See our Outsourcing Provider Directory here

Should Commercial Software Companies Create A Captive Or Outsource?

The global marketplace has determined that offshore outsourcing is an accepted business practice; the cost savings are just too compelling. But the jury is still out on the best way to offshore applications, development, and maintenance (ADM). Should commercial software companies create a captive organization or outsource that work?

Sean Walsh, President, Symphony Services’ Commercial Software Group, has crunched the numbers and come up with an answer. The supplier, which has its own operations in Bangalore and Pune, India, found that 400 is the magic number. If a company needs more than 400 people working on its projects, it is cheaper to set up a captive. But if the task needs less than 400 seats, “it’s cheaper or comparable to outsource,” says Walsh.

Two More Votes for Outsourcing

Two other factors favor outsourcing regardless of size, according to Walsh.

One is what the Symphony Services executive calls “the ramp up factor.” An outsourcer can get the center up and running sooner–sometimes as much as 12 months faster, he maintains. “The ramp up factor makes it hard for a captive to catch up,” he explains.

Walsh says “the sustained productivity model” also favors captives. He’s observed that Indian workers are 60-75 percent as productive as American workers when they start a project. He needs 10 offshore employees to do the work of seven Americans until they get into the rhythm of the project. He says they typically take six to nine months to achieve productivity parity with their American counterparts.

“As outsourcers, we focus on training. We do that every day,” he says of Symphony’s offshore centers.

Walsh says American software companies that opened a captive with less than 25 people are finding they are not capturing the value they expected. He says Symphony is taking over some of these centers, charging the original owner an operations fee to run them. “We think this is the tip of the iceberg,” he says.

Get 3 Free Quotes Logo

  • Save 70%
  • Unrivaled expertise
  • Verified leading firms
  • Transparent, safe, secure

Get Started

Book a Call Now Logo

Start your Outsourcing Journey in 15 seconds.

Get Started

Outsourcing

Dive into “Outsourcing”

A Guide to … Selecting the Correct Business Unit … Negotiating the Contract … Maintaining Control of the Process

Order now

Outsourcing Articles

Start your
outsourcing
journey here

"*" indicates required fields

Start your outsourcing journey.

Book a call with an outsourcing expert now

This field is for validation purposes and should be left unchanged.

"*" indicates required fields

This guide will walk you through some areas most important when outsourcing, such as
  • Identifying Your Outsourcing Needs Intelligently
  • Research & Selection
  • The Bidding Process
  • Contracts & Agreements
  • Implementation & Onboarding
  • Ongoing Management
  • Evaluating Success
  • Additional Resources

Book a call with an outsourcing expert now

This field is for validation purposes and should be left unchanged.

"*" indicates required fields

Become an OC Partner
This field is for validation purposes and should be left unchanged.

"*" indicates required fields

Media Inquiries for OC
This field is for validation purposes and should be left unchanged.

"*" indicates required fields

Subscribe to our Newsletter
This field is for validation purposes and should be left unchanged.

"*" indicates required fields

Submit Press Release
Accepted file types: pdf, doc, docx, Max. file size: 8 MB.
This field is for validation purposes and should be left unchanged.

"*" indicates required fields

Submit an Article
Accepted file types: pdf, doc, docx, Max. file size: 8 MB.
This field is for validation purposes and should be left unchanged.

"*" indicates required fields

Request Ben Trowbridge as a Keynote Speaker
This field is for validation purposes and should be left unchanged.

Go to standard quote

Exclusive Enterprise Assistance

  • Independent
  • Trusted
  • Transparent

Offshore staffing solutions for enterprise. Independent expertise, advice & implementation

  • 200+ Firms, Global Reach
  • Offshore, Nearshore, Onshore, Rightshore
  • Managed Request for Proposal (RFP)
  • Assisted Procurement Processes
  • Vendor Management
  • Unique Build Operate Transfer model
  • Captive & Shared Services
  • Champion-Challenger
  • Multi-site, multi-vendor, multi-source
  • Managed Solutions

For Enterprise and large teams only

  • Book 20-minute consult, obligation free

You will get:

  • Needs Analysis & Report
  • Salary Guidance & Indicative Pricing
  • Process Map

Only takes 1 minute to complete the form

Get Started

Not an enterprise?

Go to standard quote