NSAM STAFF REPORT

A new report indicates that the glory days of Captives in India may well be a thing of past, opening the door for more opportunities in the Nearshore region. India-based Captives are facing serious issues and it will be hard for them to readjust their business models in order to capture sufficient value to go forward, argues the report, gathered by global KPO firm Evaluserve (EVS).

Over 60% of Captives studied have faced major operational hurdles and many of them have already closed doors. Although many of the larger captives have still managed to stay afloat, most of the smaller captives have shut down. In fact, third party service providers have accelerated their footprint in the region, taking over struggling Captives in a variety of industries.

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SOURCE: GLG

Cognizant acquired UBS’ Indian Subsidiary for $75 million – the former supports UBS around the globe with Knowledge Process Outsourcing (KPO), Business Process Outsourcing (BPO) and IT Outsourcing (ITO) and employs 2,000 people in India.

As part of the deal, UBS signed a 5 year $442 million service agreement with Cognizant.
This “Captive Spin-Off” Approach is tried and true approach in outsourcing and a large number of similar transactions are currently in progress around the world.
Analysis

Spinning of a client owned share service center (a “Captive SSC”) is a classic model for growing a BPO business. Most of today’s leading BPO providers used this technique at one time or another in their growth models. Some similar transaction in the past include:

1. Warburg Pincus creating WNS (NASDAQ: WNS) by spinning off British Airway’s SSC in India (“WNS actually stands for “World Network Services” which was the name of the BA …

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