Captives in IndiaAdding Value to Global Businesses Captives in India Adding Value to Global Businesses International Youth Centre, Teen Murti Marg, Chanakyapuri, New Delhi - 110 021, India Phone: 91 11 23010199, Fax: 91 11 23015452, Email:
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[email protected] Zinnov Management Consulting Pvt Ltd. 69 “Prathiba Complex”, 4th ‘A’ Cross, Koramangala Ind. Layout 5th Block, Koramangala Bangalore – 560 095 Phone: 91 80 41127925/6 Published by NASSCOM, New Delhi Designed by CREATIVE INC. Phone: 91 11 41634301 Printed at P.S. Press Services NASSCOM is the premier trade body as well as the Chamber of Commerce of the IT-BPO sector in India. It is a not-for-profit organisation and has emerged as the authentic voice of this industry in India. It is also the single reference point for all information on IT industry in India. Disclaimer The information contained herein has been obtained from sources believed to be reliable. NASSCOM disclaims all warranties as to the accuracy, completeness or adequacy of such information. NASSCOM shall have no liability for errors, omissions or inadequacies in the information contained herein, or for interpretations thereof. The material in this publication is copyrighted. No part of this report can be reproduced either on paper or electronic media without permission in writing from NASSCOM. Request for permission to reproduce any part of the report may be sent to NASSCOM. 3 Captives in India – Adding Value to Global Businesses process expertise and efficiencies. employing close to 4 lakh people and contributing to 1 per cent of India GDP. which stems from the basic business model more than anything else. stringent budgetary controls and the dictate to comply with global policies can cause inefficiencies to creep in. Their impact on India extends beyond revenues and employment. However. BPO captives have been instrumental in creating India as a delivery centre for high-end knowledge services. Consolidated operations. and ER&D captives are taking on complete product ownership. establishing ‘proof of concept’ and branding India as a global sourcing destination. captives have been consistently adding value to their global businesses establishing the case to expand the capacities and capabilities of the India centres. While we talk about the impact on the Indian economy and specifically the IT-BPO industry. assesses specific issues and challenges through case studies. detailed insights on industry trends. growth drivers. Going forward. Captive centres have played a key role in this phenomenal growth story. contributing over 9 per cent of incremental GDP growth in the last decade. IT captives are increasingly delivering high-end consulting services from India. The captive industry has its own set of challenges. leveraging a seamless value chain are some of the key attributes being contributed by them. competency creation and innovation roles. and we welcome your feedback and comments. providing an overview of the captives. and addresses future growth opportunities. This segment.Foreword The Indian IT-BPO industry has been the significantly contributed to India’s growth story. but as highlighted in the report. captives have been steadily moving up the value chain to deliver higher-end services across service lines. has witnessed tremendous development in the last 7 year’s – growing at a CAGR of 22 per cent. Som Mittal President 4 Captives in India – Adding Value to Global Businesses . captives would continue to emerge as ‘value players’ with increased emergence of hybrid business models that include programme management roles and collaboration with third parties. it is important to note that best-in-class captives have been successful in surmounting these obstacles to emerge pivotal for their global businesses. building an ecosystem of trust is vital for the parent organisations to derive full value from the captive model which is based upon empowered local management sharing a common vision driving transformation and enterprise-wide cost efficiencies. faster time-to-market. miniscule till 2003. spearheaded initiatives to develop affordable products for emerging markets and created entrepreneurship opportunities. Further. Lack of a flexible local strategy with limited decision making authority for local management. We trust you will find this report useful. IT-BPO captives are an integral part of the industry. This report is a first-of-its-kind. not to mention the fact that in some cases even global leadership is being driven out of India. and NASSCOM and other stakeholders are committed to the continued success of this segment. impacting the lives of over 10 million people through direct and indirect employment and influencing the lives of many more.playing a leading role in developing an R&D and product culture. AT Kearney. Booz & Co. etc. We would like to thank our Executive Council for their valuable counsel and guidance. A special acknowledgement to the NASSCOM research team for their efforts and contribution towards this report. current business trends and future opportunities.Acknowledgements This report was developed by NASSCOM. We would like to thank various people for their valuable contribution. 5 Captives in India – Adding Value to Global Businesses . In particular. with research support from Zinnov. who conducted a comprehensive six month study to understand the evolution of the Indian IT-BPO captives industry. who went out of their way to provide detailed statistics for their individual companies. TPI. Chandramouli CS. Praveen Bhadada.. without which this report would not have been possible. Cushman & Wakefield. We would like to acknowledge the inputs from McKinsey & Co.. and Pranab Sen for providing direction. AICTE. and guidance to this research effort. we would like to thank all the captive member companies of NASSCOM. company websites. Kartik Vittal. Everest Research Institute. We would also like to thank the team from Zinnov for conducting this study. we would like to thank Pari Natarajan. First. BPO and R&D sectors. The strong India value proposition prompted these centres to grow rapidly. The Indian IT-BPO third-party service providers’ role in the industry’s growth is well known. The managers at these centres were resource managers with exceptional people management 6 Captives in India – Adding Value to Global Businesses . partnership with universities. the role of the MNC captive centres in India is often overlooked.1 billion in FY2010 has increased the contribution to IT-BPO industry’s export revenue to 22 per cent. the organisations were not able to hire fast enough at their headquarters and choose to grow their centres in India due to the availability of skilled labour in India. the key focus was on process and delivery excellence. They were measured on their ability to deliver projects at lower cost. almost 44 per cent of total captive revenues. and support indirect employment of 1. Impact on India MNC captive centres have done a phenomenal job in helping India achieve the global leader status in the IT. Texas Instruments started their own centres in India very early in the evolution of the IT industry and have played a significant role in the evolution of the industry and the move towards value creation and innovation.4 billion.9 billion. (30 per cent of total revenues) and the BPO captives generated the remaining 26 per cent. employee generation and value creation. They have implemented global management and process best practices at their India centres and helped in spreading these practices in the location ecosystem. It accounts for USD 4. The sector has also helped position brand India in the global markets and help drive growth in other sectors. The industry has used global delivery model to execute complex. Today. The ER&D/SPD segment employs 132. Captive centres have played a significant role in creating an innovation ecosystem in India.Executive Summary Indian IT-BPO sector has grown significantly over the last decade to contribute over 6 per cent of the country’s GDP. The average employee size of captive centres grew from 375 employees per captive in FY2003 to 575 employees per captive in FY2010.9 billion in FY2011. They continue to play a key role in developing highly skilled talent. It is followed by IT outsourcing at USD 3. During this period. higher quality and on-time delivery. research collaboration with Indian organisations and showcase of India’s capabilities. The ER&D/SPD segment is the largest segment within the Indian captive landscape. Over the last couple of years. or USD 2.306 employees and the remaining 124. The cost and labour arbitrage were the primary levers for the growth at the India centre till recently. Organisations such as Motorola. However.799 people are employed by BPO captives. The captive centres have also brought the latest technologies to India that was otherwise unavailable.4 million people. The centres were modelled very similar to the third-party service providers and were structured to provide services to their global centres. mission-critical projects to customers across the globe using teams across multiple locations. The sector has helped the country in terms of revenue growth. these centres are also focusing on creating India and emerging market-specific products. The success of these products will significantly help improve overall productivity in India. During the early 2000s. The MNC centres saw an explosive growth from USD 3 billion in FY2003 to revenues of USD 11.920 people. The captive centres account for over 1 per cent of India’s GDP. Moving up the Value Chain MNC captive centres were set up initially to take advance of the cost arbitrage in India. the IT services segment account for 135. there are over 750 MNCs with captive centres in India which employ almost 4 lakh people. The BPO captives initially offered voice-based customer interaction and transaction services. Captive centres with optimal talent pyramid. The centres have also helped their global organisations in creating completely new business units and helped not just in bottom-line impact but also in top-line impact. 7 Captives in India – Adding Value to Global Businesses . A median captive has almost double the level of operating costs as a best-in-class captive centre. Over the last few years. Many of the organisations have set up incubation groups within their India centres. The captive centres have consciously focused on increasing business analysts. The IT captive centre focused on basic application development. Some of the BPO captive centres host global leadership roles for complex processes in areas of F&A. Procurement. Banking and Analytics. Many IT centres have global leaders who run global IT operations from the India centres. These groups research and develop product concepts with emerging markets and global relevance. innovation.skills with ability to manage large project teams. The India captive centres focused on project execution and delivery. vertical/functional domain experts. technical architects and other functions at the India centre. The successful innovations from the incubation groups are transferred to the business units within the organisation to productise these innovations. HRO. talent. Cost: Cost escalation is been a key concern of the global stakeholders with captive centres in India. maximum utilisation of existing infrastructure. effective travel policy and use of local service providers have been able to successfully address cost-related challenges. Challenges In spite of the success of the captive centres. BPO captive centres have moved into models where they are able to create complex analytical models to help measure and improve the business processes. The operating costs during the period FY2007-10 is expected to have grown by 8 per cent. The ER&D/SPD captive centres are focused on creating new products from their India centres. However. product managers. MNCs have realised that India captive centres have lot more to offer than just cost and talent arbitrage. The centres also worked at lower levels of maturity often in operational and engineering support models. productivity and business continuity. maintenance and testing activities. They look at the compensation increase year-over-year and relate it to the overall cost increase at the India centre. they continue to face a number of challenges in terms of cost. The ER&D/SPD centres focused on product sustenance and quality assurance activities. successfully resolved their challenges using industry best practices. BPO captives have been a key driver for India becoming a hub for high-end knowledge process service delivery accounting for almost 50 per cent of India’s total knowledge based services revenues. Many of the captive centres have however. in-depth analysis of operating costs between best-in-class and median captives show the existence of a wide gap in terms of costs. The rapid growth in market opportunities in emerging markets have made companies realise that they need to transform their India centres to focus on innovation and use the centres as