Explore the Advantages of Outsourcing to a Captive Center Model

Captive Center Model

What is Outsourcing?

Outsourcing refers to a business technique in which a particular company hires a third party to perform different tasks, provide services, and handle operations on behalf of the organization.

The outsourcing company is called the service provider or the third-party provider. It arranges for workers or systems to perform the activities or services at external locations or at the hiring company’s site.

The outsourcing process may involve a large third-party service provider, a temporary office worker, a freelancer, or an individual independent contractor.

What is a Captive Center?

A captive center is a client-owned and operated service delivery provider that provides resources directly to the organization. According to Gartner, it is usually present in a low-cost, nondomestic location and includes the legal employees of a particular organization. The most convenient part about a captive center is that it is less expensive and easier to operate than other entities. However, it is an integral part of organizations and serves a variety of purposes, including customer service and resource creation.

A few companies also have an offshore captive center that is located on the outskirts of their immediate geographic region. They often staff the subsidiary organization with locals who become their permanent and legal employees to continue operations from the offshore location.

What Services Does a Captive Center Provide?

A captive center acts as a subsidiary company that provides a range of business services to its parent company. These centers are located in countries where operating costs are lower and where there is access to a large pool of skilled labor.

Here is a breakdown of services provided by a captive center.

Information Technology (IT) Services

It includes software development, application management, data management, and infrastructure management.

Business Process Outsourcing (BPO) Services

It involves outsourcing non-core business processes such as customer service, finance and accounting, human resources, and procurement.

Knowledge Process Outsourcing (KPO) Services

It involves outsourcing specialized knowledge-based processes such as market research, legal support, and medical transcription.

Research and Development (R&D) Services

Captive centers also offer research and development services to their parent companies, including product development, testing, and prototyping.

Technical Support Services

It includes providing technical support to customers, resolving software and hardware issues, and troubleshooting problems.

Customer Service

Captive centers also provide customer service support, including call center services, email support, and live chat services.

Supply Chain Management

It involves managing the procurement and distribution of goods and services for the parent company.

Legal Services

Captive centers can provide legal support, including contract management, trademark registration, and dispute resolution.

What Are the Advantages of Outsourcing a Captive Center Model?

Captive model outsourcing can provide high-speed delivery services at relatively low costs. Here is a breakdown of the advantages of outsourcing a captive center model.

Maximum Control

A company can have maximum control over its operations by outsourcing them to a captive center model gives because it retains ownership and management of the subsidiary. The process allows the company to maintain control over critical processes, data, and intellectual property. Cost Transparency

Captive centers offer a high degree of cost transparency because the company has direct control over the costs of its operations. It also allows the company to manage its budget and allocate resources more effectively.

Full Client Control

A captive center model enables the client to have full control over the quality of services provided and manage the operations as needed. It gives the client greater flexibility to make changes and respond to business needs instantly.

Real Partner-Like Relationship

The relationship between the parent company and the captive center is more like a partnership, rather than a client-vendor relationship. The system allows closer collaboration, more effective communication, and greater alignment of objectives between the two entities.

Highly Skilled Talent Pool

Captive centers are often located in countries with a large pool of skilled labor, which enables the parent company to access highly skilled talent at a lower cost.

Global Team Collaborations

Captive centers can bring together teams from different locations and time zones, facilitating global collaboration and teamwork. The process can lead to improved communication, better decision- making, and more effective problem-solving to boost business growth.

The Current Indian Captive Center Landscape

According to a NASSCOM study, MNCs are likely to set up around 500 global captive centers (GCCs) in India by 2025. It implies the rising demand for outsourcing tech, IT, and other relevant services to enhance business development.

Most MNCs view GCCs in India as low-cost demand centers with exclusive domains related to the prioritization of projects, design, and architecture. Moreover, the country’s talent pool also continues to attract multiple international organizations because of enhanced automation, cost- efficient service delivery, and the adoption of new technologies.

Why Partner with ANSR to Set Up Your Captive Center Model?

Captive centers have played a significant role in India’s growth and development as a major player in the global outsourcing and business services industry.

That is why ANSR provides GCC-as-a-service with a ‘pay-as-you-go’ subscription model to build and manage global teams. We also provide multiple end-to-end products to ensure customized workplaces and integrated platform capabilities that include AI, robotics, cloud, digital services, etc.

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