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Indian captives turning centers of excellence: NASSCOM report
By siliconindia
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New Delhi: Captives in India are fast evolving from cost centers for their parent companies to 'Centers of Excellence' by providing higher value and efficiency propositions, according to a report released by NASSCOM. The report is titled 'The Captive Landscape in India' and is released in association with Zinnov Consulting.
The report pegs the size of the captives sector at $11.1 billion. This is almost 22 percent of total IT-BPO industry export revenues. Presently, India has more than 750 captives with over 4 lakh employees. In that also more than 100 captives have more than 1000 employees.
The captive sector of India, with its strong value proposition and leadership status, ensures it gets a considerable amount of first time outsourcers.
The captive sector's most noteworthy contribution has been the establishment of a design led engineering services sector. Currently, there are over 500 captives that undertake engineering and design services across industry verticals.
The continuous expansion of service portfolios has led to building new sets of skills within the sector like consulting; knowledge based services, research and analytics and end-to-end design. As a result, captives currently account for 50% of total knowledge based revenues from India which has significantly contributed to India emerging as a Knowledge hub.
Som Mittal, President, NASSCOM said, "Texas Instruments set up the first captive center and completes 25 years in India. Through this journey, captives have followed an evolution path with different business models, service delivery and leveraging India as an innovation hub for emerging economies."
Global processes must be localized giving more decision making capability to the center while maintaining global practices, suggests the report. Best in class captives have 11 percent higher productivity than parent organizations, provide 100 percent saving, have minimal attrition and create non linear growth through an innovation friendly environment that encourages reverse innovation, development of IP and platform products. More captives need to adopt these practices for sustainable growth and competitiveness going forward.
Captives will keep growing and expanding their service offerings. M&A activities will be taking place. The emergence of a new order in decision making model is forecast.