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Captives in India

Adding 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: research@nasscom.in
Website: www.nasscom.in

Copyright 2010

International Youth Centre, Teen Murti Marg, Chanakyapuri


New Delhi - 110 021, India
Phone: 91 11 23010199, Fax: 91 11 23015452
Email: research@nasscom.in

Zinnov Management Consulting Pvt Ltd.


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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-prot 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.
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any part of the report may be sent to NASSCOM.
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Captives in India Adding Value to Global Businesses

Foreword
The Indian IT-BPO industry has been the signicantly contributed to Indias growth story, contributing
over 9 per cent of incremental GDP growth in the last decade, impacting the lives of over 10 million people
through direct and indirect employment and inuencing the lives of many more.
Captive centres have played a key role in this phenomenal growth story, establishing proof of concept
and branding India as a global sourcing destination. This segment, miniscule till 2003, has witnessed
tremendous development in the last 7 years growing at a CAGR of 22 per cent, employing close to 4
lakh people and contributing to 1 per cent of India GDP. Their impact on India extends beyond revenues and
employment- playing a leading role in developing an R&D and product culture, spearheaded initiatives to
develop affordable products for emerging markets and created entrepreneurship opportunities.
While we talk about the impact on the Indian economy and specically the IT-BPO industry, captives have
been consistently adding value to their global businesses establishing the case to expand the capacities
and capabilities of the India centres. Consolidated operations, process expertise and efficiencies, faster
time-to-market, leveraging a seamless value chain are some of the key attributes being contributed by
them, not to mention the fact that in some cases even global leadership is being driven out of India. Further,
captives have been steadily moving up the value chain to deliver higher-end services across service lines.
IT captives are increasingly delivering high-end consulting services from India, BPO captives have been
instrumental in creating India as a delivery centre for high-end knowledge services; and ER&D captives are
taking on complete product ownership, competency creation and innovation roles.
The captive industry has its own set of challenges, which stems from the basic business model more than
anything else. Lack of a exible local strategy with limited decision making authority for local management,
stringent budgetary controls and the dictate to comply with global policies can cause inefficiencies to creep
in, but as highlighted in the report, it is important to note that best-in-class captives have been successful
in surmounting these obstacles to emerge pivotal for their global businesses.
Going forward, 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. However,
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.
This report is a rst-of-its-kind, providing an overview of the captives, detailed insights on industry trends,
growth drivers, assesses specic issues and challenges through case studies, and addresses future growth
opportunities. IT-BPO captives are an integral part of the industry, and NASSCOM and other stakeholders
are committed to the continued success of this segment. We trust you will nd this report useful, and we
welcome your feedback and comments.

Som Mittal
President
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Captives in India Adding Value to Global Businesses

Acknowledgements
This report was developed by NASSCOM, with research support from Zinnov, who conducted a
comprehensive six month study to understand the evolution of the Indian IT-BPO captives industry,
current business trends and future opportunities.
We would like to thank various people for their valuable contribution, without which this report would
not have been possible. First, we would like to thank all the captive member companies of NASSCOM,
who went out of their way to provide detailed statistics for their individual companies. We would like to
thank our Executive Council for their valuable counsel and guidance.
We would like to acknowledge the inputs from McKinsey & Co., TPI, Everest Research Institute, AT
Kearney, AICTE, Booz & Co., Cushman & Wakeeld, company websites, etc.
We would also like to thank the team from Zinnov for conducting this study. In particular, we would like
to thank Pari Natarajan, Chandramouli CS, Praveen Bhadada, Kartik Vittal, and Pranab Sen for providing
direction, and guidance to this research effort.
A special acknowledgement to the NASSCOM research team for their efforts and contribution towards
this report.

Captives in India Adding Value to Global Businesses

Executive Summary
Indian IT-BPO sector has grown signicantly over the last decade to contribute over 6 per cent of the
countrys GDP. The sector has helped the country in terms of revenue growth, employee generation
and value creation. 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, mission-critical
projects to customers across the globe using teams across multiple locations.
The Indian IT-BPO third-party service providers role in the industrys growth is well known. However,
the role of the MNC captive centres in India is often overlooked. Organisations such as Motorola, Texas
Instruments started their own centres in India very early in the evolution of the IT industry and have played
a signicant role in the evolution of the industry and the move towards value creation and innovation.
The MNC centres saw an explosive growth from USD 3 billion in FY2003 to revenues of USD 11.1 billion in
FY2010 has increased the contribution to IT-BPO industrys export revenue to 22 per cent. Today, there
are over 750 MNCs with captive centres in India which employ almost 4 lakh people.
The ER&D/SPD segment is the largest segment within the Indian captive landscape. It accounts for USD
4.9 billion in FY2011, almost 44 per cent of total captive revenues. It is followed by IT outsourcing at USD
3.4 billion, (30 per cent of total revenues) and the BPO captives generated the remaining 26 per cent, or
USD 2.9 billion. The ER&D/SPD segment employs 132,920 people, the IT services segment account for
135,306 employees and the remaining 124,799 people are employed by BPO captives.

Impact on India
MNC captive centres have done a phenomenal job in helping India achieve the global leader status in the
IT, BPO and R&D sectors. The captive centres account for over 1 per cent of Indias GDP, and support indirect
employment of 1.4 million people. Captive centres have played a signicant role in creating an innovation
ecosystem in India. They continue to play a key role in developing highly skilled talent, partnership with
universities, research collaboration with Indian organisations and showcase of Indias capabilities. The
captive centres have also brought the latest technologies to India that was otherwise unavailable. They
have implemented global management and process best practices at their India centres and helped in
spreading these practices in the location ecosystem. Over the last couple of years, these centres are also
focusing on creating India and emerging market-specic products. The success of these products will
signicantly help improve overall productivity in India.

