Assessing a Captive’s Value-Add Opportunities for its Global Technology Parent Company

Executive Summary

The India-based captive of a global technology firm wanted to enhance the scale and scope of services delivered for its parent company in a way that enabled realization of superior value-added business outcomes. It had identified five functional areas for consideration but needed an outside-in validation of potential opportunities based on current internal maturity and an assessment of other captives’ portfolios of offerings. Via a robust internal and external assessment and analysis engagement, Everest Group helped the captive target new initiatives that would significantly drive its support of the parent company up the value-add services supply chain.

The Client’s Challenge

Since its establishment in 2001, the India-based captive of one of the world’s largest technology companies had been successfully delivering services to its internal customers, starting with cost optimization and moving on to drive higher-order business benefits in select areas. The captive’s executives and functional heads were certain the center had the ability to significantly expand the scope of value-add services to achieve qualitative results that would contribute to the company’s competitive capabilities and bottom- and top-line results. They had already identified five technology and business functions in which they believed the captive could become a value-add partner. But given the need for additional resources and greater stakeholder alignment, as well as the risks associated with increasing the center’s delivery scope, they knew they needed internal current state synthesis and external market validation before making any concrete moves.

Insight to Action

The captive engaged Everest Group to assess the situation from two perspectives:

• External, such as what did the captive landscape in India look like; what services were the captives delivering in each of the five identified functions; what enablers helped drive success in these captives; and what value were they achieving for their parent companies?
• Internal, such as what were its own potential opportunities for expansion; and in which areas could it be most successful in driving quantitative – and increasingly qualitative – business outcomes?

During the first phase of the engagement, Everest Group conducted primary and secondary research on the captives of more than 15 peer companies and those considered best in class in one or more of the five target functions. Everest Group also had in-depth discussions with the client’s functional stakeholders to understand exactly what services they were delivering, how scope had expanded over the years, the driving forces behind the offshoring, what their three- to five-year plans were for their functions. Everest Group then analyzed all the data it had obtained from both external and internal sources and created a preliminary report on all potential expansion opportunities.

In the second phase of the engagement, Everest Group utilized a robust framework to size and prioritize each of the potential opportunities in terms of quantitative and qualitative value-add, implementation complexity, and potential savings to be passed on to the parent company. Everest Group then, in tandem with the captive’s functional heads, reviewed and evaluated each of the opportunities per a cost/benefit analysis framework to determine which would bring the most value to the parent company and enable the functions to meet their three- to five-year value-add plans.

Impact

Everest Group’s rigorous assessment and analysis of opportunities determined that new initiatives across the five identified functions would enable the captive to double its overall offshore penetration with attendant annual savings. Specific recommendations Everest Group provided included:

• Create greater R&D impact through influencing new product roadmaps and customizing products for emerging markets
• Relocate the center of gravity of IT services by delivering increasingly higher value services, such as business analysis and architecture design
• Expand the quantum, complexity, and geographical reach of business process services delivered in Finance & Accounting, Sales and Marketing
• Deliver enhanced enterprise-wide analytic services to enable proactive decision support across key business functions