Benefits of Dedicated Captive

Reap Full Benefits through Dedicated Captive

The classical operating models (In-house Captive or Third Party Outsourcing)
do not address the specific requirements of a segment of organizations that have
‘low scale’ (i.e. up to 500) headcounts for process consolidation of Support Functions.
Hence, these Parent or Client organizations are unable to derive benefits
by optimizing business services operations and capabilities

The strategic and financial benefits of Captive Shared Services or even outsourcing have largely been availed by large conglomerates (i.e. with Revenues over US$ 5 Bn, having multi locational factories, offices and footprints), since the headcount for consolidation and offshoring was in thousands. For several manufacturing organizations and corporations with Revenues of US$ 500 Mn and less than US$ 5Bn Revenues, this benefit was elusive in view of lower headcounts for consolidation, sometimes even below 500 headcounts. It is expensive to set up and maintain captive centres less than 500 headcounts, whether these are onshore or offshore. Also, these organizations and captive centres are challenged with capabilities and investments required to transform the processes in their captive centres and thereby drive transformation at the front end of the business. At the same time, when these organizations decide to outsource, they do not get the right kind of mindshare or attention from the Tier 1 or 2 Outsourcing Service Providers as they form a miniscule part of the business of the Service Provider. Hence, the classical operating models did not meet the specific requirements of this segment of organizations – onshore or offshore.

QG offers the Unique Business Services Solution of Dedicated Captive for this specific Segment to enable the organizations to reap full benefits by the Parent or Client organization as under:

Get Scale Benefits

When you move the support
functions and processes into
Dedicated Captive Operations,
you focus entirely on your core
business – be it manufacturing or
services. That too, without
any concern about the size of
your captive operations

  • Go from one function to multiple functions
  • Retain Exclusive Centre thro Legal Entity
  • Get Mindshare even at lower scale
  • No hassles of operations and service delivery
  • Mix of Existing Team (onshore) & New Hires
  • No Loss of control, + Operational Flexibility
  • Proven Best in Context Practices
  • Leverage Super Captive Capabilities

Reduce Costs

While Captive Centres provide
consolidation benefits, they remain
cost centres and do not drive
year over year cost saves.
With Dedicated Captive, we commit
and deliver on business case and go
beyond cost saves to value delivery,
thereby growing your profits and cash.

  • Clear Business Case & Benefits
  • Right Skill/Talent Mix On shore
  • 60 – 70% lower offshore personnel costs
  • Transparent Costs & Flexible Pricing Model
  • The India Advantage
  • Committed cost saves
  • Upfront Pay out for existing Captive Units
  • EBITDA & Cash flow Impact with Gain Share

Transform Fast

Transformation calls for investments in specialist capabilities and automation. For a Low Scale centre this is difficult to come by, For the D-CapTM Unit, transformation is at the core and you get high quality capabilities and automation, going beyond the D-CapTM unit to business front end, driving business performance and co-creating value.

  • Grow Your Core Business
  • Extension of Your Business to co-create
  • Captive Unit aligned with Your Business Goals
  • Capex to Opex for Tools & Digital Automation
  • Super Captive Capabilities 'as a service'
  • End to End Solution: Captive Ops to Front end
  • Focus on Customer Experience
  • Simple Disengagement possibilities

Get Scale Benefits

Under the D-CapTM Solution, you get full visibility to an organization-wide strategy for consolidation of Support Functions and have an idea of the size and scale of operations for each function. Even if the total consolidation is less than 500 headcounts for all support functions taken together, at minimum, you can start with one function that has consolidation potential of 50 to 100 headcounts, and then decide to scale up to multiple support functions. You will accrue benefits from Month 7, with an exclusive center, much like your captive, getting all the scale benefits of a Captive operation like a large Captive Centre (of say, 800 to 1000+ headcounts).

All these are available to you ‘hassle-free’ as QG will take full accountability for operations, people, services, transformation and delivery of saves.

Reduce Costs

The best benefit of D-CapTM is to fundamentally shift the Captive Operations from being a Cost Centre to becoming a ‘Value Centre’. This is achieved in three ways – cost saves, optimizing on investments to step up the RoI and value delivery through end to end transformation initiatives.

By design, D-CapTM delivers a combinations of cost saves, while focused on delivering quality services or opportunity to scale up:

  • Upfront cost reduction of 20% for captive centres set up on shore, and ~ 40 to 50% saves for offshore set up.
  • Year over year reduction of 5 to 10% p.a, overall about 25 to 30%
  • Opex based ‘pay for use’ cost structure to optimize investments on transformation capabilities and automation/ tools

In addition, there is a clear focus on ‘end to end’ transformation initiatives that will connect the D-CapTM Unit operations with the front end of the business, and these initiatives drive top line or bottom line saves or saves in working capital or overall investments enabling EBITDA as well as Cashflow impact.

Where Parent or Client organizations are handing over their existing captive centre to QG, be they global in-house centre (GIC) in India or onshore centre in India, we work out and commit a gliding path for cost saves, and they receive the cost reduction confirmed upfront through commitment of charge-out over 5 years. In select cases, QG can commit and split the cost saves as a combination of upfront pay out and year over year reduction.

For Low Scale offshore centres set up or existing global inhouse centres, the D-CapTM solution helps to remove the implications of ‘related party transaction (RPT)’and removes the transfer pricing requirements. This also reduces corresponding tax out flow on transfer pricing margins as well as considerable regulatory issues and bottlenecks, given the low scale operations.

Transform Fast

Transformation centricity is at the core of the D-CapTM Solution and it is the foundation that drives all benefits to the Parent/ Client Organization. Both components of D-CapTM – TCOps and TCaaS – have transformation embedded at their core. The D-CapTM Unit becomes an extension of the Parent organization and the collaborative relationship ensures active participation as ‘One Team’ to drive transformation and co-create value.

The Parent / Client Organization derives the unique combination of Low Scale & High Capabilities as well as focus on Operations & Transformation. In view of this, the Transformation Initiatives are identified right after Go Live based on the business case prepared before transition and the initiatives on a ‘Fast Track’ from the month 1. This is one of the significant benefits from D-CapTM for the Parent organization. QG brings immense expertise to move up the Process Value Chain and End to End focus for Enterprise-wide services to the Parent Organization.

For Low Scale operations,typically, the specialist resources for transformation like Lean Six Sigma, Process Reengineering, Tech Optimization, etc., as fulltime resources are quite expensive and hence, often these centres do not hire such resources. Similarly, the investments on automation is deferred by Low Scale operations, as the Parent directs the investments to the core business and not for the Captive operations. D-CapTM Solution brings these capabilities on ‘As a service’ and ‘opex based’ model and hence, the cost of transformation is also optimum as the organizations ‘pay for use’ only.

The Transformation Capabilities are holistic, and the Parent organization stands to benefit by receiving the full range of capabilities without any prior investments including RPA/ AI Tools, Control & Governance, Program & Change Management, Reporting & Dashboard etc., QG brings in an ecosystem for New Age Tools and can supplement the Digital Transformation agenda of the Parent Organization.