Moving up the Value Chain


MNC captive centres were set up initially to take advance of the cost arbitrage in India. During the early
2000s, 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 cost and labour arbitrage were
the primary levers for the growth at the India centre till recently. The strong India value proposition
prompted these centres to grow rapidly. The average employee size of captive centres grew from 375
employees per captive in FY2003 to 575 employees per captive in FY2010.
During this period, the key focus was on process and delivery excellence. The centres were modelled
very similar to the third-party service providers and were structured to provide services to their global
centres. They were measured on their ability to deliver projects at lower cost, higher quality and on-time
delivery. The managers at these centres were resource managers with exceptional people management
6

Captives in India Adding Value to Global Businesses

skills with ability to manage large project teams. The project requirements often came from the global
headquarters. The India captive centres focused on project execution and delivery.
The IT captive centre focused on basic application development, maintenance and testing activities. The
BPO captives initially offered voice-based customer interaction and transaction services. The ER&D/SPD
centres focused on product sustenance and quality assurance activities. The centres also worked at lower
levels of maturity often in operational and engineering support models.
Over the last few years, MNCs have realised that India captive centres have lot more to offer than just
cost and talent arbitrage. 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.
Today, many of the captive centres have evolved in their maturity and operate as strategic partner to
their headquarters. Many IT centres have global leaders who run global IT operations from the India
centres. The captive centres have consciously focused on increasing business analysts, product managers,
programme managers, vertical/functional domain experts, technical architects and other functions at
the India centre. 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.
BPO captive centres have moved into models where they are able to create complex analytical models
to help measure and improve the business processes. Some of the BPO captive centres host global
leadership roles for complex processes in areas of F&A, HRO, Procurement, Banking and Analytics. 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 Indias total knowledge based services revenues.
The ER&D/SPD captive centres are focused on creating new products from their India centres. Many
of the organisations have set up incubation groups within their India centres. These groups research
and develop product concepts with emerging markets and global relevance. The successful innovations
from the incubation groups are transferred to the business units within the organisation to productise
these innovations.

Challenges
In spite of the success of the captive centres, they continue to face a number of challenges in terms of
cost, talent, innovation, productivity and business continuity. Many of the captive centres have however,
successfully resolved their challenges using industry best practices.
Cost: Cost escalation is been a key concern of the global stakeholders with captive centres in India. They
look at the compensation increase year-over-year and relate it to the overall cost increase at the India
centre. The operating costs during the period FY2007-10 is expected to have grown by 8 per cent. 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. A median captive has almost double the level of operating costs as a
best-in-class captive centre. The large difference in cost structure can be explained by the differences in
underlying practices being followed. Captive centres with optimal talent pyramid, maximum utilisation
of existing infrastructure, effective travel policy and use of local service providers have been able to
successfully address cost-related challenges.
7

Captives in India Adding Value to Global Businesses

Talent: Lack of experienced talent pool and high attrition are key talent-related issues faced by captive
centres. The transformation of the captive centres to value centres requires them to develop specialised
skills and domain expertise in a short duration. The lack of availability of this talent slows down the
transformation at some of the centres. Best-in-class captive centres have devised innovative strategies to
develop the talent through expat programmes, partnerships with universities, internal/external training
programmes and cross-centre mentorship programmes.
Attrition is a key issue at these centres as they do not have a concept of bench resources, often used by
services providers to reduce the impact of attrition. Closer analysis of the attrition issue throws up some
interesting facts best-in-class captives have an attrition rate that is signicantly lower than median
captives; compensation is not the only factor for attrition. Organisations that focus on job satisfaction,
career growth, constant employee communication, work-life balance are able to successfully manage
the attrition issues.
Productivity: Global stakeholders often cite the lower productivity from their India captive centres
as a key challenge. They perceive that the individual productivity at the India centre is lower than the
individual productivity at the headquarters. Expectation mismatch, communication and management
overheads, lack of travel, lack of customer access and micromanagement came out as the key reasons for
the difference in productivity. The average experience level of talent at developed geographies is higher
than in India and is misconstrued for lower productivity at the India centre. 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. The key drivers include talent development,
process optimisation, lab infrastructure, engagement models and automation.
Innovation: Innovation is one of the key focus areas for the Indian captive centres. Once the captive
centres started delivering end-to-end projects from their India centre, the expectation of the global
stakeholders moved from delivery quality to innovation and new ideas. The key constraints are: lack of
access to customers, lack of product management capability and evolving product development mindset
of engineers. The growth of the emerging markets is helping organisations solve the customer access
problems. Many captive centres now have direct access to customers in Asia Pacic. It gives them a
sample of the global customer requirements. 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. The innovations focused on emerging market and new business
models are getting more traction at the India centres.
Business continuity: Organisations with over 30-40 per cent of headcount for any function or business
unit are worried about business continuity. They look at other locations to expand their global footprint.
Many organisations have realised that most other global locations dont offer similar advantages as India
and are now looking at Tier 2/3 locations within India. We have seen cities such as Chandigarh, Nagpur,
Coimbatore become a preferred location for MNC to set up their second or third centre in India.

