Captive Service is a portion of Business Process Outsourcing where an organization will use a wholly owned subsidiary instead of a Third Party Vendor. The benefit of doing such an arrangement would be to leverage the cost savings of using offshore resources, while maintaining complete control over process and delivery. The costs of such an arrangement are generally higher than using a vendor. [1] Captive Service Units have been in the media lately because of large financial firms tied to the Subprime mortgage crisis. Many of the firms had captive service units and as they file for bankruptcy, these units are being sold separately. Specifically, Lehman Brothers, Citigroup, AIG and Merrill Lynch all have captive units that are being considered or have already been sold off. A shared services center – a center for shared services in an organization – is the entity responsible for the execution and the handling of specific operational tasks, such as ing, human resources, payroll, IT, legal, compliance, purchasing, security. The shared services center is often a spin-off of the corporate services to separate all operational type of tasks from the corporate headquarters, which has to focus on a leadership and corporate governance type of role. As shared services centers are often cost centers, they are quite costsensitive also in of their headcount, labour costs and location selection criteria. A shared service is an able entity within a multi-unit organization tasked with supplying the business unit, respective divisions and departments with specialized services (finance, HR transactions, IT services, facilities, logistics, sales transactions) on the basis of a service level agreement (SLA) with a costs charge out on basis of some type and system of transfer price.[1] Shared service centers are deployed for a variety of reasons:[2] 

to reduce costs of decentralization, to increase the quality and professionalism of processes for the business,



to increase cost flexibility for ing services,



to create a higher degree of strategic flexibility.

Reported cost reductions of costs of services organized in shared service center are as high as 70% of the original costs, but average about 50%. Shared service centers are not to be confused with corporate staff departments. Different from staff departments, shared service centers have measurable outputs (by quantity and quality), with costs per unit of service provided. Tasks not organized in shared service centers include corporate control, corporate legal, management development policy, IT-governance and other typical for the statutory duties of the executive board.

Shared services training: Many organizations in private and public sectors use a competency-based training course to identify and fill skill gaps. The SSO Pro course is one that looks to do that with an industryrelevant certification. http://www.outsourcing-law.com/sourcing-models/wholly-owned-operating-subsidiarycaptive-or-shared-services-center/ Wholly-Owned Operating Subsidiary (“Captive” or “Shared Services Center”) “Absolute” Control. An enterprise may choose to establish a wholly-owned subsidiary to perform particular services for all corporate s. Such an enterprise is often referred to as a “captive” or a “shared services center.” The enterprise controls all aspects of operations and is able to integrate the back-office operations with its front-office customer-facing business. Costs. The “shared service” or “captive” model has certain inefficiencies due to size and structure. 

Costs. The enterprise customer’s sole control causes some inefficiency and higher costs, assuming demand for services is constant or at least predictable. By choosing a sharedservice model, the enterprise does not have any third party to share in investment in capital equipment or operating overheads (such as high bandwidth telecom, fixed costs of personnel who cannot be redeployed if the demand for services fluctuates). In the case of a classic outsourcing, the service provider may quickly and easily redeploy the work force. In the case of a wholly-owned subsidiary, redeployment may be difficult, requiring potentially unneeded cross-training or one-time retraining, assuming new tasks can be found. If service demand declines, the captive shared-service center may need to terminate employees, with possible added costs of severance that an outsourcer could avoid redeployment.



Taxation. As s of the customer, each shared service center is subject to transfer pricing rules of each jurisdiction where the customer, its s and the shared service center conduct their business. Under the OECD model income tax treaty, this might not result in significant additional costs. However, not all countries have OECD-type bilateral income tax treaties and not all bilateral treaties are interpreted in the same manner. In particular, for example, the U.S.-India Double Income Tax convention has an unusual definition of “permanent establishment” that tends to allow Indian tax authorities to attribute more income to an Indian service center.