a gateway into the emerging markets. many of the captive centres have evolved in their maturity and operate as strategic partner to their headquarters. Today. The project requirements often came from the global headquarters. programme managers. The large difference in cost structure can be explained by the differences in underlying practices being followed. The key drivers include talent development. over 40 captives have either expanded operations or set up new centres in India. The key constraints are: lack of access to customers. while the remaining are offering a mix of BPO and IT services. career growth. Almost 40 per cent of the new captives are ER&D/SPD focused. Innovation: Innovation is one of the key focus areas for the Indian captive centres. communication and management overheads. India accounted for 33 per cent of total worldwide new captive announcements in Q1 2010 8 Captives in India – Adding Value to Global Businesses . Many captive centres now have direct access to customers in Asia Pacific. Closer analysis of the attrition issue throws up some interesting facts – best-in-class captives have an attrition rate that is significantly lower than median captives. The average experience level of talent at developed geographies is higher than in India and is misconstrued for lower productivity at the India centre. They look at other locations to expand their global footprint. We have seen cities such as Chandigarh. The lack of availability of this talent slows down the transformation at some of the centres. The transformation of the captive centres to value centres requires them to develop specialised skills and domain expertise in a short duration. lack of travel. It gives them a sample of the global customer requirements. lab infrastructure.Talent: Lack of experienced talent pool and high attrition are key talent-related issues faced by captive centres. lack of customer access and micromanagement came out as the key reasons for the difference in productivity. engagement models and automation. Best-in-class captive centres have devised innovative strategies to develop the talent through expat programmes. Once the captive centres started delivering end-to-end projects from their India centre. compensation is not the only factor for attrition. often used by services providers to reduce the impact of attrition. The growth of the emerging markets is helping organisations solve the customer access problems. They perceive that the individual productivity at the India centre is lower than the individual productivity at the headquarters. Nagpur. constant employee communication. Organisations that focus on job satisfaction. Organisations are also encouraging a risk taking culture within and are focused on interventions that provide incentives for engineers to develop new ideas and also partner with the external ecosystem. internal/external training programmes and cross-centre mentorship programmes. lack of product management capability and evolving product development mindset of engineers. The innovations focused on emerging market and new business models are getting more traction at the India centres. Expectation mismatch. Business continuity: Organisations with over 30-40 per cent of headcount for any function or business unit are worried about business continuity. Many organisations have realised that most other global locations don’t offer similar advantages as India and are now looking at Tier 2/3 locations within India. Productivity: Global stakeholders often cite the lower productivity from their India captive centres as a key challenge. process optimisation. Way Forward In FY2009-10. the expectation of the global stakeholders moved from delivery quality to innovation and new ideas. work-life balance are able to successfully manage the attrition issues. Coimbatore become a preferred location for MNC to set up their second or third centre in India. partnerships with universities. Best-in-class captive centres are able to operate at same or higher level of productivity by establishing the key drivers that improve productivity and work towards improving these drivers. Attrition is a key issue at these centres as they do not have a concept of bench resources. The services will expand to all support functions such as SG&A. Open innovation network – Indian captive centres will play a key role in developing innovation network across emerging countries. BPO and engineering needs. Global location support – India captive centres will increasingly support global locations outside of the headquarters for their IT. The presence of various IT. BPO and engineering functions in India will allow organisations to experiment with new business models from the India centre. Organisations who have platform-based products will leverage the India centre to create ecosystem around their platforms and encourage the technical community to contribute to the platform initiatives. joint development with third-party service providers and also with technology start-ups in India. The future growth of captives in India hinges on six key themes: Product and business model innovation – Captive centres in India will focus on developing new products with emerging markets and global relevance. The captive centres should consciously put themselves in the transformation journey to focus on innovation and leadership from India. 5 of these planned captive centres are in Tier 2/3 locations. This will allow these centres to become the key growth engine within their organisations. The centres will continue to play a key role helping their parent organisations attain high level of operational efficiency. 9 Captives in India – Adding Value to Global Businesses .itself. 11 centres with planned investments of over USD 800 million. This will also allow organisations to host headquarters of the new businesses from their India centre. This will allow organisations to drive their globalisation initiatives from their India centre. contract negotiation/management and governance of third-party service providers across the globe. HRO. This will include research partnerships with universities. Increased breadth of services – India captive centres will increase the breadth of services offered from India. The close proximity to Asia and other emerging locations will allow India centre to take a lead in supporting these locations. India centre leaders will also take up product leadership and business leadership roles within the organisation. Sales & Marketing and Procurement functions. The incubation centres within their organisations will become a key source of ideas and products. Global leadership – Captive centres that have proved their capabilities will be given responsibilities to lead other global centres. Global sourcing management – Competency in global delivery model and globalisation is moving toward the India centres. This will include programme management. Contents Lay of the Land 10 11 IT Captive Landscape 22 BPO Captive Landscape 31 Engineering Research & Design/Software Product Development Captive Landscape 40 India Value Proposition 49 Challenges for Captives 55 Way Forward 68 Appendix 83 Captives in India – Adding Value to Global Businesses . Lay of the Land 11 Captives in India – Adding Value to Global Businesses . Software/Internet. with revenues of ~USD 11 billion in FY2010. Chemicals. etc. • Software. BFSI. Electronic/Electrical Equipment.8 per cent increase from the previous year • Majority of the contribution comes from the ER&D/SPD segment which has consistently contributed around 44 per cent of the market size over the last 3 years • The captive industry has significantly grown over the last 5 years and currently has representation from most of the verticals like Aerospace & Defence. Computer Hardware.The growth of captive offshoring market in India has been phenomenal till date. or 4.1 billion by FY2010. Industrial. Semiconductor and Telecommunication verticals together contribute around 30 per cent of the captive market size Captives in India – Adding Value to Global Businesses .6 billion FY2009. Healthcare. Bio-Technology. Education. Semiconductors. almost 22 per cent of total IT-BPO industry export revenues 12 • The Indian captive market has risen from USD 3 billion in FY2003 to USD 10. Automotive. It is estimated to touch USD 11. Energy. and Telecommunications. Telecom and Banking domains set up their operations in India between the years 2003-06 • Software. Healthcare. Semiconductors. the Indian captive industry has witnessed increased investments in Knowledge Services/BPO-related activities (growth of shared services) Captives in India – Adding Value to Global Businesses . India witnessed a dip in the number of new centres being set up over the last 12 months • In the last 24 months. with growing concentration in Aerospace. Pharmaceuticals and Biotechnology domains • Owing to the global economic scenario. Semiconductor and Telecom domains still remain the main areas of interest for captives.The demonstrated success of Indian IT vendors in the Y2K phenomenon prompted increasing number of MNCs exploring captive offshoring opportunities in India 13 • Large number of MNCs from the Software. 5 per cent • The next highest representation has been from Europe – 17 per cent. together they contribute to more than 90 per cent of the captives in India 14 • 76 per cent of the captive centres located in India have their parent organisations based out of North America.North America and Europe happen to be the largest investors in the captive space. BPO and ER&D/SPD Captives in India – Adding Value to Global Businesses . has been minimal. The contribution from other parts of the world like APAC. Japan. 38 per cent of these organisations are from the software vertical. etc. Semiconductors and telecommunications together contribute another 31. However. organisations from across the world have perceived India as a destination for multiple activities like IT outsourcing. 5 per cent (641) organisations perform ER&D/SPD-related activities from their captive centres • These captive centres have employed around 389.More than 750 IT-BPO captives present in India with close to 400. has helped nurture the captive talent pool growth. 44 per cent of the captive talent pool is based out of Bengaluru Captives in India – Adding Value to Global Businesses . This sector is largely dominated by the presence of ER&D/SPD organisations.5 per cent of the talent pool is based on captive IT outsourcing. Similarly BPO and ER&D/SPD contribute 32 per cent and 30 per cent of the talent pool respectively • Bengaluru being a major destination for most MNCs.674 people in India. 38.000 employees 15 • India boasts of a huge MNC presence with a strong base of 758 captives. 84. other Tier 2/3 locations are starting to gain momentum 16 • India has witnessed remarkable growth in the number captive centres established in the last decade. However. 20 organisations have more than 5 centres in India • Few captives have considered Tier 2 cities for cost benefit reasons. Mumbai/Pune. There are about 103 centres in Tier 2 cities • Captive centres prefer Tier 2 locations for expansion. 