Way Forward
In FY2009-10, over 40 captives have either expanded operations or set up new centres in India. Almost
40 per cent of the new captives are ER&D/SPD focused, while the remaining are offering a mix of BPO
and IT services. India accounted for 33 per cent of total worldwide new captive announcements in Q1 2010
8

Captives in India Adding Value to Global Businesses

itself, 11 centres with planned investments of over USD 800 million. 5 of these planned captive centres
are in Tier 2/3 locations. 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 incubation centres within their organisations will
become a key source of ideas and products. The presence of various IT, BPO and engineering functions
in India will allow organisations to experiment with new business models from the India centre. This will
also allow organisations to host headquarters of the new businesses from their India centre.
Global sourcing management Competency in global delivery model and globalisation is moving toward
the India centres. This will allow organisations to drive their globalisation initiatives from their India
centre. This will include programme management, contract negotiation/management and governance
of third-party service providers across the globe.
Open innovation network Indian captive centres will play a key role in developing innovation network
across emerging countries. This will include research partnerships with universities, joint development
with third-party service providers and also with technology start-ups in India. 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.
Global location support India captive centres will increasingly support global locations outside of the
headquarters for their IT, BPO and engineering needs. The close proximity to Asia and other emerging
locations will allow India centre to take a lead in supporting these locations.
Global leadership Captive centres that have proved their capabilities will be given responsibilities to
lead other global centres. India centre leaders will also take up product leadership and business leadership
roles within the organisation.
Increased breadth of services India captive centres will increase the breadth of services offered from
India. The services will expand to all support functions such as SG&A, HRO, Sales & Marketing and
Procurement functions.
The captive centres should consciously put themselves in the transformation journey to focus on
innovation and leadership from India. 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.

Captives in India Adding Value to Global Businesses

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

The growth of captive offshoring market in India has been


phenomenal till date, with revenues of ~USD 11 billion in FY2010,
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 10.6 billion FY2009. It is
estimated to touch USD 11.1 billion by FY2010, or 4.8 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 signicantly grown over the last 5 years and currently has representation
from most of the verticals like Aerospace & Defence, Automotive, BFSI, Bio-Technology, Chemicals,
Computer Hardware, Education, Electronic/Electrical Equipment, Energy, Healthcare, Industrial,
Semiconductors, Software/Internet, and Telecommunications, etc.

Software, Semiconductor and Telecommunication verticals together contribute around 30 per cent
of the captive market size

Captives in India Adding Value to Global Businesses

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, Semiconductors, Telecom and Banking domains set up
their operations in India between the years 2003-06

Software, Semiconductor and Telecom domains still remain the main areas of interest for
captives, with growing concentration in Aerospace, Healthcare, Pharmaceuticals and
Biotechnology domains

Owing to the global economic scenario, India witnessed a dip in the number of new centres being
set up over the last 12 months

In the last 24 months, 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

North America and Europe happen to be the largest investors


in the captive space; 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. 38 per cent of these organisations are from the software vertical. Semiconductors
and telecommunications together contribute another 31.5 per cent

The next highest representation has been from Europe 17 per cent. The contribution from other
parts of the world like APAC, Japan, etc. has been minimal. However, organisations from across
the world have perceived India as a destination for multiple activities like IT outsourcing, BPO and
ER&D/SPD

Captives in India Adding Value to Global Businesses

More than 750 IT-BPO captives present in India with close to


400,000 employees

15

India boasts of a huge MNC presence with a strong base of 758 captives. This sector is largely
dominated by the presence of ER&D/SPD organisations. 84.5 per cent (641) organisations perform
ER&D/SPD-related activities from their captive centres

These captive centres have employed around 389,674 people in India. 38.5 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, 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

While the majority of captive centres are located in the top 6


cities, 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.
Most of the large centres started their rst centre in Bengaluru and slowly started to expand into
other cities

Today, most of the captive centres are located in the Top 5 cities (established IT hubs) of Bengaluru,
Mumbai/Pune, NCR, Hyderabad and Chennai. Bengaluru has been the hub for outsourcing for most
multinationals and has become the host for 381 organisations. There are about 103 centres in
Tier 2 cities

Captive centres prefer Tier 2 locations for expansion, business continuity reasons. 28 per cent of
the companies now have more than one location within India. 20 organisations have more than
5 centres in India

Few captives have considered Tier 2 cities for cost benet reasons. However, 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

The evolution of the captive landscape in India has been


supported by critical drivers such as abundant talent, low-costs,
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. At that time, 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 llip to the overall
growth of the industry between 2005-2007. The captive market size in FY2008 reached a whooping
USD 9.6 billion from USD 3 billion in FY2003

With the economic meltdown, though the landscape did not change drastically, there was a
slowdown in growth and cost arbitrage again became a major driver for organisations. Organisations
concentrated in becoming operationally more efficient

Organisations are now looking at driving innovation and transformation to create more value from
their India centres. They now understand the role of emerging markets for their products/services
in the future, and the advantage of being close to such markets

Moving forward, 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

As a result, the captive landscape is starting to show signs of


maturity across multiple activities, 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. Organisations
in this space have moved from being a pure cost arbitrage centre to an innovation centre. Also,
many organisations now have global leaders operating from these centres

India will witness rapid growth in services like technical/customer support, professional services,
nance and accounting. Many organisations have established their F&A shared services centres in
India to support all geographies

However services like Sales & Marketing, HR, Procurement & Logistics, etc. are in the emerging
phase and will take time to reach the next level of maturity. Most of the work carried out in these
service lines are transactional in nature. Also in Sales & Marketing, due to customer disconnect,
the work is currently limited to doing collaterals and documentation, though is changing rapidly.

Captives in India Adding Value to Global Businesses

Successful captive units have migrated along two, often


overlapping paths enhanced value or efficiency

19

Sustainable captives in India have migrated along two, often overlapping paths enhanced value or
enhanced 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, while incrementally
increasing economic efficiency without disrupting current delivery model, e.g. 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. They have mature processes,
strong internal measurements and controls, and achieve a high degree of standardisation and
automation. They encourage a culture of thrift across the organisation

Captives in India Adding Value to Global Businesses

Improving operational excellence has been key focus for captives


in India

20

In the past, IT-BPO captives used a plethora of frameworks and guidelines, myriad operational
assessments and improvement techniques. Organisations measured their performance on the
basis of key operational metrics such as utilisation, attrition and FTE costs. Lack of communication
and focus on organisation led to silo approach in operational improvement strategies, as a result
of which they were ineffective

Now, captives have a consolidated approach that organisations inputs from the onshore customers
and the offshore operations teams across all operating areas, on metrics as well as underlying
practices. More value can be unlocked if both offshore organisations and clients strive for end-to-end
project and process optimisation. This would require that they jointly dene a common operations
assessment and improvement framework

Captives in India Adding Value to Global Businesses

Captives have made a signicant impact on India, and on


global business

21

Over the years, captives have played a stellar role in making India the global leader in the
IT-BPO outsourcing landscape. Captives today account for over 1 per cent of Indias GDP, and support
indirect employment of 1.4 million people

Captives have played a key role in creating brand India as a global sourcing destination, 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, the captive drive towards higher value work has enabled the availability of
highly skilled manpower for the entire industry, and made India a hotbed for process expertise
and efficiencies.

