The Journey of Virtual Captive Centers Since Their Origin

Published on:
August 3, 2022
TransForm Solutions

Virtual captive centers are being recognized as an emerging trend. But their origin dates back decades. It was in the late 1980s that many progressive companies realised that they were unable to achieve global growth. It was due to their inability to plan properly and build a strategy for their business.

It was then that they understood the need for sub-optimal spans of management. They learnt that it was vital to set up their presence on a regional level to take care of the variety of tasks that would be performed by the locals on ground.

It all led to the establishment of full fledged shared service centres, which are referred to as captive centres today. However, there were many stepping stones during this entire journey. 

So, to address them in detail, we have curated this article where we have laid out the entire journey of the evolution of the virtual captive centers. 

How were companies operating before captive centers?

Historically, businesses operated from a certain location. It was just an option of trade that enabled them to expand their business beyond their location of operation. However it cost them a lot of money, irrespective of what they were earning with it.

As the years passed, these businesses realised that they were unable to respond quickly and consistently to their global customers. In the absence of the information of their global spend, they struggled to plan for or optimise revenue in business with global suppliers. They were left with stranded inventories overseas that had to be put on resale. 

It resulted in the decrease in overall efficiency of the supply chain. The need for country-based financial and organizational structures has begun to surge among businesses.

Birth of virtual captive centers

With all the struggles faced above, companies started looking out for ways to attain better operational control. The third-party service provider was an option on the table with low-cost and faster time to market. But it still didn’t give the management the control they were seeking.

It was then that virtual captive centres came into the picture, bringing all the benefits to the company. It gave them complete operational control with the cost benefits offered by the offshore third-party software services provider.

Companies are now able to work with a hybrid outsourcing model in which a third party vendor sets up a captive centre for them. Apart from this, the local third party vendor also provides the company with all the necessary technical infrastructure, office resources, talent, and more, while still giving full control over the management and everything to the client.

Captive outsourcing may look like it is the client's own office, but in reality it is fully maintained by the third party vendor.

Experts say: India is experiencing a rise in the popularity of virtual captive centres, and this could soon become a standard outsourcing model for the IT industry.

Why is the popularity of virtual captive centers rising in the IT industry?

The virtual captive centres have overcome all the challenges for the companies. Instead, they have provided significant advantages like enhanced effectiveness, improved internal control, and low-cost. To discuss in detail, we have listed down some mind blowing advantages of virtual captive centres for you.

1. Market fast

When companies partner with a local and experienced service provider, they can start their captive operations quickly. Don’t have to worry about any office infrastructure and other things needed.

2. Low risks

Companies can mitigate the risk of falling into legal trouble by keeping their trust in a third-party service provider. They are well acquainted with the local regulatory compliances and to make sure that your captive unit fulfills them all.

3. Transparent cost

The cost of valuation for virtual outsourcing is based on the cost plus model. It gives the client complete transparency over the operational expenses, vendor profit margins, and salary transparency.

In Conclusion

Many companies who were initially unsure about the virtual captive model have now adopted it after observing all the benefits it is bringing to their competitors in the IT market. The business control and ground for continuous improvement have further made it the first choice among companies.

If you are still looking for ways to have robust management in a foreign land, connect now, and we will get you started in no time. Our experts have extensive experience working with renowned organizations and helping them set up virtual captive centres in various countries.

Let’s begin a fruitful partnership

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