28 per cent of the companies now have more than one location within India. most of the captive centres are located in the Top 5 cities (established IT hubs) of Bengaluru. Most of the large centres started their first centre in Bengaluru and slowly started to expand into other cities • Today.While the majority of captive centres are located in the top 6 cities. Hyderabad and Chennai. lack of infrastructure and inability to attract middle and senior level management is hampering the growth in these cities Captives in India – Adding Value to Global Businesses . NCR. Bengaluru has been the hub for outsourcing for most multinationals and has become the host for 381 organisations. business continuity reasons. the need for global leadership from India centre is going to be the most important aspect for organisations to further enhance their business in the emerging markets Captives in India – Adding Value to Global Businesses . supportive infrastructure and business environment 17 • The initial drivers for most multinationals to set up captive centres in India were cost arbitrage and the huge talent pool availability. The captive market size in FY2008 reached a whooping USD 9. Organisations concentrated in becoming operationally more efficient • Organisations are now looking at driving innovation and transformation to create more value from their India centres.6 billion from USD 3 billion in FY2003 • With the economic meltdown. low-costs. though the landscape did not change drastically.The evolution of the captive landscape in India has been supported by critical drivers such as abundant talent. there was a slowdown in growth and cost arbitrage again became a major driver for organisations. lack of knowledge about outsourcing by both the parties (HQ and India centre) was perceived as a major challenge • The demonstrated success of the global sourcing model in India gave a further fillip to the overall growth of the industry between 2005-2007. and the advantage of being close to such markets • Moving forward. At that time. They now understand the role of emerging markets for their products/services in the future. etc. HR. professional services. Procurement & Logistics. attracting more and more organisations to explore opportunities going forward 18 • Over the last 25 years the Indian captive ecosystem has matured in various services. ER&D and SPD are high on the maturity curve followed by application development and infrastructure management services • The primary reason for this growth is the vast base of ER&D/SPD organisations in India. though is changing rapidly. many organisations now have global leaders operating from these centres • India will witness rapid growth in services like technical/customer support.As a result. Also. Organisations in this space have moved from being a pure cost arbitrage centre to an innovation centre. finance and accounting. the captive landscape is starting to show signs of maturity across multiple activities. Most of the work carried out in these service lines are transactional in nature. are in the emerging phase and will take time to reach the next level of maturity. Captives in India – Adding Value to Global Businesses . due to customer disconnect. the work is currently limited to doing collaterals and documentation. Also in Sales & Marketing. Many organisations have established their F&A shared services centres in India to support all geographies • However services like Sales & Marketing. They encourage a culture of thrift across the organisation Captives in India – Adding Value to Global Businesses . while incrementally increasing economic efficiency without disrupting current delivery model. strong internal measurements and controls. They have mature processes. e. and achieve a high degree of standardisation and automation. often overlapping paths – enhanced value or enhanced efficiency.Successful captive units have migrated along two. a number of engineering captives have in particular used India as a place to derive value for global products. and a core centre for emerging market products • Efficiency players focus primarily on enhancing economic efficiency. The extent to which one or the other choice is made determines the ongoing business model for the captive • Value players typically focus on enhancing value to the parent organisation. often overlapping paths – enhanced value or efficiency 19 • Sustainable captives in India have migrated along two.g. Improving operational excellence has been key focus for captives in India 20 • In the past. Lack of communication and focus on organisation led to silo approach in operational improvement strategies. More value can be unlocked if both offshore organisations and clients strive for end-to-end project and process optimisation. Organisations measured their performance on the basis of key operational metrics such as utilisation. captives have a consolidated approach that organisation’s inputs from the onshore customers and the offshore operations teams across all operating areas. This would require that they jointly define a common operations assessment and improvement framework Captives in India – Adding Value to Global Businesses . attrition and FTE costs. myriad operational assessments and improvement techniques. on metrics as well as underlying practices. IT-BPO captives used a plethora of frameworks and guidelines. as a result of which they were ineffective • Now. the captive drive towards higher value work has enabled the availability of highly skilled manpower for the entire industry. and spearheading efforts to penetrate emerging markets Captives in India – Adding Value to Global Businesses .4 million people • Captives have played a key role in creating brand India as a global sourcing destination.Captives have made a significant impact on India. and support indirect employment of 1. and on global business 21 • Over the years. captives are playing a major part in developing India and other emerging markets-specific products out of India. Captives today account for over 1 per cent of India’s GDP. • Additionally. and made India a hotbed for process expertise and efficiencies. leading to faster time-to-market of solutions and products. also by increased process efficiencies across geographies. and establishing 'proof of concept'. Captives have played a leading role in establishing an R&D and product culture focusing on IP creation. platform products and establishing India as a design hub • Further. in addition to promoting entrepreneurship opportunities • Captives in India have added significant value to parent organisations not only through cost savings and access to talent. leveraging the 24/7 value chain. establishing global best practices. captives have played a stellar role in making India the global leader in the IT-BPO outsourcing landscape. IT Captive Landscape 22 Captives in India – Adding Value to Global Businesses . Electronic/Electrical Equipments. is one of the key drivers for organisations across different verticals to choose India as their destination for IT offshoring • The software vertical contributes to 38. primarily due to the talent pool generated by the growth of service providers in India. followed by BFSI which contributes around 17 per cent Captives in India – Adding Value to Global Businesses . when close to 80 captives were set up in this segment alone. Energy.2 billion in FY2009 with a CAGR of around 21 per cent • There were about 45 captives in this segment before the year 2000. the Indian captive industry has 153 captives focusing on IT-related activities which represent an increase of 240 per cent in the last 10 years • The captive IT industry is well-represented by most of the verticals including BFSI. Semiconductors.5 per cent of the total IT captives in India. Industrial. Exponential growth has been observed during 2002-2007. Retail.IT captives have experienced the fastest growth in India in the past 4 years 23 • The captive IT services market has increased from USD 0. etc. Software.9 billion in FY2003 to USD 3. At present. • High talent pool availability for IT services. Telecommunications. BFSI. and organisations predominantly leverage India from an internal IT/professional services standpoint • Telecom vertical is fast emerging with 15 organisations currently leveraging India for activities spanning from application development.000 and the average headcount for all captive centres in the IT space in India is about 650 Captives in India – Adding Value to Global Businesses . software and telecom verticals account for more than 75 per cent of the total installed base of talent pool within IT captives 24 • BFSI is the dominant vertical in the IT captive space with 23 of the global banks currently having a captive presence in India including some of the largest banks across the globe • Software vertical is the second largest in terms of headcount. system integration to IT consulting • Only 18 per cent of the total IT captive centres in India have a headcount of more than 1. Mumbai. NCR.Though North America accounts for the majority of the captive centres. Pune. Hyderabad. etc. 69 per cent of the IT captives have their parent organisation based out of North America and have contributed to 61 per cent of the IT captive market size in 2009 • Though 23 per cent of the IT captives are based out of Europe. European organisations including some of the large banks are increasingly leveraging India 25 • North America has been the biggest adopter of IT captive outsourcing both in terms of number of captives and the revenue generated. they contribute 34 per cent to the market size • 153 captives have set up 300 centres across different cities in India like Bengaluru. • Bengaluru continues to retain its position in hosting the maximum number of IT captive centres Captives in India – Adding Value to Global Businesses . Testing services and application development and maintenance are prime focus areas for IT services captive centres 26 • The major focus areas for the IT captives in India are testing. service desk. incident management. web operations. Infrastructure Management Services (IMS). to all the offices located globally • Systems and network integration include building computing systems internally by combining hardware and software products from multiple vendors • IT consulting is seen as a niche area and very few organisations practice this at their captive centres. This sector makes up 34 per cent of the market size • IMS forms the third major focus area and providing services like database administration. Testing includes maintaining the IT applications built internally for running the dayto-day operations of the organizations • Application development includes developing custom applications for internal purposes of the organisation and forms the second major focus area. etc. desktop management. system integration and IT consulting • Testing services is the major focus area for IT captives focus area contributing 46 per cent to the market size. etc. SAP. Organisations who are ahead in the offshoring maturity curve like Oracle. application development. are now beginning to provide IT consulting solutions like SAP or Oracle implementation to their other offices globally Captives in India – Adding Value to Global Businesses . From a pure captive perspective. BFSI vertical currently dominates the market for ADM in India – Organisations across verticals such as BFSI and retail are now starting to leverage their existing operations for growth. Internal IT is now being thought of as a new growth engine • With the license revenues dipping for many organisations. product-based organisations are consciously focusing on services (delivered from low-cost destinations) in order to increase customer wallet share and smoothen revenue flows Captives in India – Adding Value to Global Businesses . captives are starting to leverage hybrid models (with vendors) to cross leverage capabilities – Technology disruptions such as cloud/SOA allows a level playing field for Indian captives and are increasingly being looked upon 27 • Organisations performing ER&D/SPD activities are now looking to move in-house IT-related work to their captive centres in India • Especially for ER&D/SPD captive centres.IT captives are increasingly using their India delivery base to offer services beyond application development – such as testing. which account for more than 20 per cent of the global headcount. infrastructure management and consulting services • Application development & maintenance is a mature function in the Indian IT industry and is primarily driven by organisations in the BFSI and retail industries. the growth in terms of headcount ramp-up has been slow. Xerox. the growth of Indian service providers in this space has created a vast pool of talent in areas such as implementation services. etc. migrations/upgrades. have established the fact that organisations globally are moving towards increase in percentage contribution of services revenue. sustaining services. With this changing phenomenon. the importance of professional services is increasing rapidly • As the talent pool required for professional services is similar to IT.– The recent acquisitions by Dell. 28 Captive Landscape in India . we can expect growth of this function in captive model – Further. etc. capabilities. this is still a nascent phenomenon.Captive centres in India are aggressively being leveraged to provide Infrastructure Management Services to the parent organisation 29 • IMS is fast catching up. server and network infrastructure support activities are preferred within the captive model • A few organisations have tried to leverage vendor resources to work out of their centre to deliver IMS activities.) required for IMS function are similar to level 3 technical support • Shared model has emerged in IMS where activities such as desktop support. However. Vendors who offer managed services engagement model are preferred for IMS function as compared to captive centres Captives in India – Adding Value to Global Businesses . application services are being outsourced to vendors while activities such as information security. etc. The early movers in this space have faced some key talent-related challenges while maturing this function at the captive centres in India • The resources (skill sets. organisations are now looking at cloud-based solutions for automating testing. Having such a system reduces the time and effort involved in testing and is a cheaper option in the long-term Captives in India – Adding Value to Global Businesses . Such systems generally have pre-built scenarios. Organisations are coming up with business model innovations enabling flexible and standardised testing processes • In the previous model. As the testing practice has matured and been commoditised. powerful analytical engines with search engines to search for relevant test cases. Organisations have built strong expertise in this space and are world leaders • However.Captives are now starting to leverage cloud-based testing automation to optimise investments and standardise the processes 30 • Testing has been an important part of the offshoring business for most of the captives in India. challenges and customer pain points are very well-understood. captives had to plan for dedicated resource allocation and create an entire plan for the testing processes. organisations are now taking the cloud approach with access to a library of test cases • This is especially true for mature and sunset products where the customer feedback. BPO Captive Landscape 31 Captives in India – Adding Value to Global Businesses . . telecommunications. Captives in India – Adding Value to Global Businesses .Over 100 captives use India as a delivery base for a wide range of BPO services. the growth in BPO segment has been steady from USD 1. • Organisations are increasingly realising the advantages of having BPO captives. Many organisations now have dedicated knowledge teams for their HR. for decisionmakers in a faster and simplified manner. Big organisations like Dell have set up knowledge-based services teams to provide business intelligence to headquarters. a dedicated knowledge team for HR can help in providing on-time data like projected attrition. research/consulting.8 billion in FY2010 32 • The Indian BPO captive market forms 25. When compared to the IT or ER&D/SPD captive segments. there has been an increase from 26 in FY2000 to 113 in FY2009 • The BPO market is well-represented from all verticals like software. F&A activities.7 billion in FY2009. In terms of the number of captives offering such services. etc. This would help in proactively shaping or changing strategies and better prepare for future issues that need to be addressed. For e. BFSI.1 billion in FY2003 to USD 2. generating revenues of USD 2. 