Additionally, captives are playing a major part in developing India and other emerging
markets-specic products out of India, in addition to promoting entrepreneurship opportunities

Captives in India have added signicant value to parent organisations not only through cost savings
and access to talent, also by increased process efficiencies across geographies, leveraging the
24/7 value chain, leading to faster time-to-market of solutions and products, establishing global
best practices, and spearheading efforts to penetrate emerging markets

Captives in India Adding Value to Global Businesses

IT Captive
Landscape

22

Captives in India Adding Value to Global Businesses

IT captives have experienced the fastest growth in India in the


past 4 years

23

The captive IT services market has increased from USD 0.9 billion in FY2003 to USD 3.2 billion in
FY2009 with a CAGR of around 21 per cent

There were about 45 captives in this segment before the year 2000. Exponential growth has been
observed during 2002-2007; when close to 80 captives were set up in this segment alone. At present,
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, Retail, Software,
Semiconductors, Telecommunications, Electronic/Electrical Equipments, Energy, Industrial, etc.

High talent pool availability for IT services, primarily due to the talent pool generated by the growth
of service providers in India, 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 38.5 per cent of the total IT captives in India, followed by BFSI
which contributes around 17 per cent

Captives in India Adding Value to Global Businesses

BFSI, 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, 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, system integration to IT consulting

Only 18 per cent of the total IT captive centres in India have a headcount of more than 1,000 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

Though North America accounts for the majority of the captive


centres, 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. 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, they contribute 34 per cent to the
market size

153 captives have set up 300 centres across different cities in India like Bengaluru, Pune, Mumbai,
Hyderabad, NCR, etc.

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, application development, Infrastructure
Management Services (IMS), 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. 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. This sector makes up 34 per cent of the
market size

IMS forms the third major focus area and providing services like database administration, web
operations, desktop management, service desk, incident management, etc. 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. Organisations who are ahead in the offshoring maturity curve like Oracle, SAP, etc. 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

IT captives are increasingly using their India delivery base to


offer services beyond application development such as testing,
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. 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; captives are starting to leverage hybrid models (with vendors) to cross
leverage capabilities
Technology disruptions such as cloud/SOA allows a level playing eld 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, which account for more than 20 per cent of the global
headcount, the growth in terms of headcount ramp-up has been slow. 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 ows

Captives in India Adding Value to Global Businesses

The recent acquisitions by Dell, Xerox, etc. have established the fact that organisations globally
are moving towards increase in percentage contribution of services revenue. With this changing
phenomenon, the importance of professional services is increasing rapidly

As the talent pool required for professional services is similar to IT, we can expect growth of this
function in captive model
Further, the growth of Indian service providers in this space has created a vast pool of talent in
areas such as implementation services, migrations/upgrades, sustaining services, etc.

28

Captive Landscape in India

Captive centres in India are aggressively being leveraged to provide


Infrastructure Management Services to the parent organisation

29

IMS is fast catching up. 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, capabilities, etc.) required for IMS function are similar to level
3 technical support

Shared model has emerged in IMS where activities such as desktop support, application services
are being outsourced to vendors while activities such as information security, 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. However, this is still a nascent phenomenon. 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

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.
Organisations have built strong expertise in this space and are world leaders

However, organisations are now looking at cloud-based solutions for automating testing.
Organisations are coming up with business model innovations enabling exible and standardised
testing processes

In the previous model, captives had to plan for dedicated resource allocation and create an entire
plan for the testing processes. As the testing practice has matured and been commoditised,
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, challenges and
customer pain points are very well-understood. Such systems generally have pre-built scenarios,
powerful analytical engines with search engines to search for relevant test cases. 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

BPO Captive
Landscape

31

Captives in India Adding Value to Global Businesses

Over 100 captives use India as a delivery base for a wide range of
BPO services, generating revenues of USD 2.8 billion in FY2010

32

The Indian BPO captive market forms 25.4 per cent of the total captive market size. When compared
to the IT or ER&D/SPD captive segments, the growth in BPO segment has been steady from USD
1.1 billion in FY2003 to USD 2.7 billion in FY2009. In terms of the number of captives offering such
services, there has been an increase from 26 in FY2000 to 113 in FY2009

The BPO market is well-represented from all verticals like software, research/consulting, BFSI,
telecommunications, etc. 30 per cent of the captives carry out research/consulting activities for
their parent organisations.

Organisations are increasingly realising the advantages of having BPO captives. Big organisations like
Dell have set up knowledge-based services teams to provide business intelligence to headquarters.
These teams would play a diligent role in collecting data from across the organisation to help
business units in making strategic decisions. Many organisations now have dedicated knowledge
teams for their HR, F&A activities. For e.g., a dedicated knowledge team for HR can help in providing
on-time data like projected attrition, expected requirement for new candidates, etc. for decisionmakers in a faster and simplied manner. This would help in proactively shaping or changing
strategies and better prepare for future issues that need to be addressed.

Captives in India Adding Value to Global Businesses

BFSI, 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 1,250 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

Though most of the BPO captive centres are spread across top
5 locations in India, 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, Pune, Bengaluru,
Chennai, Hyderabad, NCR, etc.

