Offshore captive development and Global Business Services (GBS) have been integral to the growth and expansion of multinational corporations in recent years. With globalization and technological advancements, the offshoring industry has undergone significant changes, and offshore captives and GBS centers have evolved to fulfill changing business needs. The continued expansion of the middle and senior management talent pool, along with increased demand for the right shoring of costs to include lower-cost GBS locations, opens the opportunity for the continued expansion of services. My view is that the 5 trends in global business center development will create new opportunities how to improve operational efficiency, reduce costs, and enhance your global footprint. They are:
Focus on Digital Transformation: In order to fund the cost of digital transformation, leading-edge companies will use the move to offshore locations and the resultant cost benefit to fund their digital transformation costs. These Captive centers will increasingly be used to support digital transformation initiatives, such as data analytics, artificial intelligence, and machine learning. This requires a skilled workforce that can handle complex technologies and deliver high-quality digital solutions.
Expansion of Geographical Footprint: Companies will continue to explore new locations for setting up captive centers beyond traditional outsourcing destinations such as India and the Philippines. This includes countries such as Mexico, Brazil, Eastern Europe, and Southeast Asia, which offer a diverse talent pool, favorable business environments, and lower costs. According to an article in The Economic Times, “Companies are looking beyond traditional outsourcing destinations such as India and the Philippines as they seek a broader talent pool with specialized skills. Other factors such as favorable business environments, tax incentives, and stable political climates are also driving the trend toward geographic expansion of captive centers.”
Shift towards Hybrid Models: Companies are increasingly adopting hybrid models that combine outsourcing and captive center strategies to optimize costs and access a broader range of skills. This includes partnering with outsourcing service providers to establish captive centers and leveraging their expertise in managing and scaling operations.
Emphasis on Data Privacy and Security: Data privacy and security are critical concerns for companies when outsourcing or setting up captive centers in foreign countries. Companies are implementing strict security measures to ensure the confidentiality, integrity, and availability of data and comply with local regulations such as GDPR, CCPA, and HIPAA.
Collaboration with Academia and Government: To address the skills gap and attract and retain talent, companies are partnering with local in-country academic institutions and government bodies to develop training programs and initiatives that can build a skilled workforce. This includes sponsoring research projects, internships, and training programs that can enhance the capabilities of local talent.
GBS and Offshore captive development growth continue to shape the global business landscape. As companies navigate the ever-changing business environment, these offshore services have become an essential part of their strategic planning process. The latest trends, such as the rise of digital technologies and changing employee expectations, are driving the evolution of offshore captives and GBS centers. As a result, businesses are better equipped to succeed in a dynamic industry. By staying up to date with the latest developments in offshore captive development and GBS, companies can position themselves for success and build a competitive advantage in the global marketplace.
About the Author: Ben Trowbridge is an accomplished Outsourcing Advisor with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, BPO, IT Outsourcing, and Cybersecurity Managed Services. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides valuable insights and guidance to buyers and managed services executives. Contact him at [email protected].