The better alternative to offshore captive centers
The captive center market will grow to around $11 billion this year, a 300% growth when compared to 2003. However, today’s captive center has changed beyond recognition, with outsourcing vendors providing critical support through their offshore development center (ODC). This hybrid model hopes to remove the disadvantages of the model, mainly the inability to scale up and to maintain low attrition.
A couple of the prominent hybrid models today include –
- Captive center on steroids – Both the captive center and the outsourcing vendor’s ODC are mirror images of each other, with each center doing software work that it is most suited for. Both centers maintain full scale HR, Admin, and IT resources
- Keep sensitive work inside – In this model, core work (aka sensitive and IP related) is done by the captive center while non-sensitive work is assigned to outsourcing vendor, with the company’s top IT leadership closely managing both
While captive centers are transforming themselves, can small and medium businesses benefit from them? In our earlier blog, we outlined why SMBs need to stay away from captive centers. When Ilan Oshri, author of the “Offshoring Strategies: Evolving Captive Center Models”, was asked how SMBs could take advantage of the captive center model, his answer was clear – “I cannot see the logic for such firms to set up their own captives. There isn’t enough scale.”
In today’s economy, it has become extremely tough for companies to manage remotely while maintaining productivity, innovation and low attrition rates. No matter how you look at it, SMBs will not be able to scale up to justify the risk and cost involved.
And at Suyati Technologies, we see no reason why any company would consider the captive center model. Globalization has brought parity in cost, salaries, and innovation. Today outsourcing is less about cost, and more about focus and growth. Outsource less critical, and non-core, activities, and focus on market growth. Our Dedicated Global Team model brings in the dedicated and secure nature of a captive center, with the low-risk, low-investment, low-turnaround nature of traditional outsourcing.
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