Mumbai being the nancial capital of India, has attracted 58 captives to set up their operations in
this location. This is followed by Bengaluru and the NCR

Captives in India Adding Value to Global Businesses

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), Customer interaction services, Knowledge-based services, Sales & Marketing, HR and
Procurement & Logistics

F&A forms the major focus area for 27 per cent of the captives in India. This is majorly dominated
by large players in the BFSI segment like American Express, Bank of America, Citibank, Fidelity, JP
Morgan, Goldman Sachs, etc.

Knowledge-based Services form the focus area for 19 per cent of the captives. This space is
dominated by players from BFSI and research/consulting. A T Kearney, Bain, McKinsey, Gartner,
Forrester, 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,
a signicant chunk of global high level L3, L4, L5 support for hi-tech companies is delivered
from India

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, utilities & healthcare verticals

India is seeing rapid growth in the F&A offshoring segment. 31 per cent of the various processes
in the F&A segment have high propensity for offshoring to captive centres in India. Around
42 per cent of the processes have medium propensity of offshoring

With good availability talent pool, 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

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, payroll and recruiting & staffing are the most
offshored functions to the India centres

Increasingly organisations of relatively smaller size (Headcount ~ 9,000; Sales; USD 3-5 billion) are
also outsourcing their HR processes to India

Captives in India Adding Value to Global Businesses

Within inside sales value chain, lead generation and requirement


analysis sub-processes have higher propensity to be offshored

38

Planning & identication, lead generation and requirement analysis & fulllment 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, and help them with product information

The major drivers for offshoring of inside sales functions to India include large talent pool, time
zone advantage, 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

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 Electrics 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 worlds top ISVs including Microsoft, Oracle and SAP have their R&D centres in India.
These R&D centres have achieved signicant 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

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, telecommunications, semiconductors, industrial, automotive, aerospace, defence, etc.

31 per cent of the captives in this segment are from the software vertical. 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. 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. These centres form a signicant portion of the global R&D headcount and share
a high amount of product ownership and responsibility with their parent organisation. And hence,
there is a greater percentage of innovation happening from these centres.

The ER&D/SPD segment employs over 1.1 lakh employees, with the software/internet segment
accounting for the biggest share, around 28 per cent of the total base

Captives in India Adding Value to Global Businesses

While Bengaluru continues to be the key hub for


engineering-related activities in India, other locations such as NCR
and Mumbai/Pune are fast catching up

43

Unlike the IT and BPO markets, in the ER&D/SPD market the revenue contribution is well-represented
by organisations in North America, 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 69.4 per cent to the market size in 2009

641 captives have set up 868 centres across different cities in India like Bengaluru, Mumbai, Pune,
Chennai, Hyderabad, NCR, etc.

Bengaluru hosts 313 captive centres in this segment, 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. Pune is expected to grow in SPD and ER&D while Delhi/
NCR is expected to grow in embedded systems capabilities.

Moving forward, large organisations will plan the operation of their second centre to tap talent
that is unwilling to relocate. The second centre will help strengthen business continuity plans. Also,
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

Captives focused in the embedded, as well as the engineering


services market

44

The major focus areas for the ER&D/SPD captives in India are Embedded Systems, 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, testing and support activities are the functions most commonly offshored
to India. However, with increasing maturity of R&D centres product management, architecture
design will soon be making inroads. Organisations such as Adobe has successfully conceptualised,
developed and released products like Page Maker from India centre

Also with the increasing awareness about the emerging markets, organisations will command more
product ownership from India centres for creating localised products. This will also help in driving
innovation thus creating more value for the organisation

Captives in India Adding Value to Global Businesses

Despite challenges, 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, slow growth in developed markets and increased focus on emerging markets has
fundamentally changed the paradigm. 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, organisations are now looking at ways beyond
these to add higher value

ER&D captives are now increasingly focusing on competency creation; focus on increasing maturity
of the centres, etc.

Captives in India Adding Value to Global Businesses

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, organisations
are looking at various growth themes for their India centres. Broadly, the growth themes focus
on building products for emerging markets, innovation, localisation, 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, e.g. Texas instruments, CISCO, Microsoft, etc.

Captives in India Adding Value to Global Businesses

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-specic 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

Dene 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 edged 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

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. Providers in India both third party and captive have
responded well to these demands, thus creating a role model which others are trying to replicate. 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, large scale contracts and product/service
design capabilities thus including the benets of cost, quality and innovation.
Today, 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.
This expansion has turned Indian IT locations into hubs of the global offshoring universe with more
spokes reaching out to increasingly diverse locations.
This industry has built a unique 'service-led' export-oriented model away from the traditional
product-based play. Cost effective and high reliable delivery model of caters to the core process of
its customers across the globe. The emergence of the Indian domestic market has also attracted
organisations to set up operations that focus on developing solutions for emerging markets.

50

Captives in India Adding Value to Global Businesses

India continues to hold onto its position as the leading and cost
efficent provider of talent

India continues to be the most nancially attractive location for offshored services across the world.
While a number of Asian countries offer competing services, in addition to locations in Eastern Europe
and South America, service delivery from Tier 1 centres in India still works out to be signicantly lower.
Tier 2 centres in India offer a further 20-30 per cent reduction in the operating costs.
Availability of skilled talent has been the foremost attraction for India to emerge as a global sourcing
country. Indias graduate out-turn has more than doubled in the past decade. It is steadily adding fresh
graduates to the workforce 3.7 million in FY2010.
Technical graduate out-turn, comprising engineering degree (4-year programmes) and diploma/
MCA students (3-year programmes), is expected to be over 571,000. Graduate out-turn across other
non-technical streams including science, commerce and arts is expected to cross 3.1 million.