Human Resource Management. The career path of employees in a captive is more restricted than the career path for employees of an outsourcing service provider. In a captive, there is only one customer. In an outsourcing service provider, there are many customers, and a promising individual can find more new opportunities for advancement than in a captive. For this reason, attrition rates may be higher in a captive, resulting in higher costs of replacement and inefficiencies during more frequent replacement.

Benefits. Of source, the benefits of a shared-service model may be significant, depending on the “outsourced” business processes and core business. With the flexibility of controlling its workforce, the enterprise can redeploy its shared service center’s personnel to new tasks without having to go through the sometimes cumbersome, sometimes contentious process of “change control” with a third-party supplier. Regional Service Delivery Centers. Multinational enterprises may have several such captives, one in each region, to perform services on a continuous “24/7” basis. Such multiple regional captives serve functions of redundancy and “handing off the baton” at the moment when one center’s day ends and another’s day starts. Exit Strategy. The enterprise may choose to sell or spin-off the captive entity to a service provider to recoup its investment and achieve a profit, to achieve competitive pricing and to divest a non-core operation. Such sales enable service providers to enlarge their portfolio of service specialties and territorial footprint. Spin-offs have created a number of new service providers. http://www.bpmwatch.com/captive-call-centers/ Captive Call Centers in India A company that wants to outsource work to India will either have to hire services of thirdparty call centers or set up captive centers in India. There is the option of combining both these aspects as well. Captive call centers are basically call centers that are operated by a company to service their own clients and not the clients of other companies. In the past few years, captive centers in India have seen tremendous changes with some of them closing down and several other new ones opening up. India Home To MNC R&D Centers And Captive Units Nasscom reports one-third of India’s $70 billion (Rs 380,000 crore) software export revenue comes from R&D centres and captives of multinational firms.

India has 700 captive units of which 70 were setup in 2012. Should You Setup A Captive Unit Few questions that you need to dwell upon before deciding on starting your own center are: 1. Is it a one one-off outsourcing assignment or a long term assignment? 2. How much flexibility do you want for future downsizing or expansion? 3. Are you using any proprietary technologies? If so, captive could be better. 4. Do you want to control the day to day operation? 5. Is it better to build a captive centre from scratch or acquire one? Some of the captive centers in India are listed below. 1. Accenture: The captive center of Accenture is located in Bangalore. The company is a consulting, technology services as well as anoutsourcing company. They have collaborated with clients to transform them into high-performance businesses. 2. American Express: American Express or AmEx is a company that offers global financial services and has set up captive centers in India at Delhi and Gurgaon. The company specializes in credit card, travelers’ cheque and charge card businesses. 3. BA Continuum India Private Ltd, founded in 2003 and operating from Hyderabad, provides BPM solutions for the Bank of America branches in the bank’s various business aspects such as consumer banking, small business banking, cards services, investment management, global wealth management etc. 4. British Airways: British Airways caters to global clientele offering extensive route network all over the world connecting several centrally-located networks. The captive centers have employees managing error handling, enger ing as frequent flier miles. 5. DELL International Services: This is the services and division of the multinational company which has a strong presence in India catering to PC customers. This division has operations in Chandigarh, Hyderabad and Bangalore in India. 6. D-Link: D-Link India Ltd. is a subsidiary of D-Link Corporation. The networking company is one the largest of its kind in India engaged in distribution and marketing of networking products.

