Which is a more viable option – captive providers or third party vendors? This has been a question plaguing the outsourcing industry since the BPO (Business Process Outsourcing) boom in the 90s. For many global players, offshoring is not so much the issue as the choice between opting to set up a captive unit or outsourcing to a third party service provider.
Background
Realizing the potential of countries like India in terms of cost saving and brain power, many Fortune 500 companies opted to outsource none-core processes in the 80s. GE and British Airways led the path for captive services by setting up wholly owned subsidiaries in India. Local players also realized the scope of this budding industry and offered services, with the backing of established players or venture capitalists. The industry soon realized the advantages of outsourcing to third party service providers (TPSP) instead of investing in captive units in terms of responsibility and cost savings. |