Offshoring Strategies: Evolving Captive Center Models
By Ilan Oshri
Abstract
In today’s globalized economy, firms often consider off shoring when confronted by rising costs and fierce competition. One mode of off shoring has continued to grow despite the current global economic turmoil: the captive centre. Captive centres are offshore subsidiaries or branch offices that provide the parent company with services, usually in the form of back-office activities. In Offshoring Strategies, Ilan Oshri examines the evolution of the captive centre. He identifies basic captive centre models, examines the captive centre strategies pursued by Fortune Global 250 firms, describes current captive centre trends, and offers detailed individual case studies that illustrate each model. His analysis highlights the strategic paths available to firms that want to maximize the returns offered by captive centres.
Oshri outlines six models for captive centres that range from the basic wholly owned branch office to hybrids and joint ventures and identifies evolutionary paths along which the basic model develops. He analyzes firms’ strategies during initial set-up, then tracks the changes as strategies evolve to meet different business needs. The case studies, all based on the Fortune Global 250, include the development of a basic captive unit into a complex hybrid structure; the evolution of a captive centre into a shared service centre offering services to other international firms; the divestment of a captive centre to a private equity firm; and the migration of a captive centre to a location where costs were lower.