7. Deutsche Network Services Pvt Ltd (dNETS) functions as a part of Deutsche Bank, based in Whitefield, Bangalore, and works on cash management and payment processing. The business and private clients corporate division of Deutsche bank caters to financial services and branch banking to self employed clients, medium and small customers businesses as well as private customers across the world. 8. Fidelity Investments in Gurgaon has Europe and UK center and operations and have professionals who provide customer services and operational services to investors in Europe and UK. The Asset Management Company of Fidelity also offers customer care. 9. GE Capital Service based in Gurgaon is a finance provider. The company also leverages the global knowledge of TE in order to offer smart financial solution that helps in the growth of the company’s local customers. 10. Global e-Business Operations Pvt., Ltd. is a business processoutsourcing company (BPO) founded in 2000 with their office at Bangalore. The company is a subsidiary of HewlettPackard (HP) Europe BV. The company offers integrated services in human resource, decision , supply chain management, finance and ing as well as business analytics. 11. HSBC Electronic Data Processing India Pvt. Ltd., with service centers in Bangalore, Hyderabad, Vishakhapatnam and Kolkata. The company offers global resourcing in India. HSBC Global Resourcing is an integral part of the international strategy of HSBC. The company serves as the largest, banking and financial and captive services offshoring organization across the world. 12. JP Morgan: It was in 2003 that the major bank in US set up captive centers in Technopolis Knowledge Park in Mumbai and MindSpace in Malad. The unit is responsible for transaction processing for financial services, investment management and investment banking as well as research activities. Another similar unit was set up in Bangalore in 2004. The company set up their fourth global center in Hyderabad as well. 13. Morgan Stanley Advantage Services: This is a company that is fully owned by Morgan Stanley and was incorporated in Mumbai in 2003. The company offers services to institutional securities businesses of Morgan Stanley world-wide. A host of specialist services from IT development and financial modeling to research is provided by the company. 14. Prudential Process Management Services is a subsidiary of prudential Plc which is wholly owned. In India the company is based in Mumbai operating out of two sites with an

employee base of over 1200. The PPMS provides knowledge services, customer services, human resources, information technology and risk management. 15. Sitel India is the second largest center of the company offshore. Established in 2000, the company’s locations in India are at Gurgaon, Mumbai, Chennai and Hyderabad. The company services clients in diverse domains such as technology, financial services, manufacturing, media and entertainment, communication, travel etc. 16. Visual Graphics Computing Services India has two offices in India in Trivandrum and Chennai. The company is a fully owned McKinsey & Company subsidiary. The company is responsible for the production and design of visual communication materials such as charts, graphics, onscreen animated presentations, multi-media products, overhead transparencies etc for the global offices of McKinsey. 17. Citibank has over 900 professionals who work at the banks centers of excellence located in Bangalore, Chennai, Mumbai and Gurgaon. They handle critically sensitive projects in transaction services, consumer banking, investment banking and risk management. The banks operations have been planned to expand to Mumbai as well, considering the financial talent pool available there. 18. Allstate Solutions Private Ltd. in Bangalore is a subsidiary which is fully owned by Allstate Corporation. The company provides BPO solutions and software development services to Allstate Corporation. The Bangalore center was opened in Dec 12, 2012 and has hired more than 60 people and has plans of hiring more than 1700 employees in IT in the coming two or three years. 19. RBS Business Services Pvt. Ltd. is a part of the bank’s Business Services based in India, offering services to different RBS group division globally. The company provides services in different levels such as M&A advisory, credit trading, securities processing, balance sheet preparation, voice-based processes, equity research etc. http://www.bpotimes.com/efytimes/fullnewsbpo.asp?edid=16513

India Tops As Financial Services Outsourcing Destination More and more global investment banks are getting their number crunching work done in India as it is a market that can offer mission critical as well as complex function services EFY News Network

Wednesday, January 03, 2007: With the global acceptance of India as a financial services outsourcing hub, major financial companies