30 per cent of the captives carry out research/consulting activities for their parent organisations.4 per cent of the total captive market size. expected requirement for new candidates. etc.g. These teams would play a diligent role in collecting data from across the organisation to help business units in making strategic decisions. BFSI.250 per centre • The BPO captive space is dominated by large-sized organisations leveraging India across sub-categories • Most of the smaller organisations prefer to outsource BPO-related activities to third-party providers owing to cost constraints Captives in India – Adding Value to Global Businesses . software and computer hardware are key verticals for BPO captives in India 33 • Most of the banks have a large BPO (voice and non-voice) presence in India providing support services to global customers of the parent organisations • Organisations in the software vertical have been at the forefront of offshoring F&A. and HRO-related activities to India • The last 18 months also witnessed faster ramp-up at the existing knowledge process services in India providing market research and analytics services to global customers • The average BPO captive currently stands at about 1. • Mumbai being the financial capital of India. This is followed by Bengaluru and the NCR Captives in India – Adding Value to Global Businesses . Hyderabad.Though most of the BPO captive centres are spread across top 5 locations in India. has attracted 58 captives to set up their operations in this location. Chennai. etc. Bengaluru. NCR. Pune. organisations are now looking towards exploring low-cost Tier 2/3 locations within India 34 • 78 per cent of the BPO captives have their parent organisations based out of USA and have contributed 82 per cent of the BPO captive market size in 2009 • 113 captives have set up 226 centres across different cities in India like Mumbai. Gartner. HR and Procurement & Logistics • F&A forms the major focus area for 27 per cent of the captives in India.F&A and knowledge-based services account for the majority of BPO-related activities for captives 35 • The major focus areas for the BPO/Knowledge Services captives in India are Finance and Accounting (F&A). L5 support for hi-tech companies is delivered from India Captives in India – Adding Value to Global Businesses . etc. This space is dominated by players from BFSI and research/consulting. Fidelity. A T Kearney. Frost and Sullivan are some of the big players in this space • While Customer interaction and support constitutes 20 per cent of BPO captives revenues. Citibank. Bank of America. Knowledge-based services. a significant chunk of global high level L3. Goldman Sachs. • Knowledge-based Services form the focus area for 19 per cent of the captives. Bain. This is majorly dominated by large players in the BFSI segment like American Express. Sales & Marketing. Customer interaction services. JP Morgan. McKinsey. L4. Forrester. Around 42 per cent of the processes have medium propensity of offshoring • With good availability talent pool. utilities & healthcare verticals • India is seeing rapid growth in the F&A offshoring segment. offshoring in the F&A segment is bound to grow rapidly in the near future • Indian F&A captive centres are gradually evolving into F&A shared services centres to deliver greater business impact at the HQ in terms of higher value delivery and enhanced cost savings Captives in India – Adding Value to Global Businesses .F&A services with varied complexity across the BPO value chain are currently being offshored 36 • F&A accounts for a majority share of the BPO function in India with majority of the activity concentrated in BFSI. 31 per cent of the various processes in the F&A segment have high propensity for offshoring to captive centres in India. 000. USD 3-5 billion) are also outsourcing their HR processes to India Captives in India – Adding Value to Global Businesses . Sales. payroll and recruiting & staffing are the most offshored functions to the India centres • Increasingly organisations of relatively smaller size (Headcount ~ 9.HRO has vastly matured over the years with a number of processes now being provided by captives in India 37 • HR outsourcing to captives is relatively in a nascent stage when compared to internal IT or F&A with very select processes being delivered out of the global centre • This function being a 'high-touch' function prevents a large chunk of the activities from being offshored • Workforce administration & leave management. Within inside sales value chain. regional market understanding to penetrate the APAC market • This function is gaining increasing importance since customers prefer talking directly to the organisation as opposed to a systems integrator or a re-seller Captives in India – Adding Value to Global Businesses . time zone advantage. lead generation and requirement analysis & fulfillment are the typically offshored processes in inside sales • Organisations are leveraging inside sales team in their India centres for hosting live online demos for potential end-users. lead generation and requirement analysis sub-processes have higher propensity to be offshored 38 • Planning & identification. and help them with product information • The major drivers for offshoring of inside sales functions to India include large talent pool. Knowledge-based services account for over USD 500 million for captives; captives have played a key role in making India a knowledge-based services delivery hub 39 • Knowledge Services is one of the key trends that were bought in the Indian offshoring landscape by the captives in the late 1990s. The initial success of ITO-BPO in India prompted many organisations to experiment outsourcing of high-end knowledge-based services to India • The trend started with General Electric’s captive unit in Bengaluru providing risk analytics service to GE capital in 1997, followed by American Express performing risk analytics for many of its credit card divisions across the globe • Talent pool for statistical modelling and analytics is also very limited in India. Cost of talent for vertical specialists including business consulting, statistical modelling, actuarial analysis, etc. is very high. Only a few consulting/banking captives have been able to hire and retain top talent at their captive units Captives in India – Adding Value to Global Businesses Engineering, Research & Design/ Software Product Development Captive Landscape 40 Captives in India – Adding Value to Global Businesses The engineering services captive market in India has shown signs of fast growth with over 400 engineering and R&D captives having been established in the last 5 years 41 • The Engineering Services Research & Development/Software Product Development (ER&D/SPD) segment is the fastest growing segment within the captive industry in India, with a CAGR of 24 per cent over the last 7 years, to reach revenues of USD 4.9 billion in FY2010. While in 2001, there were only 170 captives in this segment, exponential growth was witnessed between 2003 and 2007, where close to 400 new captives were set up • Organisations in embedded systems are the pioneers in India, while offshoring of engineering services design activities by organisations in manufacturing began in early 2000. Many new automotive and aerospace organisations are setting up/expanding their operations • High talent pool availability for ER&D/SPD in India has been a key driver for the growth of this sector. Most of the world’s top ISVs including Microsoft, Oracle and SAP have their R&D centres in India. These R&D centres have achieved significant scale since their inception and are now positioned as the second largest centres outside the headquarter countries Captives in India – Adding Value to Global Businesses with the software/internet segment accounting for the biggest share. Around 60 per cent of these captives have a headcount of less than 500 people • Small R&D centres usually employ high quality talent at a compensation level slightly above the industry average.The hi-tech verticals account for the majority of installed base of talent pool engaged in R&D-related activities at the captive centres 42 • The ER&D/SPD segment has a well-rounded representation from various verticals like software/ internet. And hence. industrial. automotive. around 28 per cent of the total base Captives in India – Adding Value to Global Businesses . etc. defence. there is a greater percentage of innovation happening from these centres. These centres form a significant portion of the global R&D headcount and share a high amount of product ownership and responsibility with their parent organisation. aerospace. • 31 per cent of the captives in this segment are from the software vertical. telecommunications. • The ER&D/SPD segment employs over 1.1 lakh employees. It is followed by 15 per cent from telecommunications and 12 per cent from semiconductors • The average ER&D/SPD captive currently stands at about 200 per centre • 22 per cent of the captives in this segment have more than USD 10 billion as revenue. semiconductors. Hyderabad. in the ER&D/SPD market the revenue contribution is well-represented by organisations in North America. Also. The second centre will help strengthen business continuity plans. Europe and APAC regions • 76 per cent of the ER&D/SPD captives have their parent organisations based out of North America and they have contributed 69. other locations such as NCR and Mumbai/Pune are fast catching up 43 • Unlike the IT and BPO markets. Pune. Chennai. Pune is expected to grow in SPD and ER&D while Delhi/ NCR is expected to grow in embedded systems capabilities. which contributes to 58 per cent of the total ER&D/SPD talent pool • Bengaluru is expected to be the frontrunner driving the growth for R&D offshoring in India while Pune and NCR would follow the league. Mumbai. • Moving forward. these centres with strong education ecosystem will act as satellite centres to main centre and help in managing costs effectively Captives in India – Adding Value to Global Businesses . etc. • Bengaluru hosts 313 captive centres in this segment. NCR.4 per cent to the market size in 2009 • 641 captives have set up 868 centres across different cities in India like Bengaluru.While Bengaluru continues to be the key hub for engineering-related activities in India. large organisations will plan the operation of their second centre to tap talent that is unwilling to relocate. as well as the engineering services market 44 • The major focus areas for the ER&D/SPD captives in India are Embedded Systems. developed and released products like Page Maker from India centre • Also with the increasing awareness about the emerging markets. Engineering Services and Software Product Development (SPD) • Embedded services form the major focus area for 20 per cent of the captives and contribute 45 per cent to the market size • Product development. This will also help in driving innovation thus creating more value for the organisation Captives in India – Adding Value to Global Businesses . organisations will command more product ownership from India centres for creating localised products. However. with increasing maturity of R&D centres’ product management. testing and support activities are the functions most commonly offshored to India. architecture design will soon be making inroads.Captives