51

Captives in India Adding Value to Global Businesses

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 Software Technology Parks of India (STPI) scheme was crucial to the development of the
industry, the Special Economic Zone (SEZ) scheme is creating investment, employment, exports and
infrastructural development. Further, the development of Tier 2/3 locations in India offer a signicant
cost advantage.
The telecom revolution in India has led to average call rates decreasing by 70 per cent, handset prices
by 50 per cent, 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.
Today, Indian telecom ranks amongst the largest and the fastest growing markets in the world, adding
over 10 million wireless subscribers a month.
Similar explosive growth has taken place in the real estate sector. The ability of private developers
to quickly adopt world-class standards (large oor-plate designs, energy efficient designs, etc.) has
ensured that supply of Grade A infrastructure has always met the demand.

52

Captives in India Adding Value to Global Businesses

India presents an enormous market in itself, with a rapidly


growing economy and increased demand from the burgeoning
Indian middle-class

India has become, (in Purchasing Power Parity terms), the fourth largest economy in the world leading
to global organisations customising products/services for the Indian markets.
Indias economic growth has accelerated signicantly over the past two decades resulting in an increase
in the spending power of its citizens. Real average household income has roughly doubled since 1985.
With rising incomes, household consumption has soared and a new middle-class has emerged. It is
expected that India will go through a major transformation over the next decade and emerge as the
fth largest consumer market provided it continues its high growth path. As incomes rise, 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 Indias middle-class will swell by 17 per cent in terms of number
of households.
This will lead to a signicantly different socio-economic structure in India with declining poverty
levels and increasing income levels. In the next 5 years, the number of rich people in India is expected
to double, while the middle-class is expected to grow by 50 per cent. While much of this wealth will
be created in the urban areas, rural households will benet too. Indian spending patterns will also
evolve with basic necessities declining in relative importance and categories such as communication
and healthcare growing rapidly. But in order to achieve these results, the country must continue to
reform and modernise its economy as well as address signicant shortfalls in its education and
infrastructure systems.
53

Captives in India Adding Value to Global Businesses

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. 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. Apart from identifying a leader for innovation in their organisation, they have introduced
several organisation-wide internal initiatives to create a rich environment which encourages employees
to innovate. Thus, organisations are seeking to utilise their own domain experience, gained over the
last two decades, to generate business impact for clients through innovation.
The drive to create core intellectual property has meant that the larger organisations have set up
in-house research labs for applied research. They are also increasingly integrating with the academia
on research projects at the institutes as well as having academicians consult them. Thus, innovations
on core technology are now being generated as opposed to a predominant focus on process innovation
in the past. Further, even innovations to internal process have been led by the development of core
technology. There has been several instances of IP creation by Indian organisations, along with
substantial work in new technology development, model and process innovation.

54

Captives in India Adding Value to Global Businesses

Challenges for
Captives

55

Captives in India Adding Value to Global Businesses

The captive business model has inherent challenges

In spite of the success of the captive centres, they continue to face a number of challenges in terms
of cost, talent, innovation, productivity and business continuity. Many of the captive centres have
however, successfully resolved their challenges using industry best practices.
Cost: Cost escalation is been a key concern of the global stakeholders with captive centres in India.
Captive centres with optimal talent pyramid, maximum utilisation of existing infrastructure, effective
travel policy and use of local service providers have been able to successfully address cost-related
challenges.
Talent: Lack of experienced talent pool and high attrition are key talent-related issues faced by captive
centres. Best-in-class captive centres have devised innovative strategies to develop the talent through
expat programmes, partnerships with universities, internal/external training programmes and crosscentre mentorship programmes.
Productivity: Global stakeholders often cite the lower productivity from their India captive centres
as a key challenge. They perceive that the individual productivity at the India centre is lower than
the individual productivity at the headquarters. 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. The key drivers include talent development, process optimisation,
lab infrastructure, engagement models and automation.

56

Captives in India Adding Value to Global Businesses

Innovation: Innovation is one of the key focus areas for the Indian captive centres. The key constraints
are: lack of access to customers, lack of product management capability and evolving product
development mindset of engineers. The growth of the emerging markets is helping organisations
solve the customer access problems. Many captive centres now have direct access to customers in Asia
Pacic. It gives them a sample of the global customer requirements. 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.
Business continuity: Organisations with over 30-40 per cent of headcount for any function or business
unit are worried about business continuity.

57

Captives in India Adding Value to Global Businesses

Operating cost ination has been tempered by the recession;


best-in-class captives have maintained exemplary control over
operating costs

Rising operating costs are cited as a key deterrent to Indias competitiveness by industry players.
Captives need to follow global standards in technology, infrastructure and processes that can lead to
inated costs. Operating costs during the period FY2007-10 is expected to have grown by 8 per cent.
While the economic recession again cushioned the rise somewhat in the past year, overall operating
costs are expected to grow further in the future.
Again, in-depth analysis of operating costs between best-in-class and median captives show the
existence of a wide gap in terms of costs. A median captive has almost double the level of operating
costs as a best-in-class captive. The large difference in cost structure can be explained by the differences
in underlying practices being followed. Captives with a sound talent management plan hiring people
with the right skills, setting correct job expectations and creating visible career paths, leading to lower
attrition at lower compensation levels, providing a 35 per cent operating cost advantage. Similarly,
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. Lastly, improving management
infrastructure to increase the span of control and lower support headcount can give an additional
25 per cent cost advantage.

58

Captives in India Adding Value to Global Businesses

Though there has been periodic increases in salaries, cost savings


are still signicant 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.g. 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.e. 6 to 12 months which helps in
understanding the product context

Dene the success of HQ leader based on the number of engineers who he/she has mentored and
trained in the dened 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

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).
In this scenario, 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

While high attrition levels are a challenge, 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, and do not hire extensively from campus. While attrition
levels peaked in FY2007, the advent of the economic recession reduced attrition levels to manageable
proportions. Even then, a closer analysis of the attrition conundrum throws up some interesting
facts:

Best-in-class captives have an attrition rate that is signicantly lower than median captives

Compensation is not the only factor for attrition

Further analysis showed that best-in-class captives, that had lower attrition, were also paying lower
wages. This was possible because they focused intensely on employee engagement. These organisations
successfully cross-skilled people, dened explicit career tracks for them, groomed them into leadership
positions, actively worked on retaining team leaders. These measures bind the employees emotionally
to the organisation induce them to build long-term careers with the organisation.
Thus, captives that have robust career management plans have successfully managed the attrition
problem in India.