are ing the offshoring bandwagon. Recently banking giant Credit Suisse announced its plans to set up its centre of excellence in Pune by January this year. Another US-based financial company State Street is on the verge of setting up its centre in Pune as well. Gradually India is being seen as a market which can offer highend and mission critical services. Functions being offshored have graduated from the functions such as F&A and voice based services to complex functions including financial modeling, equity research and portfolio tracking. In fact over the last two years research and analytics has emerged as a service area that has picked up steam. With the growing maturity of vendors, functions with increasing complexity are being offshored. For instance, Credit Suisse has tied up with Wipro to set up the COE, where the vendor will provide the the necessary IT and basic operations . State Street has a tie up with Syntel. More and more global investment banks are getting their number crunching work done in India. Cost still remains the predominant driver for most of the global financial institutions to outsource services to India. Companies have been able to realize cost savings to the tune of 30-50 percent. According to a study conducted by NASSCOM, American BFS companies saved $6 billion in the last four years by offshoring to India. Other crucial factors driving offshoring to India include regulatory compliance requirements, large-scale availability of skilled personnel, English speaking capabilities and favourable cultural issues. They are doing that through different models of outsourcing that are in vogue currently in the market. While captive and the third party models are being traditionally followed, financial service companies are constantly experimenting with new models and their innovations are likely to drive BPO sourcing as a whole in the country. The latest to emerge is hybridisation of sourcing models that calls for multi-locational sourcing as well as combination of captive, third party and t venture sourcing models. There are around 30 global financial service providers with captive set ups in India. These include players like HSBC, AXA, Citigroup, Deutsche Bank and ABN Amro. Top tier investment banks including Goldman Sachs, Lehman Brothers and UBS also have captive centres in the country. Setting up of a captive centre and the related infrastructure and manpower management involves significant financial outlay. Hence typically only the larger players aggressively follow the captive model. For many others, offshoring volumes are currently not large enough to make captives viable. This springs opportunities for the third party service providers. There are more than 50 large and small third party players catering to the requirements of the BFS clients globally. Some of the big players in the country include Genpact, IBM Daksh, ICICI Onesource, WNS and Wipro BPO. There are some smaller niche service providers including Amba Research, Irevna and Copal Partners that have captured the high-end research and analytics work. Going forward, global sourcing that follows a best-of-breed approach will find greater acceptability as firms adopt a multiple-model, multiple-vendor and multiple-location approach. Blended or hybrid models will be the preferred model for financial institutions. With almost 50% of the world’s biggest banks in of asset size are offshoring to India, the country remains the most preferred offshoring destination. However, India faces stiff competition from emerging hubs in Asia Pacific and Eastern Europe. Despite such stiff

competition, India will retain its dominant position at least for the next couple of years.

http://www.sourcingnotes.com/content/view/50/73/ CAPTIVES OF BANKS - GOING THE THIRD-PARTY WAY? Friday, 16 February 2007

Since the time American Express and Citigroup established captive centers in India two decades back, several global financial conglomerates have made India their back office hub. Unlike other verticals such as airlines, healthcare and telecom, banking and financial services (BFS) segment has seen a larger share of offshore captives. Captive centers offer economies of scale and competitive advantage especially for companies that have very large volume of work to be transferred offshore. Setting up of a captive center and the related infrastructure and manpower management involves significant top management interest and financial outlay. Hence typically only the larger players aggressively follow the model. As the number of functions being offshored increases, the rationale for captives is becoming more attractive. Corporations try to minimize cost and at the same time retain control over operations, which is important, given the confidential nature of information. Captive centers usually handle a wider range of processes with more complexity from their offshore centers. Some of the major captive players are included in the table below: Vendors

Year established

Services provided

ABN Amro

2002

IT and back office operations

American Express

1994

IT and transaction processing

Bank of America

2003

Transaction processing

Deutsche Bank

2002

Research and analytics, F&A

Citibank

1992

Transaction processing, research and analytics

HSBC

2002

Electronic data processing, voice based services, cash management

Standard Chartered

2002

IT, HR processes, F&A

UBS

2006

IT, transaction processing, research and analytics

World Bank

2003

Research and analytics, transaction processing

Source: ValueNotes Research

Captives offering services to third-party? Lately, captives are seen to extend services to the third party client. Some of the captive centers such as HDPI (HSBC's captive unit) and Scope International (Standard Chartered's captive center) are exploring the option of providing specific services to other banks. The rationale behind this to leverage their existing capabilities. In addition, some want to transform from a cost center to a profit center. Captive centers have well laid out processes and have achieved maturity serving the global operations of their parent companies. Having attained such experience and maturity, some of these captives believe they might be in

