Comments on: The real deal with offshore captives http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/ Basab Pradhan's weblog about business and life in a 'flat world'. 6 AM Pacific is the best time for a global conference call. Sat, 06 Sep 2008 01:36:34 +0000 http://wordpress.org/?v=2.5 By: Challenges of Off-Shored Product Management « Confessions of a Digital Immigrant http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-14516 Challenges of Off-Shored Product Management « Confessions of a Digital Immigrant Sun, 13 Jul 2008 13:53:23 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-14516 [...] (like Helpdesk or Accounting off-shoring) to more higher end off-shoring (like Product Development) here is a nice post from Basab Pradhan that takes a deeper [...] […] (like Helpdesk or Accounting off-shoring) to more higher end off-shoring (like Product Development) here is a nice post from Basab Pradhan that takes a deeper […]

]]> By: 6 AM Pacific » Blog Archive » Outsourcing Captives is Not an Acquisition http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-13731 6 AM Pacific » Blog Archive » Outsourcing Captives is Not an Acquisition Mon, 12 May 2008 01:43:24 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-13731 [...] a year ago, I had written about why offshore IT captives don’t work [link]. Now I hear that the companies that had set up captives in India are rushing to get rid of them. [...] […] a year ago, I had written about why offshore IT captives don’t work [link]. Now I hear that the companies that had set up captives in India are rushing to get rid of them. […]

]]> By: Scott http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-12306 Scott Fri, 29 Feb 2008 18:05:15 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-12306 I am contacting you through this contact form as there was no email address available. We would be interested in purchasing advertising on your blog http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/ . Please get back to me using the email address I have entered if you would be interested in discussing this further. I am contacting you through this contact form as there was no email address available. We would be interested in purchasing advertising on your blog http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/
. Please get back to me using the email address I have entered if you would be interested in discussing this further.

]]> By: Amit` http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-7761 Amit` Sun, 23 Sep 2007 22:00:29 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-7761 I would like to add my two cents. Basab and Bipin and Sandeep have summed up the issues totally. IMHO the difference between a successful captive and an unsucessful one is the way the employees are given responsibilities. I have had a chance to work with GE and they were dilligent in ensuring that the architects and the Business Analysts were from GE's Indian operations. The coding and maintenance work ( typical low-end) was given to the lowest bidder. Which makes sense, get the small enhancement done at the cheapest price and keep the fundamental knowledge internal to the organization. Some companies keep a very small IT team and in turn source people from other companies.There are advantages in working for captives - better domain knowledge, better work-life balance. BUt they are offset by the limited growth opportunities and the fatigue factor. I would like to add my two cents. Basab and Bipin and Sandeep have summed up the issues totally. IMHO the difference between a successful captive and an unsucessful one is the way the employees are given responsibilities. I have had a chance to work with GE and they were dilligent in ensuring that the architects and the Business Analysts were from GE’s Indian operations. The coding and maintenance work ( typical low-end) was given to the lowest bidder. Which makes sense, get the small enhancement done at the cheapest price and keep the fundamental knowledge internal to the organization. Some companies keep a very small IT team and in turn source people from other companies.There are advantages in working for captives - better domain knowledge, better work-life balance. BUt they are offset by the limited growth opportunities and the fatigue factor.

]]> By: Sandeep Kaujalgi http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6555 Sandeep Kaujalgi Fri, 08 Jun 2007 14:28:15 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6555 Basab: Hope you are doing well. Its been a long time since we last spoke. On the topic of Captives, After INFY - I had the opportunity to be President & CEO of a company that helped US and European clients set-up and run captives (not BOT) in India. We took small product development companies offshore, but also took big boys like ADP offshore - we did about 40+ such projects in 4 years. In my experience, what you say is mostly correct for Enterprise IT. To add some more insight to your points - Our "sweet" customer was one who had spent 8-10 years with an offshore provider and was now keen to internalize the operation for a variety of reasons. These could be: 1. Adding more types of services in India - IT, Call center, BPO and what have you. It made sense to them to have a single roof for this rather than managing a remote distributed multi-vendor operation. 2. Adding more IP sensitive work which had not previously been done offshore and did not have the stomach to outsource - a few cases atleast 3. And (not joking), had a high level executive of Indian Origin who wanted to return to India and the company did not want to lose him/her. Sorry for coming into the topic so late. Cheers Basab:

Hope you are doing well. Its been a long time since we last spoke.

On the topic of Captives, After INFY - I had the opportunity to be President & CEO of a company that helped US and European clients set-up and run captives (not BOT) in India. We took small product development companies offshore, but also took big boys like ADP offshore - we did about 40+ such projects in 4 years.

In my experience, what you say is mostly correct for Enterprise IT. To add some more insight to your points - Our “sweet” customer was one who had spent 8-10 years with an offshore provider and was now keen to internalize the operation for a variety of reasons. These could be:

1. Adding more types of services in India - IT, Call center, BPO and what have you. It made sense to them to have a single roof for this rather than managing a remote distributed multi-vendor operation.
2. Adding more IP sensitive work which had not previously been done offshore and did not have the stomach to outsource - a few cases atleast
3. And (not joking), had a high level executive of Indian Origin who wanted to return to India and the company did not want to lose him/her.

Sorry for coming into the topic so late. Cheers

]]> By: Basab http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6536 Basab Thu, 07 Jun 2007 04:22:27 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6536 Mohit, The post was about captives in enterprise IT. As per my comment above, outside of enterprise IT - prod devpmt, bpo, research - the dynamics are different. Mohit,

The post was about captives in enterprise IT. As per my comment above, outside of enterprise IT - prod devpmt, bpo, research - the dynamics are different.

