Captives in India Complete Report

Captives in India

Adding Value to Global Businesses

Captives in India

Adding Value to Global Businesses

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NASSCOM is the premier trade body as well as the Chamber of Commerce of the IT-BPO IT-BPO sector in India. It is a notnot-for-profit for-profit 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 thereof.. The material in this publication is copyrighted. No part of this report can be reproduced either on paper or electronic media without permission in i n writing from NASSCOM. Request for permission to reproduce any part of the report may be sent to NASSCOM. 3

Captives in India – Adding Value to Global Businesses

Foreword The Indian IT-BPO industry has been the significantly contributed to India’s 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 influencing 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 year’s – 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 specifically 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 flexible 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 first-of-its-kind, providing an overview of the captives, detailed insights on industry trends, growth drivers, assesses specific 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 find this report useful, and we welcome your feedback and comments.

Som Mittal President 4


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 & Wakefield, 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.

5


Executive Summary Indian IT-BPO sector has grown significantly over the last decade to contribute over 6 per cent of the country’s 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 industry’s 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 significant 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 industry’s 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 t he IT, BPO and R&D sectors. The captive centres account for over 1 per cent of India’s GDP, and support indirect employment of 1.4 million people. Captive centres have played a si gnificant 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 India’s 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-specific products. The success of these products will significantly 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 i n 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


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 activit ies. 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 capti ve 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 Analytic s. 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 India’s 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 c an be explained by the differences in underlying practices being followed. Captive centres with optimal talent pyramid, maximum utilisati on of existing infrastructure, effective travel policy and use of local service providers have been able to successfully address cost-related challenges. 7


Talent: Lack of experienced talent pool and high attrition are key talent-related issues faced by c aptive

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 significantly 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 Pacific. 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 don’t 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


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 gl obe. 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 l ocations 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.

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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


Lay of the Land

11


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

•

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 significantly 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

12


The demonstrated success of Indian IT vendors in the Y2K phenomenon prompted increasing number of MNCs exploring captive offshoring opportunities in India

•

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)

13


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

•

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

14


More than 750 IT-BPO captives present in India with close to 400,000 employees

•

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

15


While the majority of captive centres are located in the top 6 cities, other Tier 2/3 locations are starting to gain momentum

•

India has witnessed remarkable growth in the number captive centres established in the last decade. Most of the large centres started their first centre in Bengaluru and slowly started t o 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 benefit reasons. However, lack of infrastructure and inability to attract middle and senior level management is hampering the growth in these cities

16


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

•

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 fillip 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

17


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

•

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, finance 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.

18


Successful captive units have migrated along two, often overlapping paths – enhanced value or effi ciency

•

Sustainable captives in India have migrated along two, often overlapping paths – enhanced value or enhanced effi ciency. 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

19


Improving operational excellence has been key focus for captives in India

•

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, attriti on 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 organisation’s 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 define a common operations assessment and improvement framework

20


Captives have made a significant impact on India, and on global business

•

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 India’s 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 effi ciencies.

•

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

•

Captives in India have added significant value to parent organisations not only through cost savings and access to talent, also by increased process effi ciencies 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

21


IT Captive Landscape

22


IT captives have experienced the fastest growth in India in the past 4 years

•

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

23


BFSI, software and telecom verticals account for more than 75 per cent of the total installed base of talent pool within IT captives

•

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

24


Though North America accounts for the majority of the captive centres, European organisations including some of the large banks are increasingly leveraging India

•

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.

•

25

Bengaluru continues to retain its position in hosting the maximum number of IT captive centres


Testing services and application development and maintenance are prime focus areas for IT services captive centres

•

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

26


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 field for Indian captives and are increasingly being looked upon

•

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 flows

27


– 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

•

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

29


Captives are now starting to leverage cloud-based testing automation to optimise investments and standardise the processes

•

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 flexible 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

30


BPO Captive Landscape

31


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 simplified manner. This would help in proactively shaping or changing strategies and better prepare for future issues that need to be addressed.


BFSI, software and computer hardware are key verticals for BPO captives in India

•

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

33


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

•

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

34


F&A and knowledge-based services account for the majority of BPO-related activities for captives

•

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 significant chunk of global high level L3, L4, L5 support for hi-tech companies is delivered from India

35


F&A services with varied complexity across the BPO value chain are currently being offshored

•

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

36


HRO has vastly matured over the years with a number of processes now being provided by captives in India

•

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

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Within inside sales value chain, lead generation and requirement analysis sub-processes have higher propensity to be offshored

•

Planning & identification, lead generation and requirement analysis & fulfillment 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

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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

•

Knowledge Services Services is one of of the key key trends that were bought in the Indian offshoring landscape 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 trend started with General General Electric’s captive unit in Bengaluru Bengaluru providing risk analytics service to GE capital in 1997, followed by American Express performing performing risk analytics for many of its credit card divisions across the globe

•

Talent pool for statistical modelling 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

39


Engineering, Research & Design/ Software Product Development Captive Landscape

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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

•

The Engineering Services Research Research & Development/Software Product Development 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, segment , exponential growth growt h was witnessed between 2003 and 2007, 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 availabili availability ty for ER&D/SPD in India has been a key driver for the growth of this sector. sector. Most of the world’s top ISVs including Microsoft, Oracle and SAP have their R&D centres in India. These R&D centres have achieved significant scale since their inception and are now positioned as the second largest centres outside the headquarter countries

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The hi-tech verticals account for the majority of installed base of talent pool engaged in R&D-related activities at the captive centres

•

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 significant 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

42


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

•

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

43


Captives focused in the embedded, as well as the engineering services market

•

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

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Despite challenges, the past year witnessed a shift in key focus areas of organisations doing engineering-related work in India

•

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.

