During my initial time of setting up the Captive company in India, there were a lot of negative information shared with the decision makers. This made my work very tough as the inputs provided to them were speaking against the opening of the captive companies in India and keep the strategy of third party intact. A damaging report written by Sudin Apte of Forrester which clearly mentioned that captives would be a thing of past very soon as none of them are doing great. The issue was not the report, but the way the third party vendors presented this report to various stake holders. This report did mention the issues in front of most of the captives which was to a great extent true. Any company taking care of these issues had no reasons to feel otherwise.
Finally, when I started the captive company, I ensured that care was taken to address all these issues right from the start. I would detail out each of the the issues in subsequent blogs while would like to give the summary of each of them as per my knowledge.
a. Keeping the cost within control. Cost saving is not to be left for hard times, it is everyday and everyone’s job. It is to be noted that the primary reason for any captive to be opened in India is the cost advantage and it cannot be ignored.
b. Management buying in : Captive companies are located far away from parent companies and if special care is not taken to keep the relationship warm, even excellent values shown can become invisible to the headquarters.
c. Making a flexible organisation: Once the euphoria of cost dies down, delivery is what matters. Assuming that every captive delivers what is expected, it is very common scenario that peak and sudden requirements from parent organisation is not manageable by captives. This keeps them closer to third party vendors for ever and slowly dilutes the captive advantage.
d. Integration with the parent organisation: The next level of relationship is the complete integration. Standalone captives at times pose a threat to the same set of managers onsite who created them. Integration in true sense helps dispel this communication gap and ensures better output.
e. Focus on Value generation instead of cost reduction alone: Most of the captives cannot generate cost advantage for ever. This cost benefit has to transform to value generation which enhances the value of the captive instead of stagnating them.
f. Becoming the next step for entering into India market. This is a new phenomenon where captives become the starting point of entering into India for business. A large democracy like India is very lucrative for businesses to launch in this time.