focused in the embedded. Organisations such as Adobe has successfully conceptualised. etc.Despite challenges. slow growth in developed markets and increased focus on emerging markets has fundamentally changed the paradigm. Captives in India – Adding Value to Global Businesses . focus on increasing maturity of the centres. organisations are now looking at ways beyond these to add higher value • ER&D captives are now increasingly focusing on competency creation. The drivers of cost and talent are now giving way to newer dimensions of innovation and access to newer markets in the region • While operational efficiency still remains critical. the past year witnessed a shift in key focus areas of organisations doing engineering-related work in India 45 • Cost arbitrage and vast availability of talent pool were the key drivers for many organisations to have an R&D presence in India • However. Texas instruments. CISCO. innovation. organisations are looking at various growth themes for their India centres. localisation.g. Microsoft. Broadly. e. etc. Captives in India – Adding Value to Global Businesses . the growth themes focus on building products for emerging markets.Engineering captives have chosen a few focus areas for their growth 46 • With cost arbitrage and talent pool being no longer the only attractive proposition. increasing productivity and product ownership • There are multiple examples of organisations who have achieved phenomenal success by focusing on one or more of these themes. Captives are striving to create competencies and synergies through proper project selection and aggressively focusing on driving innovation for local markets by creating innovation culture Competency Creation • India centres are striving to create location-specific competencies and strive to be the primary location for the selected areas • Business units should be provided with a broad framework for them to choose the right projects and location Project Consolidation • Evaluate the complete project portfolio at the India centre and move back the projects where there is not enough competencies within the India centre or in the Indian talent market • This helps India centres in developing deep domain expertise in few areas rather than spreading thin across product areas Project Selection • 47 Define processes to strategically select the right projects to be executed at the India centre Captives in India – Adding Value to Global Businesses . Create Synergies • Improve organisation alignment by enabling a platform to enable joint decisions among BU heads as well as the associated global centre heads • Balance the tension/synergies between the India centre leadership and the business leadership Innovation for Local Markets • Drive innovation for the local market by building a compelling business case to channelise investments • Full fledged integrated efforts involving engineering. market development and sales teams should be undertaken Education on R&D Globalisation • Increase the knowledge level of engineers at various global centres to effectively work with India centre • Holding knowledge workshops to explain the 'Know-how's' of working with India teams at middle management level Innovation Culture 48 • Inculcate the culture of 'Customer-led innovation' across development teams • Innovation programmes are sponsored by senior leaders in the organisation • Both monetary and non monetary rewards and recognition programmes can be introduced Captives in India – Adding Value to Global Businesses . India Value Proposition 49 Captives in India – Adding Value to Global Businesses . Today. thus creating a role model which others are trying to replicate. This expansion has turned Indian IT locations into hubs of the global offshoring universe with more spokes reaching out to increasingly diverse locations.8 factors have led to establishing India as the leader in the global sourcing landscape and being 'distinctive' Clients looking at outsourcing in a more strategic and inclusive manner have generated a need for demonstrating greater value and differentiation. large scale contracts and product/service design capabilities – thus including the benefits of cost. quality and innovation. This industry has built a unique 'service-led' export-oriented model away from the traditional product-based play. India started as a low-cost location providing routine technology services on project basis. moving on to providing BPO services and now integrated service offerings. Cost effective and high reliable delivery model of caters to the core process of its customers across the globe. 50 Captives in India – Adding Value to Global Businesses . The emergence of the Indian domestic market has also attracted organisations to set up operations that focus on developing solutions for emerging markets. Providers in India both third party and captive have responded well to these demands. virtually any offshoring service can be performed in India and new areas are being constantly invented including customer facing functions apart from knowledge management and legal processes. service delivery from Tier 1 centres in India still works out to be significantly lower. is expected to be over 571. India’s graduate out-turn has more than doubled in the past decade. commerce and arts is expected to cross 3.India continues to hold onto its position as the leading and cost efficent provider of talent India continues to be the most financially attractive location for offshored services across the world. Graduate out-turn across other non-technical streams including science. in addition to locations in Eastern Europe and South America. While a number of Asian countries offer competing services. Availability of skilled talent has been the foremost attraction for India to emerge as a global sourcing country. It is steadily adding fresh graduates to the workforce – 3.7 million in FY2010. Technical graduate out-turn.000.1 million. Tier 2 centres in India offer a further 20-30 per cent reduction in the operating costs. comprising engineering degree (4-year programmes) and diploma/ MCA students (3-year programmes). 51 Captives in India – Adding Value to Global Businesses . energy efficient designs. the development of Tier 2/3 locations in India offer a significant cost advantage. The telecom revolution in India has led to average call rates decreasing by 70 per cent. adding over 10 million wireless subscribers a month. Today. employment.) has ensured that supply of Grade A infrastructure has always met the demand. Further. The Software Technology Parks of India (STPI) scheme was crucial to the development of the industry. exports and infrastructural development. handset prices by 50 per cent. The ability of private developers to quickly adopt world-class standards (large floor-plate designs.Government and private enterprise working in tandem to create a robust infrastructure ecosystem The growth of the IT-BPO industry in India has been supported by an enabling policy environment. the Special Economic Zone (SEZ) scheme is creating investment. Indian telecom ranks amongst the largest and the fastest growing markets in the world. while computer prices had declined by 40 per cent. This allowed the IT-BPO sector to access ready connectivity and world-class services at declining costs and enjoy unhindered growth. Similar explosive growth has taken place in the real estate sector. 52 Captives in India – Adding Value to Global Businesses . etc. the country must continue to reform and modernise its economy as well as address significant shortfalls in its education and infrastructure systems. 53 Captives in India – Adding Value to Global Businesses . But in order to achieve these results. household consumption has soared and a new middle-class has emerged. the fourth largest economy in the world leading to global organisations customising products/services for the Indian markets. Real average household income has roughly doubled since 1985. It is expected that India will go through a major transformation over the next decade and emerge as the fifth largest consumer market provided it continues its high growth path. With rising incomes. the number of rich people in India is expected to double. This will lead to a significantly different socio-economic structure in India — with declining poverty levels and increasing income levels. with a rapidly growing economy and increased demand from the burgeoning Indian middle-class India has become. while the middle-class is expected to grow by 50 per cent. the shape of the pyramid will change considerably. About 18 per cent of the total households will move from poverty to more sustainable life and India’s middle-class will swell by 17 per cent in terms of number of households.India presents an enormous market in itself. rural households will benefit too. While much of this wealth will be created in the urban areas. (in Purchasing Power Parity terms). As incomes rise. India’s economic growth has accelerated significantly over the past two decades resulting in an increase in the spending power of its citizens. Indian spending patterns will also evolve with basic necessities declining in relative importance and categories such as communication and healthcare growing rapidly. In the next 5 years. IT-BPO organisations in India are creating an ‘innovation-conducive’ environment within their organisations Rapid maturity of Indian IT-BPO organisations. coupled with the need to move up the value chain and access new markets has prompted organisations to focus on creating an innovation-conducive environment. gained over the last two decades. Apart from identifying a leader for innovation in their organisation. There has been several instances of IP creation by Indian organisations. along with substantial work in new technology development. Thus. Further. to generate business impact for clients through innovation. they have introduced several organisation-wide internal initiatives to create a rich environment which encourages employees to innovate. The drive to create core intellectual property has meant that the larger organisations have set up in-house research labs for applied research. organisations are seeking to utilise their own domain experience. 54 Captives in India – Adding Value to Global Businesses . innovations on core technology are now being generated as opposed to a predominant focus on process innovation in the past. Thus. Most of the large organisations have moved from ad hoc efforts at innovation to putting in place structured programmes to drive innovation through the breadth and depth of their organisations. even innovations to internal process have been led by the development of core technology. model and process innovation. They are also increasingly integrating with the academia on research projects at the institutes as well as having academicians consult them. Challenges for Captives 55 Captives in India – Adding Value to Global Businesses . maximum utilisation of existing infrastructure. effective travel policy and use of local service providers have been able to successfully address cost-related challenges. Best-in-class captive centres are able to operate at same or higher level of productivity by establishing the key drivers that improve productivity and work towards improving these drivers. engagement models and automation. successfully resolved their challenges using industry best practices. They perceive that the individual productivity at the India centre is lower than the individual productivity at the headquarters. partnerships with universities. Best-in-class captive centres have devised innovative strategies to develop the talent through expat programmes. Many of the captive centres have however. productivity and business continuity. internal/external training programmes and crosscentre mentorship programmes. Talent: Lack of experienced talent pool and high attrition are key talent-related issues faced by captive centres. The key drivers include talent development. process optimisation. innovation. they continue to face a number of challenges in terms of cost. Productivity: Global stakeholders often cite the lower productivity from their India captive centres as a key challenge. lab infrastructure. Cost: Cost escalation is been a key concern of the global stakeholders with captive centres in India. talent.The captive business model has inherent challenges In spite of the success of the captive centres. Captive centres with optimal talent pyramid. 56 Captives in India – Adding Value to Global Businesses . Organisations are also encouraging a risk taking culture within the organisations and are focused on interventions that provide incentives for engineers to develop new ideas and also partner with the external ecosystem.Innovation: Innovation is one of the key focus areas for the Indian captive centres. Many captive centres now have direct access to customers in Asia Pacific. It gives them a sample of the global customer requirements. The key constraints are: lack of access to customers. 