]]> By: Mohit Mahendra http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6533 Mohit Mahendra Wed, 06 Jun 2007 20:24:42 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6533 "But now that I no longer am in the industry, I can freely speak my mind on captives. No vested interests." ...not sure you can make that claim 100% :) You're the CEO of a company that would want to see every hedge fund let you do their number crunching rather than go build a captive team of offshore financial analysts in Mumbai! I know you'd rather sell them your platform, but tell us the split between your folks in the offshore operation between product R&D and Financial research :) “But now that I no longer am in the industry, I can freely speak my mind on captives. No vested interests.”

…not sure you can make that claim 100% :) You’re the CEO of a company that would want to see every hedge fund let you do their number crunching rather than go build a captive team of offshore financial analysts in Mumbai! I know you’d rather sell them your platform, but tell us the split between your folks in the offshore operation between product R&D and Financial research :)

]]> By: Kelpie http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6419 Kelpie Mon, 28 May 2007 20:01:36 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6419 Hi! Funny Basab brought this up so late in his creation (6 AM), this is something he has been intimately involved in during his INFY days and as a propagator of offshoring and GDM etc. Coming to the point, the primary ones by Basab and Bibin are laser like in their focus - and true too. . . I too being a part of the offshoring giant and wave have meet with many clients who happen to be the whos who of F500 list from NY to SFO and scattering in Europe - posing this "heaven and hell" question, while there are plenty of dynamics and multiple moving wheels many have forgotten the employee or the talent pool - they are the KEY, period. All others can be overcome. The intersection of everyones' view above is only on the employee and that is the only thing that will make it work or not. "Shit work" shipped out to places will not be done by those who think they are as good if not better for an extended period of time, that is the only truth. Once a company realises this, it will succeed, either doing its S/W work in India, or having its chips designed in Israel, or developing algogs in Rumania, it does not matter. They will succeed once the employee comes first. Most capitves fail to recognise that and despite it being contrary to my role and sales pitch I have often told them the day you discover and practice this, you will succeed, till then leave it to the outsourcing partner. The temptation to be close to the market / client / business whatever name you wish to grant it is much more than what money can buy. . . . Hi!

Funny Basab brought this up so late in his creation (6 AM), this is something he has been intimately involved in during his INFY days and as a propagator of offshoring and GDM etc.

Coming to the point, the primary ones by Basab and Bibin are laser like in their focus - and true too. . . I too being a part of the offshoring giant and wave have meet with many clients who happen to be the whos who of F500 list from NY to SFO and scattering in Europe - posing this “heaven and hell” question, while there are plenty of dynamics and multiple moving wheels many have forgotten the employee or the talent pool - they are the KEY, period. All others can be overcome.

The intersection of everyones’ view above is only on the employee and that is the only thing that will make it work or not. “Shit work” shipped out to places will not be done by those who think they are as good if not better for an extended period of time, that is the only truth. Once a company realises this, it will succeed, either doing its S/W work in India, or having its chips designed in Israel, or developing algogs in Rumania, it does not matter. They will succeed once the employee comes first. Most capitves fail to recognise that and despite it being contrary to my role and sales pitch I have often told them the day you discover and practice this, you will succeed, till then leave it to the outsourcing partner. The temptation to be close to the market / client / business whatever name you wish to grant it is much more than what money can buy. . . .

]]> By: Shashi http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6262 Shashi Thu, 24 May 2007 03:20:28 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6262 This argument holds good for pure IT services (since IT is the cost side of client but revenue side of 3rd party IT service providers), the logic would be difficult to apply when it comes to emerging areas such as engineering services (which is on the business side for client as well). In these areas, which Indian IT companies are investing, it would become difficult to argue against captives. With India emerging as a market for many of the products such as auto, aero, engineering plants etc.....having a near shore design house is more a strategic choice for companies and i don't see much scope for this logic to pay a part in having 3rd part vendors win against captives. This argument holds good for pure IT services (since IT is the cost side of client but revenue side of 3rd party IT service providers), the logic would be difficult to apply when it comes to emerging areas such as engineering services (which is on the business side for client as well).

In these areas, which Indian IT companies are investing, it would become difficult to argue against captives. With India emerging as a market for many of the products such as auto, aero, engineering plants etc…..having a near shore design house is more a strategic choice for companies and i don’t see much scope for this logic to pay a part in having 3rd part vendors win against captives.

]]> By: Basab http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6246 Basab Wed, 23 May 2007 00:38:59 +0000 http://6ampacific.com/2007/05/07/the-real-deal-with-offshore-captives/#comment-6246 Old Hand, Sounds like you may be one of the smart ones (or lucky ones) that made it work, but evidence (and organizational dynamics) says that successes are and will be the exception with captives for a while. You raise an interesting point about the vested interest in IT/BPO companies bashing captives. I actually never did that when I was at Infosys. Instead, we formed a consulting offering to enable clients to build captives without doing a BOT (build, operate, transfer). It wasn't a great money-spinner but at least we were able to help some of our clients to do what we we were far better at than they were and earn some brownie points. But now that I no longer am in the industry, I can freely speak my mind on captives. No vested interests. :-) Old Hand,

Sounds like you may be one of the smart ones (or lucky ones) that made it work, but evidence (and organizational dynamics) says that successes are and will be the exception with captives for a while.

You raise an interesting point about the vested interest in IT/BPO companies bashing captives. I actually never did that when I was at Infosys. Instead, we formed a consulting offering to enable clients to build captives without doing a BOT (build, operate, transfer). It wasn’t a great money-spinner but at least we were able to help some of our clients to do what we we were far better at than they were and earn some brownie points.

But now that I no longer am in the industry, I can freely speak my mind on captives. No vested interests. :-)

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