BANGALORE: Initially, business process outsourcing (BPO) was done in two major ways. A company wishing to outsource its back-office services could either open its own offshore captive centre or use an external service provider (ESP). Captives have recently been under pressure, mainly because of cost overruns. A third model has now been made available by the process known as captive conversion. Difficulties faced by the captive sector have prompted a number of ESPs to offer the struggling companies mutually beneficial deals. One example of this strategy is the recent activities of GlobalLogic in India. GlobalLogic has partnerships with over 150 technology companies in consumer, mobile, telecom, and healthcare markets. Its clients include Microsoft, Motricity, Avid, Medtronic, Polaris Wireless, and Broadsoft Telcordia. Headquartered in the US, GlobalLogic has a delivery centre in Bangalore. One of the company’s VPs, Yuri Goliyad, explains the key facts about captive conversion: "For many existing centres this is the best model. As a big firm we are able to manage centres efficiently as it is more optimal to operate on a larger scale." Quoting recent analytical results by Gartner, Goliyad said, for a captive centre in India to reach its steady state within 18 months, it needs 250 to 300 people. A small venture can easily become unprofitable. Take the story of Apple that had to shut down its centre in Bangalore three years ago after just two months of operation, laying off all the 30 staff. The growth in the conversion industry makes future less black-and-white for captives. Instead of suffering losses or closing down, they can approach a specialist company and, having secured their support in all areas of management, focus on more immediate tasks such as product development. "These agreements are a win-win situation," says Goliyad. "Captive centres cut their costs by letting us look after their taxes and accountancy, run their HR departments. Imagine having several players in the same sector under your umbrella: whenever one company goes down another one is bound to go up." |
