The Lure of the Captive Center

TPI, the outsourcing consultancy, is getting a lot of coverage of its recent study in the UK of outsourcing and offshoring practices within large companies.

Steve Ranger, Silicon.com, provides the best coverage of the research. In “‘DIY’ offshore outsourcing on the increase,” Mr. Ranger says that TPI believes large companies are more commonly setting up captive centers when they head to India or China or both. (A captive center is one that’s owned by the company doing the offshore work.)

According to TPI stats, headcount in captive operations has increased by nearly 75% in the last year. “In contrast, the total number working in India in IT and business process management has increased by just one-quarter over the same period.”

TPI also sees the “build-operate-transfer” model “coming into vogue, particularly in IT outsourcing.” In this situation, the client hires a service provider to set up the development team, manage it and then transfer it back to client control.