a good position to service third party clients. Going forward… Though this trend of 'captives extending their services to third party clients' might intensify competition in the short run, it is not likely to be a significant threat to established third party vendors. Captives of banks or financial institutions face a disadvantage in of competing with their target clients - unless they are ready to alter their ownership structure. While some banks and financial institutions might offer a few services to their peers, they will be unlikely to replicate the Genpact (GECIS) success story. Come June and Genpact becomes the third Indian BPO to get listed in the US. The company plans to raise $600 million from the IPO and will file an application to list its common shares under the symbol "G" on the NYSE. This will be the biggest Indian BPO listing overseas. WNS and EXL Service are the other two Indian BPOs listed on NYSE and NASDAQ respectively, while ETelecare Global Solutions is the first Filipino BPO to list on NASDAQ. From a captive outfit, Genpact has transformed itself into a leading third party service provider (WNS was also a captive unit of British Airways) employing more than 28,000 people (as on December 2006) with FY06 revenues reported at $613 million. While the company is positioned very strongly for growth, the key challenges will be managing growth across destinations and reducing its dependence on the single key client GE (Genpact depends on GE for around 74% of its revenues). Genpact plans to use the proceeds from its IPO towards debt repayment (Genpact has around $230 million of longterm and short-term debts), general corporate and working capital expenses and funding potential acquisitions. The listing on foreign bourses is attracting large Indian BPO players. Other Indian BPOs exploring the listing route are 24/7 Customer, HCL BPO and Hexaware. Name

Verticals served

Total Manpower

Locations

Revenues($ Mn)

Genpact

Banking & Finance, 28,000 (India India 613 (Dec Insurance, 19,700) (Gurgaon, 2006) Manufacturing, Delhi, Transportation & Hyderabad, Automotive Jaipur, Bangalore, Kolkata), Mexico, Romania, Philippines, China (Dalian, Changchun, Shanghai), Hungary, USA and UK

WNS

Travel, Financial 14,000 Services, Insurance, 7,500) Healthcare, Professional Services, Legal Services, Manufacturing, Retail & Logistics

EXL

Insurance, Banking & Approx 9,000 Financial Services, Utilities, Healthcare & Media

IPO Size ($ Mn) 31, 600

(India India (Pune, 219 (March 31, 255 Nashik, 2007) Gurgaon), Sri Lanka, USA

US (New York, 121.77 (Dec 31, 72 CA, New 2006) Jersey), UK (London), India (Noida, Gurgaon,

Pune), Singapore ETelecare Global Solutions

Consumer Electronics, Approx 10,000 Philippines, US 195 (Dec Telecommunications, 2006) Financial Services, Travel and Hospitality, Media & Healthcare

31, 75

Source: ValueNotes Research

Why the foreign listing? While a listing in an exchange abroad is an easier way of raising capital, it also provides a comfort level for the investors and clients on the vendor companies.

   

Since most of the vendors cater to the US or European market, an international listing serves to build brand via greater visibility and credibility. This provides the vendors with a good marketing presence too. Most funding agencies (venture capitalists or private equity firms) are comfortable with international or US listings. The listing signifies higher liquidity, lower perceived risks and better corporate governance norms. Increasing investor interests in the fast-growing Indian outsourcing story have made foreign bourses highly attractive for the promoters and private equity players to offload their stake. BPO companies getting listed in these bourses have market capitalization multiple times (3 -5 times) their earnings. Impressive investor response to the previous BPO issues has raised the comfort level of the aspiring BPO firms. Both the EXL and WNS stocks are currently trading at , with their current P/E ratios hovering at 30 and 40 plus marks respectively. Going Forward… While the larger BPOs are racing towards listing on NASDAQ / NYSE, several other vendors are eyeing acquisitions in the US and UK. These acquisitions are primarily to acquire the marketing front-end as well as add to their clientele. For instance Apollo Health Street, a healthcare BPO acquired a medical billing company in the US to complement its capabilities. Aptara acquired US based Whitmont Legal Technologies, a leading litigation and eDiscovery services company. Infomedia bought a 100% stake in UK-based publishing BPO Keyword Group. Either way, the BPO space is likely to witness more action, much to the delight of international investors and funding agencies. But this also marks an opportunity-lost for the general Indian investors and the stock exchanges.

