Indian ‘captives’: Value creators in the digital era

The Global In-house Centres (GICs) or Captives contributed revenues of $20 billion in FY 2015, accounting for one-fifth of India’s IT-BPM exports. Starting from the phase when moving up the value chain and improving share of wallet were the key priorities for any captive, today these organisations are an inseparable part of the parent company.

Not only are they supporting business processes for global operations but are also ‘innovators’ or ‘game changers’ for the parent company. The agility and speed of innovation in these centres of excellence help the parent achieve an edge over its competitors.

In the era of digital transformation, the Indian captive centres are certainly at the forefront. Digital transformation and automation provide a unique opportunity for GICs to front end on certain activities and become true business partners. And they are not letting the opportunity pass.

In addition to the entrepreneurial nature of the Indian captives, what is also driving their role in the parent company’s digital transformation journey is the fact that India is the hotbed of digital start-ups. The captives are creating Proof of concepts (PoCs) with multiple innovative companies, in the areas of Robotics, Telematics and IoT (Internet of Things) to understand the value proposition for the parent.

The developments on the digital front, will impact the efficiency, operating model and thus the FTE requirement of a captive. The expansion of captives in terms of FTE addition will slow down as an outcome. However, Indian captives understand that days of measuring the success of a GIC by the number of FTEs are over. It is now time to measure the impact of mature GICs in the form of business impact. The operational parameters for performance measurement are a given and are hygiene factors now. What matters is what GICs can offer to the parent companies to change the end game. How can they impact the business outcomes such as product performance, end Customer satisfaction etc. And with centers of analytics and innovation of the Global parents out of India, the potential offered by Indian captives is phenomenal.

The challenge, however, is to get the right talent. The millions of science and commerce students graduating out of Indian colleges don’t attract GIC investment any more. We need the data scientists and financial engineers – the talent with the ‘left’ side of the brain more active than the ‘right’. The people who look for smarter, automated, innovative ways of helping the Global parent achieve higher market share and beat competition.

The need of the hour is also a change in mind-set and leadership approach. There is considerable ambiguity on how to manage the mind-set of the leadership team or Gen Y. The generation Y, has always seen efficiency and cost management as paramount. Generation X, on the other hand, wants to challenge the paradigm and ‘disrupt’ to innovate. Achieving the right balance between the two is the challenge the senior management faces. The change is more of a cultural transformation, to be driven like a well-knit program including people, tools, metrics along with proper communication, recognition and sponsorship from the leadership.

The writing on the wall is clear – the Indian captives cannot afford to underestimate the digital transformation and they are clearly not. They have all embarked on the journey of understanding, analysing and innovating in their respective sectors and services, managing to delight their global parents with their ingenuity and talent. The talent to re-engineer processes, develop automation and robotics technologies and continuously challenge the paradigm. The FTE count for traditional repetitive manual processes may be going down, but the more value added, firm-wide impact activities will certainly make its way to the Indian shores.

Shikha Gera, Manager, Advisory Services has also contributed to this article. The article has previously appeared in moneycontrol.com. 

2 thoughts on “Indian ‘captives’: Value creators in the digital era

  1. Great article! I completely agree!
    With the rise of alternative offshoring locations such as Phillipines, Latin America and East Europe, Indian BPM companies can no longer afford to pitch value on the FTE numbers.

    The need of the hour lies in real innovation through the use of automation technologies. India, blessed with a large talent pool of STEM students, is “at the right place and at the right time” during this inflection point of the BPM industry in India

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