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Availability of Capital

Establishing a global delivery model is expensive. Even establishing a single captive centre requires significant capital. Some examples of the investment required include

  1. Real estate: Finding and buying/leasing a new centre

  2. Fit-out: Making the new centre “process-ready”‖ requires new computers, telecommunications, workstations, cafeteria, etc.

  3. Consulting fees

    Standing up a captive centre is complex work, requiring consulting help that is typically three times the level of outsourcing consulting fees.

  4. Legal and tax fees

    Country-dependent, but in most cases this constitutes a significant investment to establish the tax entity and ensure legal compliance

  5. Knowledge transfer

    Typically double that of outsourcing knowledge transfer because the you and we must play both the teacher and the learner

  6. Human resources

    Recruiting and hiring the right personnel for the work in a foreign country requires a third party and is expensive. Additionally, competition for the best talent is fierce. ]Brand name is important, and hiring personnel in these markets requires more than competitive wages

  7. Technology

    The new global delivery model must be interconnected and utilize enterprise resource planning (ERP) capability. This requires establishing reliable communications, additional ERP licenses, and additional on-site hardware/software to maintain the new operations and ensure transparent processing. Outsourcing providers, on the other hand, will charge a transition fee, which typically averages about 10 to 20 percent of the first year’s outsourcing fees — so their transition is not free, either. However, establishing a captive is likely to require about double the investment of outsourcing.