62

Captives in India Adding Value to Global Businesses

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. However, 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. Hiring practices, reporting structures, titles, job descriptions,
norms for working relationships, and power balances between functions all should be evolved to
support globalisation

Shift power to where the growth is: Without autonomy, the local growth teams wont be able
to focus on the problems of customers in emerging markets. Specically, they need the power to
develop their own strategies, organisations and products

Customise objectives, targets and metrics: Innovation by nature, is uncertain. Its more important
to learn quickly by efficiently testing assumptions than to hit the numbers. 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

64

Have local growth teams report to someone high in the organisation: The executive overseeing the
LGT has 3 critical roles: mediating conicts between the team and the global business, connecting
the team to resources such as global R&D centres, and helping take the innovations that the team
develops into rich countries. Only top managers have the access to experiment with people transfers,
organisational 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, infrastructure, and sustainability needs, reverse innovation must be
zero-based. These wide differences cannot be spanned by adapting global products

Captives in India Adding Value to Global Businesses

Captive organisations will need to identify multiple 'innovation


themes'; different sources and enablers of innovation

As captives look beyond labour arbitrage, need for innovation is emerging as the dominant theme for
captive expansion in the future. While in the past, organisations struggled with execution-related
challenges, such as lack of senior management focus, innovation frameworks, talent and nancial
investments, 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, assigning responsibilities, and incentivising teams. Key innovation enablers include research
labs/Centres of Excellence (CoEs) focusing on innovation, tools, workshops and symposiums, and
organisational changes redening focus on innovation. Innovation ideas can be sourced from customer
demands and experiences, internal brainstorming and collaboration with third-party advisors.
Innovation ideas are centred around themes such as offerings for emerging markets, improving user
experience and new business models.

65

Captives in India Adding Value to Global Businesses

Low productivity of many captive centres is a hindrance, 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.
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. While this suggests that there might exist a
mismatch in expectations between the management of different locations, along with lack of effective
communication channels, it is interesting to note that best-in-class captives in India are seen to have
higher productivity levels than parent organisations, which means that this is a challenge that can be
overcome if right processes are put in place.
Eliminating waste, accurate volume forecasting, automation tools, 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

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, Mysore and Madurai. Most of the Tier 2
cities offer low-cost of living thus, featuring as attractive locations, coupled with entertainment,
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. 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

Way Forward

68

Captives in India Adding Value to Global Businesses

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 incubation centres within their organisations will
become a key source of ideas and products. The presence of various IT, BPO and engineering functions
in India will allow organisations to experiment with new business models from the India centre. This
will also allow organisations to host headquarters of the new businesses from their India centre.
Global sourcing management: Competency in global delivery model and globalisation is moving towards
the India centres. This will allow organisations to drive their globalisation initiatives from their India
centre. This will include programme management, contract negotiation/management and governance
of third-party service providers across the globe.
Open innovation network: Indian captive centres will play a key role in developing innovation network
across emerging countries. This will include research partnerships with universities, joint development
with third-party service providers and also with technology start-ups in India. 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.
Global location support: India captive centres will increasingly support global locations outside of the
headquarters for their IT, BPO and engineering needs. 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

Global leadership: Captive centres that have proved their capabilities will be given responsibilities
to lead other global centres. India centre leaders will also take up product leadership and business
leadership roles within the organisation.
Increased breadth of services: India captive centres will increase the breadth of services offered from
India. The services will expand to all support functions such as SG&A, HRO, Sales & Marketing and
Procurement functions.
The captive centres should consciously put themselves in the transformation journey to focus on
innovation and leadership from India. 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.

70

Captives in India Adding Value to Global Businesses

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 benets 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 100,000 and above and targeted at
sophisticated hospitals in China

Too expensive for the market; poor sales of currently offered solutions; inability to
achieve scale

GE took a robust approach to master this concept. As a rst step, they built a LGT model,
basically shifting power to where the growth is centred. They built this team from ground
up just like a new start-up. 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. Further, they customised the objectives, targets and metrics to t the emerging markets
Captives in India Adding Value to Global Businesses

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, 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. 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, or free-power, 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 had
huge success in the power-starved regions of the country. Philips is taking this product to its other
markets in the Asia Pacic region

Teams at the India centre must act as catalysts to increase the organisations focus on emerging
market opportunities. Leadership team should work towards allocating a percentage of the
cost savings to build products for India. 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. Moving forward, this is a huge opportunity
that no MNC can afford to miss

Captives in India Adding Value to Global Businesses

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.
One of the computer manufacturing organisations collaborated with one the vendors to come up
with an innovative business model. Through this model, all the customer care calls are converted
to prospective leads

Similarly IBM is leveraging the university ecosystem in creating services innovation. The objective
is to research and develop IPs for streamlining automated service processes

Captives in India Adding Value to Global Businesses

The captive business model is expected to fundamentally change


in the future, with captives emerging as prot centres and global
sourcing organisations

