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An end to the Indian adventure

Paul Smith (MIS Australia) | July 21, 2009
More and more stressed companies are selling their captive set-ups to cashed-up locals

"Rising salaries really won't be an issue in captive centres; people who say it will are confusing the CPI [consumer price index] increase with wages," Bertram says.

"The differential for the bulk of an Indian workforce is so significant that the benefits don't dissipate. While some of the more senior people are paid significantly higher wages, the bulk of an Indian workforce has a substantial labour arbitrage, which is not going to be eroded by the increases for the foreseeable future."

Having been back from Bangalore for 18 months, Bertram says he doesn't feel like the captive centre model has run its course, rather that the global economic climate has caught up with some financial institutions and precipitated a strategy rethink.

He says as banks have moved their attentions to better positioning themselves within their home markets during the downturn, Indian IT vendors have simply taken the opportunity to move in and acquire.

"It really depends on where an individual company sits and what it sees as core to its business - you see other companies that have outsourced are now insourcing so I believe it is a fluid situation," Bertram says.

"Those looking to acquire will tell you it is a definite trend towards selling, but in my time out there, there were always approaches being made by Indian companies looking to expand their operations by acquiring a captive and getting a foot in the door."

 

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