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Engineering captives have chosen a few focus areas for their growth

•

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.

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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-specific 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 •

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Define processes to strategically select the right projects to be executed at the India centre


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 fledged 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

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•

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


India Value Proposition

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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 benefits 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.

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

India continues to be the most financially 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 significantly 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. India’s 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.

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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 significant 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 floor-plate designs, energy efficient designs, etc.) has ensured that supply of Grade A infrastructure has always met the demand.

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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. India’s economic growth has accelerated significantly 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 fifth 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 India’s middle-class will swell by 17 per cent in terms of number of households. This will lead to a significantly 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 benefit 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 significant shortfalls in its education and infrastructure systems. 53


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 i nnovation.

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Challenges for Captives

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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


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 Pacific. 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.

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Operating cost inflation 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 India’s competitiveness by industry players. Captives need to follow global standards in technology, infrastructure and processes that can lead to inflated 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.

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Though there has been periodic increases in salaries, cost savings are still significant in India

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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

•

Define the success of HQ leader based on the number of engineers who he/she has mentored and trained in the defined time period

Establish Product Management Teams •

Provide opportunity for customer interaction in local markets by establishi ng a product management team in global locations

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•

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

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•

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


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 significantly 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, defined 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.

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Embracing innovation can lead to new opportunities for captives

•

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 descri ptions, 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 won’t be able

to focus on the problems of customers in emerging markets. Specifically, they need the power to develop their own strategies, organisations and products •

Customise objectives, targets and metrics: Innovation by nature, is uncertain. It’s 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

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•

Have local growth teams report to someone high in the organisation: The executive overseeing the

LGT has 3 critical roles: mediating conflicts between the team and the gl obal 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

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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 financial 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 redefining 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.

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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.

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MNCs are building development centres in Tier 2 cities in India as a business continuity plan

•

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

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Way Forward

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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 pl atform 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.

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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 ser vices 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 effi ciency.

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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 benefits both in monetary and technology terms

•

•

The primary drivers for reverse innovation are: -

Need to have low-cost products to scale and succeed in growth markets

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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 first 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 fit the emerging markets

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•

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 Pacific 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

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Captives are now looking at various innovative business models for non-linear growth

•

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

73


The captive business model is expected to fundamentally change in the future, with captives emerging as profit 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 significantly. 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 defining 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 i n-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 profit centre varies significantly 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 servic e 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


The flourishing Indian economy offers captives with a strong innovation ecosystem to network with (1/2)

•

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 confined 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

75


The flourishing Indian economy offers captives with a strong innovation ecosystem to network with (2/2)

•

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 benefitted from this flexibility. 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 confidence on managing costs. These models act as a win-win for all

-

Risk-reward pricing model: Risk-reward pricing models are being offered to cli ents 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

76


With the increasing capability of the India centre, support functions of various captives are being driven from here (1/3)

•

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 ser vices 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 profit

•

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

77



•

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) •

India centre supports around 110 countries across the globe for providing the finance 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

78


•

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 first process to be offshored was order management

•

79

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



Case Study 2 (Automotive Major) •

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

80


Senior management of many captives in India will figure in global leadership positions to represent emerging economies

•

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

81


Captive growth in the future will be driven by increase in breadth of services and by first 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, India’s strong value proposition and leadership status in the captives industry is ensuring that it gets a substantial share of first 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


Appendix

83


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


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


• 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

• Cornet Technology Inc.

Consultants Pvt Ltd • Charter Communications 86

• Corporate Executive Board • Cortina Systems


• 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 • Effi gent • EFI • Egon Zehnder Information and Research Services (EZIRS) • Elan • Electronic Arts • Eli lilly • Emagia • Embarcadero Technologies • Embedio • EMC • Emerging Memory Technologies • Emerson • EmPower Research Knowledge Services

• Deutsche Bank

Pvt. Ltd

• Dibcom

• Emptoris Technologies

• Diebold

• Emulex( Acquired Arohi )

• Digibee

• Eni

• Digital Juice

• Ensim

• Digital Rapids 87


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

• Foxfire 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


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

• Infineon Technologies

• Halliburton

• Infinera Corp

• Heidrick & Struggles

• Infiniti 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

• Iflect

• Intelligent Business Systems (IBS)

• Ihs

• Intellinet Technologies


• Intergraph Consulting Private Limited

• Komatsu

• Intersil

• Konica Minalto

• Intersystems

• Kronos

• Intoto Software (I) Pvt. Ltd.

• Lancesoft

• IntraSphere Information Technologies

• Lexmark

Pvt Ltd • 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


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


92

• Onskreen

• Polycom

• Open clovis

• Poseidon Design Systems

• Open Silicon

• Pratt & Whitney

• Opsource

• Praxair

• Oracle Relsys

• Procter & Gamble

• Oracle (iflex headcount included)

• Progress Software

• Osram

• Prolifictechnologies

• 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

• Pfizer

• 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


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

• Sanofi-Aventis

• Smartstream

• Sanovi Technologies

• Snecma Aerospace

• Sanyo

• SOA Software

• SAP Labs

• Societe Generale

• Sapient

• Softbrands


• 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

• Synplicity

Capital Management in 2006) • 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. Pvt . Ltd. • Tensilica Technologies • Teradata • Tesco


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

• Ventur Ventura a (India) Pvt. 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


• 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)

• Zscaler

Pvt Ltd • 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 Complete Report

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