Our Industry in the context
The financial services industry’s first captives were established in the early 1980s, principally in countries such as Ireland and Malaysia, and predominantly to provide technology services and applications development and maintenance (ADM) capabilities. Subsequently, a growing number of BPO back-office and customer relationship management (CRM) captives have been built, as well as captives providing specialized financial services processing and knowledge-based activities such as equity research and analysis. Many of these captives have been established in India.
According to our research, the most common services supplied are transaction processing, CRM voice processes, and IT help desk, research and analytical support. Roughly one-third of those captives are based in India, and the average size of each is approaching 2,000 full-time equivalents (FTEs).Though much activity in the last 10 years has been focused in India there are clear signs that the market is maturing and companies are becoming more knowledgeable about the pros and cons of using captive operations.
As a result, we are seeing a polarisation of the market, as companies aim for either niche facilities offering high-end business or knowledge processes, or larger, more general facilities aimed at full-scale back-office BPO and ITO integration.
As our Partner, You retain full control over important touch points. In essence, using KKIPL as a captive rather than a third-party service provider minimises the opportunity for vendors to bypass the parent company and turn directly to the third party for its services.
Finally, regulatory barriers introduced to protect customers of financial institutions when processing is outsourced and moved are mitigated since the captive is fully owned and operated by the parent. The overhead of ensuring compliance for outsourced and offshored processing can be significant for financial institutions and KKIPL can manage it for our Partners.
Establishing a captive typically takes far longer than it would to contract for a third-party service provider for the same services. Further, and in contrast to using a third-party provider, full financial and operating risk is retained, but without the chance to benefit from an external provider’s scale, efficiency and process experience. Crucially, captives are usually more expensive to operate than using third-party service providers, mostly due to scale effects. Finally, the parent company is often unprepared for the challenges of ongoing service management of the captive.
In particular, the company is often unaware of the extent to which service provider disciplines need to be introduced to manage the pipeline of work and the ongoing demands and expectations from different parts of its business.
These disciplines differ from those of conventional third-party provider management and the 70 years of the KKIPL Management team and their business model covering business continuity/Data Back up and Disaster Management/ Talent Management/ Succession Planning/ Involving The Real Process Owners to Design the Delivery Architecture.