The future captive business model is expected to be substantially different from the current model,
with captives taking up additional programme management roles and offering services to third-party
clients. Currently PMO for most captives are located outside India (Singapore, Hong Kong, etc.), and
they control the relationship between vendors and captives with headquarters, as a result of which
both vendors and captives operate in silos. As captive centres are maturing to take more global
responsibilities, moving PMO ownership to India reduces overheads signicantly. This will help in better
vendor leverage and also horizontal linkage of organisation/groups. With local PMO, captive centres
are able to get higher quality work to captive centre by clearly dening outsourcing framework to move
work to vendors, explore risk-reward models, programme management of deliveries, reduce overheads
to business, etc. This strategy also helps organisations to build domain capability at the centre in the
medium to long-term. Organisations can cross-leverage domain expertise and retain IP in-house, and
at the same time offer better talent management with captives focusing on high value activity.
Further, captive centres in the future will look to impact the topline revenues of the parent organisation
from India. The dimension of becoming a prot centre varies signicantly for ER&D/SPD and ITO/BPO
categories. While ER&D/SPD organisations are looking to tap emerging market opportunities and
drive business growth from India, ITO/BPO captives are using the third-party service provider model to
provide service to organisations outside the parent organisations as well. Organisations are expected to
get buy-ins from parent organisations and as a result, will witness transformation in their governance
model and organisational structure.
74

Captives in India Adding Value to Global Businesses

The ourishing 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. India provides a
three-dimensional connect with the ecosystem, i.e. Start-up, University and Service Provider
Ecosystems

Start-Ups: India has large presence of young entrepreneurs in the technology domain. About 28
per cent of the technology start-ups are located in Bengaluru followed by Mumbai and NCR region.
Over 40 per cent of them have emerged in the online/web services space. 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. This is currently conned to Tier 1 universities and institutes. With proven research
capabilities, Tier 1 universities offer a lot of scope for collaboration. However, at the same time,
organisations have now started to look at Tier 2 universities for cost-effective collaborations

Captives in India Adding Value to Global Businesses

The ourishing 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. Also, they have a scalable delivery
model that allows them to scale up and scale down operations rapidly. This has never been more
apparent than now when many clients have benetted from this exibility. Because of their large
size of operations, 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, 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 condence on managing costs.
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

With the increasing capability of the India centre, 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, job postings, HRIS, form submissions
and documentations, etc.

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, the retained HR organisation is becoming a business partner in the
true sense by being to focus on strategic issues of people and prot

These centres have become all the more critical because of the number of geographies they
manage. These centres are able to provide support to all their global offices in APAC, EMEA and
North American regions, thus helping the organisation become more cost-efficient

Captives in India Adding Value to Global Businesses

With the increasing capability of the India centre, support


functions of various captives are being driven from here (2/3)

Many organisations have established their F&A shared services centre in India. These centres have
moved from performing basic processes like order management, collections, accounts payable,
accounts receivables, etc. to more complicated tasks like stocks and Six Sigma, payroll, risk analysis,
forex payments, etc. The second dimension of maturity for these centres comes from the number
of geographies they handle. Some of the shared services centres are now handling the entire
APAC region, 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 nance back-office
support

Shared Services Centre based in Bengaluru is one of the four shared services centres that support
the organisation's internal operations. The other centres are in Dublin, CA and Sydney

The centre comprises two different groups and has 1,300 FTEs

Financial Planning and Accounting (FP&A) 200 FTEs, provides internal services such as forecasting,
budgeting and reporting

Captives in India Adding Value to Global Businesses

79

Shared Service Centre 1,100 FTEs, provides transaction processing services covering revenue
accounting and customer operations

The centre began its operations in 2002 with ~ 150 FTEs. The rst process to be offshored was
order management

Today, there are about 9 different processes that are offshored in the F&A vertical

Captives in India Adding Value to Global Businesses

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, accounts receivables, general


ledger, reconciliation and other accounts of global businesses of the organisation

Captives in India Adding Value to Global Businesses

Senior management of many captives in India will gure in global


leadership positions to represent emerging economies

81

IT, BPO & ER&D globalisation in India has evolved at a rapid pace over the last 10 years, and
organisations have made signicant progress in terms of maturity

However, topline growth is becoming increasingly important for organisations. 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, global leadership from India centres become imperative. Many MNCs in India
are now taking steps in terms of building global leaders out of the India centre

Organisations like GE, Microsoft, Honeywell, CISCO, Intel, TI, etc. have prepared India bred global
leaders to penetrate the emerging markets

Captives in India Adding Value to Global Businesses

Captive growth in the future will be driven by increase in breadth


of services and by rst time outsourcing organisations

As the captives industry in India matures, it will be characterised by increased depth of services. While
most of the captive services growth till date has largely been driven by customer interaction services,
application development, F&A services, R&D functions, in the future, more complicated services around
sales and marketing, consulting and system integration, HRO and procurement are expected to see
increased adoption.
Additionally, Indias strong value proposition and leadership status in the captives industry is ensuring
that it gets a substantial share of rst time outsourcers. In 2009, over 15 new captives were established
in India, while over 25 captives increased their presence/scale of work in India.

82

Captives in India Adding Value to Global Businesses

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

85

ARM

BA systems

Arrow Electronics

Bain & Company India

Arvin meritor

Bakbone Software

ASAP Automation

Bally Technologies

Ascent Computing Group India Pvt. 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

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 - 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

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. Ltd

Dibcom

Emptoris Technologies

Diebold

Emulex( Acquired Arohi )

Digibee

Eni

Digital Juice

Ensim

Digital Rapids
87

Captives in India Adding Value to Global Businesses

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

Foxre 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

Inneon Technologies

Halliburton

Innera Corp

Heidrick & Struggles

Inniti 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

Iect

Intelligent Business Systems (IBS)

Ihs

Intellinet Technologies

Captives in India Adding Value to Global Businesses

Intergraph Consulting Private Limited

Komatsu

Intersil

Konica Minalto

Intersystems

Kronos

Intoto Software (I) Pvt. Ltd.

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.
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

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 (iex headcount included)

Progress Software

Osram

Prolictechnologies

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

Pzer

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

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. 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

Sano-Aventis

Smartstream

Sanovi Technologies

Snecma Aerospace

Sanyo

SOA Software

SAP Labs

Societe Generale

Sapient

Softbrands

Captives in India Adding Value to Global Businesses

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

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