57 Captives in India – Adding Value to Global Businesses . lack of product management capability and evolving product development mindset of engineers. Business continuity: Organisations with over 30-40 per cent of headcount for any function or business unit are worried about business continuity. The growth of the emerging markets is helping organisations solve the customer access problems. Again. The large difference in cost structure can be explained by the differences in underlying practices being followed. A median captive has almost double the level of operating costs as a best-in-class captive. Lastly. captives focusing on productivity – minimising idle time for agents and multi-skilling their workforce for data and voice processes have a 20 per cent cost advantage. infrastructure and processes that can lead to inflated costs. Captives need to follow global standards in technology. setting correct job expectations and creating visible career paths. leading to lower attrition at lower compensation levels. Captives with a sound talent management plan – hiring people with the right skills. best-in-class captives have maintained exemplary control over operating costs Rising operating costs are cited as a key deterrent to India’s competitiveness by industry players. While the economic recession again cushioned the rise somewhat in the past year. in-depth analysis of operating costs between best-in-class and median captives show the existence of a wide gap in terms of costs. Similarly.Operating cost inflation has been tempered by the recession. providing a 35 per cent operating cost advantage. overall operating costs are expected to grow further in the future. Operating costs during the period FY2007-10 is expected to have grown by 8 per cent. 58 Captives in India – Adding Value to Global Businesses . improving management infrastructure to increase the span of control and lower support headcount can give an additional 25 per cent cost advantage. Though there has been periodic increases in salaries. cost savings are still significant in India 59 Captives in India – Adding Value to Global Businesses . Taking proactive talent development initiatives by encouraging innovation and ideas has worked for some organisations Expatriate Movement • Movement of expatriates continues to be the key for talent/technical leadership development • Few organisations have also adopted interval approach for expatriate relocation. for e. IBM and CISCO Immersion Programmes • Engaging promising technical engineers in early part of their career with senior technical leaders at HQ • Send engineers to HQ location for longer periods of time. i. 6 to 12 months which helps in understanding the product context • Define the success of HQ leader based on the number of engineers who he/she has mentored and trained in the defined time period Establish Product Management Teams • 60 Provide opportunity for customer interaction in local markets by establishing a product management team in global locations Captives in India – Adding Value to Global Businesses .g.e. • Initially product managers will shadow HQ teams from global location Promote Innovation Culture • Conceptualise innovation month in a year where engineers are motivated to nominate their ideas and compete with global teams • Initially handhold the global centre engineers by screening and mentoring them through the process • Help articulate a business case for the best ideas at local level and then pass it on to global teams for further validation Provide Ownership • Provide end-to-end ownership on certain components of the product which are developed at global locations • Local leadership to drive the product management (move a senior leader to global centre for 3 years). HQ teams will continue to report to the leader based out of global locations • Consistently mentor and build next level leadership during the time period • Empower and enable partner management at local leadership level University Partnerships 61 • Partner with local universities for research projects • Encourage engineering teams at global locations to drive the partnership locally • Provide best practices and metrics to manage the relationship Captives in India – Adding Value to Global Businesses . In this scenario. These measures bind the employees emotionally to the organisation induce them to build long-term careers with the organisation. Even then. that had lower attrition. defined explicit career tracks for them. 62 Captives in India – Adding Value to Global Businesses . the advent of the economic recession reduced attrition levels to manageable proportions. This was possible because they focused intensely on employee engagement. While attrition levels peaked in FY2007. These organisations successfully cross-skilled people. actively worked on retaining team leaders. best-in-class captives have exerted control by putting in place robust career growth plans High attrition levels have always been a prime concern for captives in India. Attrition is a bigger issue because captives do not keep a bench. groomed them into leadership positions. were also paying lower wages. Thus. captives that have robust career management plans have successfully managed the attrition problem in India. a closer analysis of the attrition conundrum throws up some interesting facts: • Best-in-class captives have an attrition rate that is significantly lower than median captives • Compensation is not the only factor for attrition Further analysis showed that best-in-class captives. and do not hire extensively from campus.While high attrition levels are a challenge. organisations and products • Customise objectives. It’s more important to learn quickly by efficiently testing assumptions than to hit the numbers. and power balances between functions – all should be evolved to support globalisation • Shift power to where the growth is: Without autonomy. targets and metrics: Innovation by nature. is uncertain.Embracing innovation can lead to new opportunities for captives 63 • MNCs are changing their focus from developed to emerging markets but R&D subsidiaries are still not their primary agents for innovation. titles. the local growth teams won’t be able to focus on the problems of customers in emerging markets. these subsidiaries are now looking at 3 popular models for innovating for the emerging markets • But the success of these models necessitate a mindset change at HQ and an organisational change at the global level • Build local growth teams from the ground up – Like new organisations: Zero-based innovation needs zero-based organisational design. norms for working relationships. However. Specifically. job descriptions. Relevant metrics and standards for LGTs – the ones that resolve the critical unknowns – are rarely the same as those used by the established businesses Captives in India – Adding Value to Global Businesses . they need the power to develop their own strategies. Hiring practices. reporting structures. and processes to see what works • Build new offerings from the ground up: Given the tremendous gulfs between rich countries and poor ones in income. Only top managers have the access to experiment with people transfers. organisational structures. reverse innovation must be zero-based. and helping take the innovations that the team develops into rich countries.64 • Have local growth teams report to someone high in the organisation: The executive overseeing the LGT has 3 critical roles: mediating conflicts between the team and the global business. These wide differences cannot be spanned by adapting global products Captives in India – Adding Value to Global Businesses . connecting the team to resources such as global R&D centres. and sustainability needs. infrastructure. Innovation ideas are centred around themes such as offerings for emerging markets. 65 Captives in India – Adding Value to Global Businesses . tools. and organisational changes redefining focus on innovation. talent and financial investments. internal brainstorming and collaboration with third-party advisors. While in the past. improving user experience and new business models. innovation frameworks. captives now are in the process of unlocking the vast innovation potential of India-based delivery centres Building a culture of innovation within the organisation is paramount – by providing freedom to take risks. such as lack of senior management focus. need for innovation is emerging as the dominant theme for captive expansion in the future. Key innovation enablers include research labs/Centres of Excellence (CoEs) focusing on innovation. organisations struggled with execution-related challenges. assigning responsibilities. and incentivising teams. Innovation ideas can be sourced from customer demands and experiences. workshops and symposiums. different sources and enablers of innovation As captives look beyond labour arbitrage.Captive organisations will need to identify multiple 'innovation themes'. which means that this is a challenge that can be overcome if right processes are put in place. along with lack of effective communication channels. cross-skilling initiatives (that enables job rotation and work load balancing) and a strong training programme are some of the tools by which best-in-class captives have been able to increase their productivity levels by 10-15 per cent each year. 66 Captives in India – Adding Value to Global Businesses . but a number of captives have put in place levers that substantially enhance productivity levels Global corporations often cite low productivity of their Indian captive centres as their primary challenge. accurate volume forecasting. automation tools. The captive's view on this is often diametrically opposite with most of them considering their productivity levels to be in the range of headquarters. it is interesting to note that best-in-class captives in India are seen to have higher productivity levels than parent organisations. Eliminating waste. While this suggests that there might exist a mismatch in expectations between the management of different locations.Low productivity of many captive centres is a hindrance. Most of the Tier 2 cities offer low-cost of living thus. A large number of technology parks are now coming up in Tier 2 cities which provide good tax incentives to R&D organisations Captives in India – Adding Value to Global Businesses . communication and basic facilities • Also medium to large IT-BPO organisations have significantly benefited from the local talent pool • Local governments have done well lately in order to promote their cities as R&D and IT services hubs as an alternative to the nearby well-established Tier 1 cities. Mysore and Madurai.MNCs are building development centres in Tier 2 cities in India as a business continuity plan 67 • Emergence of low-cost Tier 2 cities as an alternative to the Tier 1 cities for offshoring has opened gates for increased MNC investments • MNCs have set up centres in cities like Coimbatore. featuring as attractive locations. coupled with entertainment. Way Forward 68 Captives in India – Adding Value to Global Businesses . Open innovation network: Indian captive centres will play a key role in developing innovation network across emerging countries. contract negotiation/management and governance of third-party service providers across the globe. This will include programme management. Organisations with platform-based products will leverage the India centre to create ecosystem around their platforms and encourage the technical community to contribute to the platform initiatives. The incubation centres within their organisations will become a key source of ideas and products. BPO and engineering functions in India will allow organisations to experiment with new business models from the India centre. Global location support: India captive centres will increasingly support global locations outside of the headquarters for their IT. joint development with third-party service providers and also with technology start-ups in India. BPO and engineering needs. Global sourcing management: Competency in global delivery model and globalisation is moving towards the India centres.A number of trends are shaping the future of IT-BPO captives in India Product and business model innovation: Captive centres in India will focus on developing new products with emerging market and global relevance. The close proximity to Asia and other emerging locations will allow India centre to take a lead in supporting these locations. 69 Captives in India – Adding Value to Global Businesses . The presence of various IT. This will allow organisations to drive their globalisation initiatives from their India centre. This will include research partnerships with universities. This will also allow organisations to host headquarters of the new businesses from their India centre. Sales & Marketing and Procurement functions.Global leadership: Captive centres that have proved their capabilities will be given responsibilities to lead other global centres. Increased breadth of services: India captive centres will increase the breadth of services offered from India. The captive centres should consciously put themselves in the transformation journey to focus on innovation and leadership from India. The centres will continue to play a key role helping their parent organisations attain high level of operational efficiency. The services will expand to all support functions such as SG&A. HRO. This will allow these centres to become the key growth engine within their organisations. 