Captive Offshoring Vs OffshoreOutsourcing

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Suma Subramanian

Partner and Director, CaptiveAide

After two decades of robust offshore outsourcing, organizations have begun to pause and contemplate whether it really is an ‘all or nothing’ strategy.

Corporations use the services of offshore outsourcing firms because it reduces cost, accelerates the execution of tasks, gives companies a 24X7 presence otherwise not possible – or possible at great expense.

Offshore outsourcing lent itself successfully to processes that were mature, repeatable, standardized (or could be) and matured to levels where partners did more complex work beyond the cost arbitrage model. De-risking, at the time, meant having multiple partners to outsource the work to.

However, as offshore outsourcing models have matured, organizations find that knowledge and skills for those processes have died out in their organization, they have little control over people assigned to their account, they have little or no control over results(A 2012 survey by Deloitte indicated that better controls was one of the top 5 reasons for insourcing). They grapple with issues around IP, working methodology and sensitive processes, paucity of innovation, not exposing their own leaders to a global experience, de-risking from too much exposure to outsourcing.

And yet, the imperatives of offshore outsourcing – access to talent pools, geographical de-risking, follow-the-sun models, cost and intellectual arbitrage – continue to be emphatic lures

The simple answer to “having your cake and eating it too” would be for you to set up your own In-house global center (or Captive as more commonly known). Your entity would be prime for work that is sensitive, where knowledge and IP need to remain within the organization, where controls stay with you. Work that is strategic, work where the contract terms or reputational risk necessitate greater oversight are front runners for your entity to manage while leveraging all the benefits of offshoring

If setting creating a business plan to set up a global entity, ensure the right location, to scale, employ specialized talent, comply with local laws and regulations seem like a deal-breaker, we would be happy to help

This is just the beginning of the journey. More questions and more discussions will follow. If you have any questions, please do ask.

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