NICHE FOCUS BPOS: BURGEONING SIGNIFICANCE Friday, 11 May 2007

With the rapid evolution of offshoring from process driven back-office jobs and call centers, to the much-talked-about knowledge driven jobs, exciting times lie ahead for niche focused BPOs and KPOs. With the rapid evolution of offshoring from process driven back-office jobs and call centers, to the much-talked-about knowledge driven jobs, exciting times lie ahead for niche focused BPOs and KPOs. The high level of interest and optimism in knowledge service companies or specialized BPOs is evident from the spate of recent M&A deals, some of which appear hugely expensive:

Acquirer

Company Acquired

Segment

Deal details

Ayala Corp

Affinity Express

Document outsourcing, 100% stake for $28.6m embroidery design

WNS

Marketics

Research analytics

and

data 100% stake for $65 mn. WNS will pay $30 mn

towards the closing of the deal along with $35 mn earn-out payment over a period of 12 months 100% acquisition for $44m, with the potential for future earn out payments $240 m in cash

SPi

Springfield

Revenue-cycle management

Experian Group

Hitwise

Internet intelligence

Mold-Tek Technologies

Cross Roads Detailing Engineering Inc detailing

Integreon

CBF Group

Enterprise services to 100% stake for an law firms undisclosed amount

Quatrro BPO Solutions

Scope eKnowledge

Research

marketing

and 100% acquisition $1.3m

for

Buys out VC stake in the company

Source: ValueNotes Research

The rising M&A activity reflects the eagerness of larger BPO companies to quickly complement/enhance specialist capabilities, and thereby move up the value chain. Funding fast track growth Traditionally, only a few VCs have been investing in niche BPO players due to concerns over scalability, the emergence of good exit options has validated the bets of these few investors. As a result, VC investments are likely to rise significantly in such companies, a sign of the recognition of growth opportunities in under-explored and emerging segments and geographies. Some of the recent investments include:

  

Sequoia Capital, Silicon Valley Bank, Light Speed Venture have invested $10.5 million in TutorVista, which focuses on online education and content. Quattro BPO Solutions has invested in Annik Solutions, a market Research BPO, and in Scope e-knowledge a research BPO. Barings Equity partners has invested in Integra, a publishing BPO Interestingly, some players in this game have been around for many years, and after years of relatively sedate, organic growth, are experiencing a revival in their aspirations with the growing interest of VCs/private equity investors. For instance, Integra a Pondicherry-based publishing BPO set up in 1994 recently took VC funding from Baring Private Equity Partners to accelerate growth. As per Anu Sriram, Co-founder and t MD, Integra, "Integra started in a small way 13 years ago, and has grown today to become a significant player in the e-publishing space. We are well positioned to increase our market size and capitalize on the current success of our business." Of course, in any such "gold rush", there are going to be many who stumble by the way side. And any number of "metoos" only intensify competitive pressures. More funding in a segment will create bigger competitors, and those without the same kind of money clout may be unable to compete. Needless to say, players need to differentiate themselves, by virtue of either unique specialization/capabilities, robust processes, technology or productized offerings. Those that can succeed at this will continue to attract investors as well as buyers, while the rest may find no takers at any price!

https://research.everestgrp.com/Product/ERI-2010-2-R-0472/India-Captive-Market-LandscapeChallenging-Common-Myths-and-Ch

India Captive Market Landscape: Challenging Common Myths and Charting Future Role October 2010

