Surprising Benefits of Virtual Captive Centers for Your Business

Published on:
July 15, 2022
TransForm Solutions

The advent of technology and digitisation has popularised the concept of virtual captive centres. It has redefined the way in which global companies leverage exceptional talent across the world decision-making.

To understand how it is revolutionizing small and mid-sized businesses, we will walk you through its brief meaning, challenges, and benefits.

What is Virtual Captive Outsourcing?

Virtual Captive Centers outsourcing refers to your own center/campus in an offshore location. They are basically foreign subsidiaries set up by global corporations to serve the parent company. You can understand it as a part of the company regardless of its distance from the parent company.

They come as an ideal alternative to offering projects on a contract basis directly to an unrelated offshore provider.

In the past, Virtual captive centers (VCCs) had the sole aim of achieving cost arbitrage over the traditional outsourcing model. But over the years, they have become an integral part of the organization by leading mission critical innovation and delivery.

So before we move on to learn how captive outsourcing has made a difference for small and mid-sized businesses, let’s take a glance at the challenges they were facing prior to it becoming famous.

Challenges Faced Before Captive Model Outsourcing 

1. Inadequate financial knowledge 

With the lack of financial expertise, entrepreneurs end up making the wrong business decisions that lead to business failure.

2. Obstructions in approvals and regulations 

Delays in approvals, registrations, and more often keep businesses from expanding. In turn, it demotivates the entrepreneurs and their energy to keep things going.

3. Lack of trust

Often, due to the strict regulations of banks and financial institutions, it becomes difficult for small and mid-sized businesses to secure a loan. The loan lender refrains from any assistance to the businesses as the regulations stand as an obstacle for the business owners to meet the eligibility criteria.

Moreover, the institutions end up believing that they lack the capacity to repay.

4. Limited talent 

Organizations, while operating from one place, have access to limited talent. They remain deprived of the diverse talent pool across the globe.

These are a few of the difficulties that prevent small and medium-sized enterprises from growing. However, virtual outsourcing came as a page turner for such businesses and also brought in tons of benefits with it. Let’s get acquainted with them.

What are the Benefits of Virtual Outsourcing?

The captive model outsourcing is a hybrid business model that delivers higher value-added services while cutting down on the related costs. It provides an opportunity for such businesses to be flexible and ensure continuity in their operations.

Moreover, it comes as an ideal solution for enterprises that lack technical and financial knowledge or the size or maturity to establish their own center.

You must be wondering, is that all? Well, read on as the list of the benefits of virtual outsourcing starts here.

  • The parent company has maximum control over the delivery of the project as well as other parameters when it comes to risk and cost factors.

  • Cost transparency, control over resources and operations, and low risk are the added benefits of captive outsourcing.

  • It gives the client full control over the business even though a third party vendor sets up a captive centre on behalf of your company while providing you with all the necessary talent, office resources and technical infrastructure.

  • This hybrid business model helps you develop a real partner-like relationship between the client and service provider based on mutual confidence and trust.

  • It offers a faster time to market by taking advantage of the local service providers skills and expertise. 

  • With a highly skilled talent pool, you get the best return on information technology investment and can serve global and regional markets more efficiently.

  • You get to work alongside global teams as colleagues instead of suppliers, thus allowing you to make a direct and meaningful contribution on a global level.

In Conclusion 

Virtual Captive center is a refreshing take on the traditional captive center. It offers a plethora of advantages that have broken down the challenging obstacles for businesses. It has come out as a compelling business proposition for the clients looking for outsourcing endeavors. 

So, before we sum up, here's a quick recap on how this hybrid setup is turning the tides in favor of the businesses. 

  • It offers a transparent cost structure with total operational control.

  • You don’t have to spend a lot on capital investment, which can counterbalance the needed investment for process flexibility.

  • Quick adaptation and implementation speed help the business run without any interruptions.

  • Optional property ownership gives you a free hand in decision making.

With all that said above, if you are also looking to grow your business with a virtual captive delivery center, feel free to get in touch with us. We are on our toes round the clock to help you.

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