Growth and sustenance strategies for a large MNC captive cost center in India

Abstract

This study is divided into two parts with the first part focusing on challenges and sustenance issues faced by this large MNC captive center. The major components of the first part of this report delves on the following topics and the major inputs on the below areas have been gathered through interviews conducted with different business leaders of this company and also from Strategic Action Plan (STRAP) documents and McKinsey reports on HTS published on related topics in the recent past._ History and Evolution of the captive center _ Summary of challenges faced by the company_ Differences with regards to Indian IT services companies_ Growth and Sustenance Strategies (current/future)It is clear from some of the interviews and related reading that one of the major challenges facing the captive center is rising costs due to the appreciating rupee. The other major challenge for the captive center leadership to is to continuously communicate and convince SBU leadership on HTS s new offerings while continuing to relentlessly deliver task in hand. This is also challenging because some of this growth for the captive center is obviously at the expense of job losses in other costlier locations and these have to be handled very carefully. The second part of this report develops a value model for one of the business units of the captive cost-center center. The internal value model is meant to throw some light on the value that the business unit in the captive cost center creates vis-à-vis the Next Best Alternatives. It is clear from the value model that the benefit elements identified for the captive center such as intensive domain and product knowledge accumulated over the years, ability to maintain a contingent workforce by re-deploying them and utilizing them effectively, the ability to ramp-up resources in a short span of time, strict process compliance and process maturity, ability to cross-pollinate between the businesses and the ability to continuously generate new product ideas and create new products will continue to drive the captive center growth and sustenance strategies. The challenge though is to accomplish all this with the given constraints and without conflicting with the initial purpose of existence of the captive cost center.