Introduction India has a dominant share in the Global Sourcing industry. Captives constitute an important segment of the India offshore services market. However, due to the recent economic crisis and maturing supplier landscape, there is a perception that the model is under threat. Stated reasons include captives are not delivering value and are significantly more expensive than third-party suppliers. At the same time, mature s of captives articulate their commitment to the captive model and reinforce its importance in their sourcing strategy and portfolio. In addition, Everest’s interactions with global sourcing offices of large companies and senior leaders in prominent captives reveal imperatives underway to expand the role of captives and strengthen their value proposition. This research report provides an in-depth analysis of the captive landscape in India based on Everest’s proprietary captive database, the industry’s most comprehensive database on captives. The report also challenges common myths associated with captives and provides deep insights into their evolving role and value proposition. This research report will assist companies considering setting up a captive center to understand the role played by captives in sourcing portfolio design and provide an opportunity to learn from the experience of other companies. It will also help existing captives and their parent companies to assess their evolution and growth with respect to the overall industry, and provide pointers towards optimizing value captured from captives and offshoring programs. In case of service provider organizations, this research will provide an education on key trends shaping the captive landscape, and enable contextualization and identify implications.

Scope





 

This research report leverages Everest’s proprietary captive database, the industry’s most comprehensive database on captives. From an India standpoint, the database tracks offshore captives of 240 leading companies (e.g., Forbes 2000, Fortune 500 companies) employing ~300,000 offshore FTEs. The analysis is based on captives providing offshore delivery of global services, and excludes Shared service centers of companies that serve the Indian domestic market The report also draws on Everest’s deep experience in advising captives, global sourcing offices of leading companies and private equity investors on diverse set strategic issues – sourcing portfolio optimization, captive benchmarking and performance improvement, optimize captive value proposition and value capture, mergers & acquisitions, captive set-up , etc The data and Everest’s experience have been supplemented adequately by interactions with captives and service providers on key topical themes of the study This report is applicable to a broad set of stakeholders - buyers, service providers, captive organizations and industry influencers (investors, industry bodies, etc)

Contents This report analyzes the current captive landscape and key market trends , discusses the evolving value proposition of captives amidst a dynamic global sourcing market, and comments on the impact on sourcing portfolio design and optimization. Finally, the report also provides detailed profile of the India captive landscape and trends in four key industry verticals – Banking, Financial Services, and Insurance (BFSI), Manufacturing, Distribution, and Retail (MDR), Hi-tech, and Software. The report concludes with a section on implications for key stakeholders, including early adopters of offshoring, India captive centers, parents of existing captives, and service providers. The implications are tailored to each of the segments outlined above to ensure relevance.

http://blog.mancerconsulting.com/finance-shared-service-industry-in-india/

Finance Shared Service Industry In India January 7, 2013 in Services

Shared Services Model

Large companies worldwide operating across various verticals such as IT, banking and insurance are increasingly adopting shared service model. An effective shared services model blends the service quality of a decentralized system and efficiency of a centralized environment. Today the pressure to reduce costs while improving processes remains a top priority for a number of companies. In this situation, outsourcing may not be the right option because of number of reasons like, regulatory environment, availability of talent pool, criticality, lack of cost justification or competing business priorities. This system has lead to the innovative shared services model where cost efficiency of outsourcing can be achieved while keeping the tight control on confidentiality of critical matters. When it comes to choosing the right destination for shared service centers, India seems to be a preferred location despite all cultural and infrastructural constraints. India has the largest number of shared services centers in the world.

Talent Distribution in India Choosing the right location for shared services centers is a strategic choice for the companies. Companies consider factors like infrastructure, cost efficiency, talent availability and conduciveness on business environment. As per a research by MANCER Consulting services, Delhi NCR has emerged as new destination for Finance Shared services for top Global firms leaving Bangalore behind at second place. The MANCER research also states that tier 2 and tier 3 cities like Jaipur, Kochi and Coimbatore, are emerging as new preferred destinations for shared services centers. Increasing cost of infrastructure and talent in metro cities is majorly driving this trend. Also state governments are now formulating ive policies which is encouraging global firms to set up their shared services centers in second tier cities.