70 Captives in India – Adding Value to Global Businesses . India centre leaders will also take up product leadership and business leadership roles within the organisation. Further. they built a LGT model. They built this team from ground up just like a new start-up. As a first step. poor sales of currently offered solutions. targets and metrics to fit the emerging markets Captives in India – Adding Value to Global Businesses . they customised the objectives. inability to achieve scale • GE took a robust approach to master this concept. basically shifting power to where the growth is centred. This team would directly report to senior management in the organisation • Accordingly they came up with an entirely new set of offerings for the emerging markets from ground up.000 and above and targeted at sophisticated hospitals in China - Too expensive for the market.GE has brought a new organisation model with a changed mindset to foster innovation from emerging countries • GE has mastered the concept of reverse innovation and is already reaping the benefits both in monetary and technology terms • The primary drivers for reverse innovation are: • 71 - Need to have low-cost products to scale and succeed in growth markets - Pre-empt competition from emerging giants in India & China The challenges faced by GE were: - Existing products – 1990s ultrasound priced at USD 100. radio in the Indian market that didn't require any batteries since it works on mechanical power through the movement of a rotary arm. this is a huge opportunity that no MNC can afford to miss Captives in India – Adding Value to Global Businesses . India team better understands the local customers and market needs • MNCs should capitalise on their advantage of being in an emerging market like India and motivate the teams here to take product ownership for local markets.72 • The impact was that GE could build a low-cost portable ultrasound priced between USD 15K to USD 100K which has produced revenues of greater than USD 200 million • Similarly. After widespread success in India. they have taken this product to developed markets and are gaining market share rapidly • Philips India introduced a crank up. This had huge success in the power-starved regions of the country. Leadership team should work towards allocating a percentage of the cost savings to build products for India. Moving forward. or free-power. many other MNCs are now looking at India for product and business model innovation • LG developed a low-cost air conditioner targeted at the Indian market. Philips is taking this product to its other markets in the Asia Pacific region • Teams at the India centre must act as catalysts to increase the organisations focus on emerging market opportunities. Through this model.Captives are now looking at various innovative business models for non-linear growth 73 • Captives are now making effective use of the ecosystem for creating innovative business models. The objective is to research and develop IPs for streamlining automated service processes Captives in India – Adding Value to Global Businesses . all the customer care calls are converted to prospective leads • Similarly IBM is leveraging the university ecosystem in creating services innovation. One of the computer manufacturing organisations collaborated with one the vendors to come up with an innovative business model. While ER&D/SPD organisations are looking to tap emerging market opportunities and drive business growth from India. Organisations can cross-leverage domain expertise and retain IP in-house. etc. Organisations are expected to get buy-ins from parent organisations and as a result. moving PMO ownership to India reduces overheads significantly. programme management of deliveries. This will help in better vendor leverage and also horizontal linkage of organisation/groups. 74 Captives in India – Adding Value to Global Businesses .The captive business model is expected to fundamentally change in the future. With local PMO. The dimension of becoming a profit centre varies significantly for ER&D/SPD and ITO/BPO categories. etc. captive centres in the future will look to impact the topline revenues of the parent organisation from India. As captive centres are maturing to take more global responsibilities. will witness transformation in their governance model and organisational structure.). and at the same time offer better talent management — with captives focusing on high value activity. captive centres are able to get higher quality work to captive centre by clearly defining outsourcing framework to move work to vendors. with captives taking up additional programme management roles and offering services to third-party clients. explore risk-reward models. Further. This strategy also helps organisations to build domain capability at the centre in the medium to long-term. reduce overheads to business. ITO/BPO captives are using the third-party service provider model to provide service to organisations outside the parent organisations as well. with captives emerging as profit centres and global sourcing organisations The future captive business model is expected to be substantially different from the current model. as a result of which both vendors and captives operate in silos. Currently PMO for most captives are located outside India (Singapore. Hong Kong. and they control the relationship between vendors and captives with headquarters. e. organisations have now started to look at Tier 2 universities for cost-effective collaborations Captives in India – Adding Value to Global Businesses . However. Start-up. Over 40 per cent of them have emerged in the online/web services space. i. Tier 1 universities offer a lot of scope for collaboration. This is currently confined to Tier 1 universities and institutes. Major MNCs are looking at acquiring these start-ups to enhance their knowledge base (IP) and to increase their product offerings • Universities: India provides a large opportunity for University-Industry partnership for research initiatives. India provides a three-dimensional connect with the ecosystem. at the same time.The flourishing Indian economy offers captives with a strong innovation ecosystem to network with (1/2) 75 • The biggest advantage that India provides for MNC is the ecosystem connect. With proven research capabilities. About 28 per cent of the technology start-ups are located in Bengaluru followed by Mumbai and NCR region. University and Service Provider Ecosystems • Start-Ups: India has large presence of young entrepreneurs in the technology domain. This has never been more apparent than now when many clients have benefitted from this flexibility. Also.The flourishing Indian economy offers captives with a strong innovation ecosystem to network with (2/2) 76 • Service providers: Service providers have worked for multiple clients and this has allowed them to build deep domain expertise in multiple technology areas that their clients can leverage without having to invest in building the domain expertise themselves. they are able to bring in efficiencies with respect to infrastructure utilisation and other aspects which helps them to provide cost advantages to MNC clients • Also. These models act as a win-win for all - Risk-reward pricing model: Risk-reward pricing models are being offered to clients where the relationship has reached a relative stage of maturity and vendors believe in the technology/ product concept and are willing to absorb a certain amount business model risk Captives in India – Adding Value to Global Businesses . service providers have now come up with various business models that would be of greater interest to MNCs - Outcome-based pricing model: Vendors have started to offer outcome-based pricing models to clients with whom they have had long standing relationships and where the product development had reached a stage where the outcome criteria can clearly be judged - Revenue sharing: Vendors are increasingly willing to accept revenue share as a possible pricing model to their clients on sustenance projects where they have confidence on managing costs. they have a scalable delivery model that allows them to scale up and scale down operations rapidly. Because of their large size of operations. job postings. support functions of various captives are being driven from here (1/3) 77 • Many organisations started their HR shared services centre in India with the primary objective of providing transactional services like employee record keeping. etc. These centres are able to provide support to all their global offices in APAC. thus helping the organisation become more cost-efficient Captives in India – Adding Value to Global Businesses . HRIS. the retained HR organisation is becoming a business partner in the true sense by being to focus on strategic issues of people and profit • These centres have become all the more critical because of the number of geographies they manage.With the increasing capability of the India centre. • The growth has been steady and now organisations are slowly moving up the value chain in terms of providing more complex services from their shared services organisation • The shared services centre are playing a critical role in providing the bandwidth that the HR organisation has in resolving critical issues. With the gradual maturity of these centres and increased productivity and performance. EMEA and North American regions. form submissions and documentations. With the increasing capability of the India centre. CA and Sydney • The centre comprises two different groups and has 1.300 FTEs • Financial Planning and Accounting (FP&A) – 200 FTEs. These centres have moved from performing basic processes like order management. collections. The second dimension of maturity for these centres comes from the number of geographies they handle. accounts receivables. to more complicated tasks like stocks and Six Sigma. while few others are handling all geographies from India centre Case Study 1 (Software Major) 78 • India centre supports around 110 countries across the globe for providing the finance back-office support • Shared Services Centre based in Bengaluru is one of the four shared services centres that support the organisation's internal operations. etc. forex payments. budgeting and reporting Captives in India – Adding Value to Global Businesses . Some of the shared services centres are now handling the entire APAC region. The other centres are in Dublin. provides internal services such as forecasting. etc. risk analysis. payroll. support functions of various captives are being driven from here (2/3) • Many organisations have established their F&A shared services centre in India. accounts payable. 79 • Shared Service Centre – 1.100 FTEs. there are about 9 different processes that are offshored in the F&A vertical Captives in India – Adding Value to Global Businesses . The first process to be offshored was order management • Today. provides transaction processing services covering revenue accounting and customer operations • The centre began its operations in 2002 with ~ 150 FTEs. With the increasing capability of the India centre. support functions of various captives are being driven from here (3/3) Case Study 2 (Automotive Major) 80 • The centre is a wholly-owned subsidiary of the parent organisation • It services the finance and accounting requirements of the organisation globally across 5 continents • Located in Chennai. it is involved in maintaining accounts payables. general ledger. reconciliation and other accounts of global businesses of the organisation Captives in India – Adding Value to Global Businesses . accounts receivables. topline growth is becoming increasingly important for organisations. and organisations have made significant progress in terms of maturity • However. India forms the core of emerging markets and organisations are now thinking of exploring these markets with India as the base • For this to happen. Microsoft. have prepared India bred global leaders to penetrate the emerging markets Captives in India – Adding Value to Global Businesses . BPO & ER&D globalisation in India has evolved at a rapid pace over the last 10 years. etc. Honeywell. TI. Intel.Senior management of many captives in India will figure in global leadership positions to represent emerging economies 81 • IT. CISCO. Many MNCs in India are now taking steps in terms of building global leaders out of the India centre • Organisations like GE. global leadership from India centres become imperative. application development. more complicated services around sales and marketing. Additionally. it will be characterised by increased depth of services. while over 25 captives increased their presence/scale of work in India. over 15 new captives were established in India.Captive growth in the future will be driven by increase in breadth of services and by first time outsourcing organisations As the captives industry in India matures. F&A services. India’s strong value proposition and leadership status in the captives industry is ensuring that it gets a substantial share of first time outsourcers. HRO and procurement are expected to see increased adoption. consulting and system integration. In 2009. While most of the captive services growth till date has largely been driven by customer interaction services. in the future. 