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Everest Group Reports on Captive Model
[July 06, 2011]

Everest Group Reports on Captive Model

Jul 06, 2011 (Close-Up Media via COMTEX) -- New captive set-ups and expansions continue at a healthy pace, and the captive model is evolving with refinements to approaches and a mix of more complex and services, according to a study by Everest Group, a consulting and research firm.

According to a release, in the study, Captives are Staying Alive, research analysts examine and explain the story of the evolution of offshore captives. The study focuses on the history of captives in India.

The report is co-authored with Tesco HSC.

"Looking back at the 2008-2010 time period, what actually happened was notably different from the market speculation in 2007-2008 when news media headlines said captives were dying or dead," said Eric Simonson, Everest Group's managing partner of Research, who co-authored the report with Vinit Vishal, guest analyst of Tesco HSC.

"In reality, most closures were small operations and many were ill conceived from the beginning. Meanwhile, successful captives were largely ignored.

"While the noise suggested a failure of the captive model, in reality the captive model endured and further evolved. Today, captives continue to have an important role in global sourcing portfolios and are oriented towards providing increasingly unique value propositions." "We have continued to build a strong workforce that is on the cutting edge of 'future retailing' concepts with the ability to develop and enhance retail solutions based on deep functional and technical expertise," said Sandeep Dhar, CEO at Tesco HSC. "Our investment in talent development programs have resulted in positive scores on employee surveys that confirm employee engagement is a leading indicator of our overall business success." According to the study: -Most of the work will be non-commodity in nature, particularly due to the desire to control business enabling activities, but will need to be skewed towards more complex or activities to support an array of processes, many of which are less defined or more nuanced than market-based standards.

-The importance of talent models will need to be elevated to support captives that take on more complex or unique activities.

-The understanding of the role of scale to enable success will be critical as captives will require increased diversity of skills in competitive labor markets. Additionally scale is needed to overcome the natural strain of distributed global operations.

-Scope of services provided by a captive will naturally evolve and require refinement as business needs change, third-party service provider capabilities mature, end-user preferences evolve and captive-provided service performance is assessed.

Between December 2008 and December 2010, 37 new captives were established, 21 announced significant expansions, and 13 divestitures occurred.

Talent models are one of the levers for captives to optimize in support of future growth. For Tesco HSC, this means aligning its talent model to building a global pool of IT skills and domain knowledge, including proactive staff rotation programs to develop and retain employees.

Everest Group serves users of services, providers of services, country organizations and private equity firms.

Tesco is a retailer.

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