Shared Services Talent Distribution in India

Major Shared Services Companies in India – City wise Distribution Delhi/NCR

Bangalore

Chennai

Hyderabad

Metlife GOSC

Tesco Shared Services

Maersk

HSBC Global Resourcing

Barclays Shared Services

ANZ

Shell

Deloitte

HSBC Global Resourcing

Axa Business Services

Ford

Amazon

RBS Global Finance Services

Target Corporation

Logica

UBS/Cognizant

American Express

HP

Flextronics

Thomson Reuters

Bank of America

Societe Generale

HP

Infotech Enterprise

Maquarie

E&Y Global Shared Services

HSBC Global Resourcing

Invesco

Intercontinental Hotel Groups

Amazon

Olam Information Services

Infor Global Solutions

OSC Exports

Siemens

Scope International

Dr. Reddy’s Laboratories

Colt

Thomson Reuters

Barclays Shared Services

CSC

Ameriprise Financials

Logica

Temenos India

Electronic Arts

Hewitt Associates/Aon

Timken Engineering

Sitel

Harsco

Agilent Technologies

Oracle

CSC

ADP

Mercer

DBOI

Perot Systems/Dell

Franklin Templeton

Fidelity

Juniper Networks

Agility Global

Broadridge Financial

Citi Financials

Honeywell Technology

Sutherland

EI DuPont

GE

Capgemini

World Bank

Virtusa

Steria

Accenture

Phizer

Google

XL Insurance

GMR

Siemens

Intelligroup

British Telecom

Unilever

McKinsey Global F & A

United Health Group

Serco

Monsanto

HOV Services

Mumbai

Cargill India

ADC/Tyco Electronics

Pune

DBOI

Whirpool

Bechtel India

Axa Business Services

JP Morgan

Aircel

Allied Worldwide

Credit Suisse

Citi Corp

A Global

Ocwen Financial

Maersk

WNS

Keane India/NTT Data

Mach India

Tata Teleservices

Crisil

Xchanging

Glodman Sachs

Swiss Re

Aegis/Essar

DLF

Dell

Eaton Technologies

Nomura

Nestle

Grant Thornton

Amdocs

General Mills

Bharti Airtel

Misys Software Solutions

Atlas

Novartis

Egon Zehnder

Virtusa

Mphasis

Prudential

Aricent

Infosys

Avaya

Morgan Stanley

Pernod Ricard(Seagrams)

Symphony Services

L&T

Nestle

Vertax

Cambridge Solutions Ltd

Sungard Technologies

Reliance

Ericsson

Unisys Global

Bank of New York Mellon

Fluor Corporation

Ahmedabad

Capita India

Religare Enterprises

Vodafone SSC

Trivandrum

Techbooks

Future Knowledge Services

RR Donnelley

Ranbaxy

Adani Enterprise Ltd.

E&Y Global Shared Services

KPMG

Kochi/Cochin

Jaipur

E&Y Global Shared Services

Allianz

DBOI

Advance Group

EXL

Coimbatore

British Council Management

Sutherland

Robert Bosch Engineering

Convergys

ACS

Eigen Technical Services

Williams Lea

Career Opportunities Growth of shared services centers in India has created ample job openings for skilled professionals across various disciplines. Highly sought after shared services change jobs frequently which leads to high attrition rates. As per MANCER research attrition rates in smaller cities are lower as compared to that in metro cities. This is a major long term benefit for the firms who open shared cervices centers in smaller cities. There are some core processes and functions in shared cervices which require extensive customer interactions. This demands for cultural and linguistic compatibility as well as excellent communication skills of employees. Some of the areas in Finance Shared Services in which job opportunities are to surge are:

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s Payable s Receivable General Ledger Controllership Financial Planning & Analysis/Management Reporting Decision Management Statutory/Regulatory Reporting Internal Control Product Control & Other Middle Office Work(in Investment Banking) Transitions & Migrations Process Excellence/Change Management/Transformation Finance Tools and Systems