Captives are Staying Alive

16 Jun 2011
by Eric Simonson



The offshore captive model in India seems to have a public relations problem.

To begin with, few people took notice when the model was gaining strength rapidly in the 1980s and the 1990s. The market finally took notice in the 2000s as some captives converted into service providers; the market speculated whether the captive model could compete successfully with the third-party service provider model. This came to a head over 2007-2009, when rumors of failing captives and pending divestitures became most pronounced, with some speculating that the captive model was “dead”.

Since that time, captives have generally continued to grow and have become even more important components of their parent organizations’ global services portfolios. However, this part of the story is not widely understood in the market. In fact, captives seem to only gain media attention when there is a divestiture. Hence despite the market’s desire to declare a “winner” in the “battle” of captives versus third-party outsourcing, the reality is that both models will continue to be viable, when appropriate, in the future.

Captive set-ups and divestitures in India 

This report is intended to help educate the market regarding the often mis-represented story of the evolution of offshore captives. It is a pointed narrative of the evolution of the captive model – with an eye towards how captives have often been misunderstood and misperceived. The report covers four major topics:

  • History of captives in India
  • The rise of the noise
  • What actually happened
  • A look forward

Special thanks to our Guest Analyst from Tesco HSC, Vinit Vishal, who co-authored this research.


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