82 Captives in India – Adding Value to Global Businesses . R&D functions. Appendix 83 Captives in India – Adding Value to Global Businesses . Captives Centres in India 84 • 2Wire • Allianz Cornhill Information Services • 3M • Altair Engineering • AT Kearney • ALTANA • ABB • Altera • ABN Amro Bank • Amazon • AC Nielsen • Amberpoint • Accton • AMCC • Acionyx technologies • AMD • Actix • Amdocs • ADC Telecommunications • American Express • Adeptia • American Megatrends • Adobe • Amgen • ADP • Amphenol-in • Advent Software • Analog Devices • Agilent Tech • Ansys • AIG Systems Solutions Pvt Ltd • ANZ • Airbee • AOL • Aircom • Apache Design Solutions • Airtight Networks • Apere • Airvana • Aperto networks • Ajuba • Applied Materials India Pvt Ltd • Akamai • Approva • Aker Solutions • Apptix • AKZO Nobel • Aquest systems • Albany Molecular Research • Arasan Chip Systems • Alcatel Lucent • Arbitron • Alcon Laboratories • Arcot • Alfa Laval • AREVA • Allergan • Ariba • Alliance semiconductor(Pulse core) • Aris Global Captives in India – Adding Value to Global Businesses . Ltd • Bank of New York • ASG • Barclays • Aspect • Barry-Wehmiller International Resources • AstraZenecea • BASF • Asyst Technologies • Bayer • AT&T • BDA Connect (India) Pvt. Ltd. • ATC Labs • Bearingpoint • Atheros Communications • Beceem communications • Atlas Copco • Bechtel • Atlas Legal Research • Becton and Dickinson • Atrenta • Bell Helicopter • Attachmate • Benq • Autodesk • Bentley Systems • Autonomy Intervowen • Berkley design Automation • Avaya • Biogen Idec • Aveksa • Bitstream • Avid • BMC Software • AXA • BMW • Axentis • BNP Paribas • AXIOM Design Automation • Boeing • Axtel • Bombardier Transportation • Aylus Networks • BorgWarner • Azilon • Borland • Azingo soft system (Celunite) • Bosch • Azul systems • Boston Analytics • BA Continuum Solutions Pvt Ltd • Boston Consulting Group Captives in India – Adding Value to Global Businesses .85 • ARM • BA systems • Arrow Electronics • Bain & Company India • Arvin meritor • Bakbone Software • ASAP Automation • Bally Technologies • Ascent Computing Group India Pvt. Paxonet Communications • Caterpillar • Consona Corporation • Cavium Networks • Continental Automotive Systems • Cbay Systems • Continuous Computing • CDC Software • Cookson Electronics • Cegedim • Cordys • Celestix network • Coreobjects • CGI Information Systems and Management Consultants Pvt Ltd • Cornet Technology Inc. • Charter Communications 86 • Corporate Executive Board • Cortina Systems Captives in India – Adding Value to Global Businesses .• BP • Chelsio Communications • Brightpoint • Chevron • Bristlecone • Ciba • Bristol-Myers • Ciena • British telecom • Cignex Technologies • Broadcomm • Cimatron • Brocade Communication • Cincom Systems • Brooks automation • CipherMax(MaXXan) • Brovis Wireless Networks • Cirrus Logic • CA • Cisco • Cadence • Citibank • CADS • Citrix • California Micro Devices • Clariant • Calypto Design • Colgate-Palmolive • Canon • CollabNet • Cantor-Colburn and Schwegman • COLT Technology Services India Pvt Ltd • Capco • Commvault • Capital IQ Inc (S&P Company) • Comodo Security • Cardinal Health • Comverse • Carl Zeiss • Connectiva Systems • Carrier • Connexant . Ltd • Dibcom • Emptoris Technologies • Diebold • Emulex( Acquired Arohi ) • Digibee • Eni • Digital Juice • Ensim • Digital Rapids 87 Captives in India – Adding Value to Global Businesses .• Coware • Divitas Networks • CR2 • D-link • Cradle Technologies • Dover Software • Craft silicon • Dow Chemical • Credit Suisse • Dun & Bradstreet Information Services India Pvt Ltd • Crimsonlogic • Cross-tab • Cumulus Systems • Cura Software Solutions • Curam Software • CXO Systems • Cypress Semiconductor • Daimler Chrysler • Dana • Danaher • Dassault Systems • Datacard Corporation • Datacraft • Datamonitor • DE Shaw • Dell • Delphi • Denali Design Systems • Denuosourc • Dupont • EADS Technology Center • Eaton Electrical • Ebix • Eclipsys • Effigent • EFI • Egon Zehnder Information and Research Services (EZIRS) • Elan • Electronic Arts • Eli lilly • Emagia • Embarcadero Technologies • Embedio • EMC • Emerging Memory Technologies • Emerson • Deutsche Bank • EmPower Research Knowledge Services Pvt. 88 • Enterasys • First Indian Corporation Pvt Ltd • Entercoms • FirstRain • Enterprisedb • Fiserv • Ericsson • Flowserve (Acquired by Ansys) • Ering Software solutions • Fluor Daniel • Ernst & Young • FMC • Esaya • Force 10 • Evalueserve • Ford • Everest Software • Forrester • Evolveware • Fortis • Evolving Systems • Foxfire Technologies • Evonik Degussa Corporation • Franconnect • Excelacom • Franklin Templeton • Exevo • Freescale semiconductor • EXFO • Frost & Sullivan • Experian • Fusion Technologies (India) Pvt Ltd • Extreme DA • Future techno designs • Extreme Networks • Gartner • F5 • GE • Facetime • Gemalto • Fair Issac • Gemstone • Fairchild Semiconductor • Genband • FastVDO • Genesis Microchip • Fiberlink • Genzyme • Fidelity • Gerson Lehrman Group • Financial Objects • Getronics • Fiorano Software Technologies • Giesecke & Devrient • Firetide • GlaxoSmithkline • First Apex • Global CMS • First Financial Bank • Global Graphics Software Captives in India – Adding Value to Global Businesses . 89 • Global Wireless Networks • Ikanos • GlobalEdge • Ikoa • GlobalRoads • Imagination Technologies • GM • Imaje • Goldman Sachs • Impelsys • Google • Impiger Technologies • Grailresearch • INA Bearings India • GrapeCity • iNautix Technologies • Gridstone Research • India Document Solutions Private Limited • GT Nexus • Indra Networks • GXS • Ineos • Haier • Infineon Technologies • Halliburton • Infinera Corp • Heidrick & Struggles • Infiniti Research • Hellosoft • InfoPro India Pvt Ltd • Henkel • Infor • Hewitt • Informatica • Hoerbiger • InfoSpace • Honda • Ingersoll rand • Honeywell (excluding Manufacturing) • Inmage • HP Labs • Innomedia • HSBC • Innvo Systems • Huawei • InsideView • Husco • Insilica Semiconductors • Hyundai Motor • Instancy (coulera) • IBM (ISL and Research Labs) • Intacct Software • IDC Market Research • Intec telecom Systems • Ideas • Intel • Iflect • Intelligent Business Systems (IBS) • Ihs • Intellinet Technologies Captives in India – Adding Value to Global Businesses . • Lancesoft • IntraSphere Information Technologies Pvt Ltd • Lexmark • Intuit • Invensys • Invitrogen • IP soft • Ipass • IPMG • Iron Mountain • iSOFT • ITT Corporation • Ixia • Jacobs Engineering Group • JDA • Jean martin • Johndeere • Johnson & Johnson • JP Morgan • Juniper Networks • Kaizen Global Services (India) Pvt. Ltd.• Intergraph Consulting Private Limited • Komatsu • Intersil • Konica Minalto • Intersystems • Kronos • Intoto Software (I) Pvt. • Kasenna • Kaseya • Ketera • Kirusa • KLA-Tencor • Kodiak Networks 90 • LG • Librato • Lifesize • Lime wire • Lockheed Martin • Lombardini • LSI Logic • Lubrizol • Magic Software • Magma Design Automation • Magna Steyr • Manage Engine (ZOHO Corporation) • Manhattan Associates • Markettools • Marvell • MathWorks • Matisse Networks • Maxim India Integrated Circuit Design • McAfee • McKinsey Knowledge Centre • Mears • Media Tek • Meinhardt • Mentor Graphics • Mercer Captives in India – Adding Value to Global Businesses . Ltd. 91 • Merck • Navteq • Merial • NCR • Meru Networks • NDS • MetricStream • Nektar Therapeutics • mFormation • Neo Accel • Microchip Technology • Neo Advisory • Micros • Nestle • Microsoft R&D • NetApp • Millipore • NetLogic Microsystems • Mindcrest • NetScout Systems • Mindspeed Technologies • NetXen • Mirrus Systems • Neural Technologies • Misys • Nexthop (U4ea) • Mitsubishi Chemical • Niksun • MobiApps • Nissan Motor • Modelytics • NMS Communications • Monsanto • Nokia • Montronix • Nokia Siemens • Morgan Stanley • Nortel • Motive • Novartis • Motorola • Novell • Movius Interactive Corporation • Novellus • Mportal • Novozymes • MSC Software • NTT Communications • Mylan • Nvidia • Nano-Tex • NXP • Narus • Nycomed • Naspers • OatSystems • National Instruments • Omnicell • National semiconductor • ON Semiconductor Captives in India – Adding Value to Global Businesses . 92 • Onskreen • Polycom • Open clovis • Poseidon Design Systems • Open Silicon • Pratt & Whitney • Opsource • Praxair • Oracle Relsys • Procter & Gamble • Oracle (iflex headcount included) • Progress Software • Osram • Prolifictechnologies • Pacemicro • Pronto networks • Packetmotion • Proxim Wireless Corp • Packetvideo • Prudential Process Management Services • Pangea 3 • Pulsecore Semiconductor • Parametric Technology Corporation • PwC • Patent Metrix • QAD • Paypal • QL2 • PDXpert PLM • Qlogic • Peerme • Qualcomm • Pegasystems • Qualcore Logic • Performix Solutions • Quantum • Perftrends • Quark • Peritus Software • Quartics • Perstorp • Quest Software • Pfizer • Quick Logic • Phaseforward • Quintum • Phillips • Qwest • Phoenix Technologies • R R Donnelley & Son • Piaggio Vehicles • Radiance • Pipal Research • Ramboll Company • Pitney Bowes Software • Rambus • Pliva • Razorgator • PMC-Sierra • RazorSight Captives in India – Adding Value to Global Businesses . Ltd. • Sinett • Saba • Sipera • Sabre Holdings • Sirf • Safenet • SKF AB • Sage Software • SkyMobileMedia • Samsung • Skyworks Solutions • Sandisk • Sling media • Sandvik • Smart Analyst • Sanmina-sci • Smartesting • Sanofi-Aventis • Smartstream • Sanovi Technologies • Snecma Aerospace • Sanyo • SOA Software • SAP Labs • Societe Generale • Sapient • Softbrands Captives in India – Adding Value to Global Businesses .93 • RBS • Sarnoff Corporation • Redhat • Sartorius • Redknee • SAS • Redpine signals • Savvion • RedPrairie • SCA • Renault Design • Schlumberger • Renault Nissan • Schneider Electric • Riversand • SCO Group • RM Education Solutions India Pvt Ltd • Scope International Pvt Ltd • RMI • Scorelogix India • RoamFree • Seaton India IT Pvt Ltd • Roamware • Sequence design • Rockwell Automation • Serus • Rockwell Collins • Sharp Software • Rolls-Royce • Shell Technology Center • S1 • Siemens • Saama Technologies (India) Pvt. • Software AG • SunGard • Solidcore • Supervalu • Solvay • Supportsoft • Soma Networks • Suzuki • Sonicwall • Swiss Re Shared Services (India) Pvt Ltd • Sonimtech • Sybase • Sonoa Systems • Sylantro • Sonus networks • Symantec • Sony • Symbian • Sony-Ericsson • Symyx Technologies • Sphera • Synchronoss • Spikesource • Synfora • Spirit AeroSystems • Syngenta • Spraying Systems • Synopsys • Spring board Research (acquired by Nova Capital Management in 2006) • Synplicity • Stadco • Starent Networks • Starnet networks • STMicroelectronics • Stoke • Strategicanalysis • Stream Processors • Strix Systems • Stryker • Sud-Chemie • Sumtotal systems • Sun Life • Sun Microsystems (now Oracle) • Sun Pharmaceutical 94 • Syntel • SYNYGY • Tallika Technologies • Tandberg • Target • Tata Johnson Controls Automotive Ltd • TCL • Telcordia • Telenity • Tellabs • Telsima • Temenos India Pvt. Ltd. • Tensilica Technologies • Teradata • Tesco Captives in India – Adding Value to Global Businesses 95 • Tessolve • TVinnovation • Teva Pharmaceutical • Tyco • TexTech • U4EA • Thales • Unilever • The Smart cube • United Online • Think3 designs • Utstarcom • Thompson Reuters • Vanu • Thomson Asia Ltd • Veeco • TI (Texas Instruments ) • Vendio • TIBCO • Ventura (India) Pvt. Ltd. • TietoEnator • Veraz networks • Tilcon Software • Verifone • Timesys • Verint • Timken • Verisign • TNS • Verismo Networks • Tomax • Verizon • Toshiba • Versant • Tosoh • Vestas • Toyota • Veveo • TPI • Vignette • Trane • VinChip Systems • Transwitch • Virage Logic • Transwitch Corporation • Virtela • Tribal Fusion • Visionics • Trilogy • Visteon • Trimble - @road • Vitalspring • Trivent Systems • Vitesse • Trivium • VividLogic • Tundra • Vmlogix • Turbolinux • Vmware Captives in India – Adding Value to Global Businesses • VocalTec Communications • Xilinx • Volvo • Xiotech • Vsoft • Xora • Vtlglobal • YagnaIQ • Waban software • Yahoo • Wells Fargo • Yamaha Motor • Whirlpool • Yodlee • Willis • Yokogawa • Wind river • Zebra Technologies • WinsInfotek • Zenta • Wyse Technologies • Zeon • Xalted Networks • Zilog • Xambala • Zmanda • Xchanging Technology Services (India) Pvt Ltd • Zscaler • Xerox • ZTE • Zylog Disclaimer: The above list of captives centres in India is non-exhaustive. Information in this list represents captives which were established in India prior to December 2009 96 Captives in India – Adding Value to Global Businesses in www. India T 91 11 2301 0199 F 91 11 2301 5452
[email protected] .nasscom.International Youth Centre Teen Murti Marg. Chanakyapuri New Delhi 110 021.