The most common reasons why a client organization chooses to build an offshore Captive Center are that the firm wants to exercise control over the operation; the organization believes it can accomplish a lower-cost model on its own rather than by sourcing to a third-party; it has security or IP concerns; or that it cannot find an existing third-party service provider to fulfill its service requirements.
Risks associated with establishing operations abroad are reduced because the parent organization can retain a greater degree of control. In addition, risk mitigation of regulatory barriers introduced to protect clients when processes are outsourced and moved abroad is nullified as the Captive Centers can be fully owned by the parent organization.
Understanding that Captive Centers need a long-term engagement strategy, it is beneficial that the centers achieve the flexibility to adapt services and processes to changes in a business environment. After initiating all infrastructure and management processes, Captive Centers provide benefits for easier monitoring and control over an operation compared to third party or vendor relationships.
