Global Offshore Captive Landscape and Trends:Focus Geography - China: October 2011

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This preview deck of the full report provides an in-depth analysis of the global offshore captive landscape and insights into key trends in the last 30 months (2009 - H1 2011). The report also provides deep-dive of the captive landscape in six key industry verticals and a focus section on China. More information on the full report can be found at http://research.everestgrp.com/Product/11590

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Global Offshore Captive Landscape and Trends:Focus Geography - China: October 2011

  1. 1. Topic: Global Offshore Captive Landscape and TrendsFocus Geography – ChinaGlobal SourcingReport: October 2011 – Preview Deck Copyright © 2011, Everest Global, Inc. EGR-2011-2-PD-0601
  2. 2. Background and scope of research The global sourcing market has evolved and grown rapidly to reach a size of US$ 105-110 billion. Captives have been a core component of this evolution with companies such as Texas Instruments and GE setting up offshore captive units in the late 1980s and early 1990s The last 15-20 years have witnessed increasing adoption of the captive model with a large number of companies setting up/expanding their captive centers. While India continues to remain a leading geography, companies have also explored and successfully established captive operations in China, the Philippines, Central and Eastern Europe, and Latin America However, due to the significant growth of third-party service providers the impact of the economic crisis has led to the perception that the captive model is under threat. Stated reasons include captives not delivering value and being significantly more expensive than third-party service providers At the same time, mature users of captives articulate their commitment to the model and reinforce its importance in their sourcing strategy and portfolio. In addition, our discussions with global sourcing offices of large companies and captive leadership reveal imperatives under way to expand the role of captives and their value proposition This research report provides an in-depth analysis of the offshore captive landscape in leading locations. The report is based on Everest Group’s proprietary captive database and is updated after six months. Besides details on global captive landscape trends and analysis, the report also contains a focus section that provides deep-dive of captive landscape in a select geography Copyright © 2011, Everest Global, Inc. 2 EGR-2011-2-PD-0601
  3. 3. Buyer organizations have a range of options for capturingvalue from offshoring, with captives and third-partyoutsourcing as the primary models Offshore business models Captive model Strategic alliance / Joint Venture Third-party outsourcing model model Pure captive model Build Operate Transfer (BOT)/ Pure third-party offshoring  An internal cost center or a Joint Venture (JV)  Use of an offshore provider to 100% subsidiary company to  Provider-owned/joint operations outsource business processes cater exclusively to the parent that can be transferred back to or IT services company the customer  Examples: Alcoa-Infosys, Rio  Examples: American Express,  Example: eServe-Citigroup Tinto - Wipro HSBC Inverted BOT Managed third-party offshoringThe focus of this report  Offshore suppliers provide only  Full/part-time resources on theis on the captive model implementation support initially ground to facilitate transition, and are allowed to buy into the relationship mgmt, and transfer entity at a later date of org. and domain knowledge to  Examples: AIG-Polaris, BA- third-party providers WNS  Example: Greenpoint-Infosys BPOSource: Everest Group analysis Copyright © 2011, Everest Global, Inc. 3 EGR-2011-2-PD-0601
  4. 4. This research report leverages Everest’s proprietary captivedatabase that tracks offshore captives of leading companiesEverest’s proprietary captive databaseUnique characteristics Key dimensions tracked Industry’s most comprehensive database  Scale (FTE range) on global captives located across India, Rest of Asia, Europe, Latin America, and  Industry verticals Africa  Functions offered (e.g., IT, BP, ES / R&D) Tracks captives of leading firms (e.g., Forbes 2000, Fortune 500 companies)  Parent geographies Database covers more than 1,000 captive  Parent size (revenue range) centers  Location of delivery centers Focus on captives providing offshore delivery of global services – excludes shared services centers serving domestic market Copyright © 2011, Everest Global, Inc. 4 EGR-2011-2-PD-0601
  5. 5. Table of contents (page 1 of 2)Topic Page no.Section I: Executive summary 7Section II: Overview of global captive landscape 11 Summary 12 Global offshore services and captive market: Size and growth 13 Distribution of global offshore captive landscape by: – Parent revenue 16 – Parent geography 17 – Industry vertical 18 – Functions supported 19 – Offshore delivery locations 21Section III: Deep-dive in key industry verticals 24 Summary 25 Banking, Financial Services, and Insurance (BFSI ) 26 Energy & Utilities (E&U) 29 Healthcare 32 Manufacturing, Distribution, and Retail (MDR) 35 Technology 38 Telecom 41Section IV: Recent trends in global captive landscape (2009 – H1 2011) 44 Summary 45 Recent trends in captive set-ups and divestitures 46 Copyright © 2011, Everest Global, Inc. 5 EGR-2011-2-PD-0601
  6. 6. Table of contents (page 2 of 2)Topic Page no.Section IV: Recent trends in global captive landscape (2009 – H1 2011) (continued…) Recent trends in offshore captive landscape (2009 – H1 2011) by – Parent revenue 47 – Parent geography 48 – Industry verticals 49 – Functions supported 50 – Key captive locations 51 List of offshore captive divestitures (2009 – H1 2011) 56Section V: Focus geography: Captive landscape in China 62 Summary 63 China’s offshore services and captive market: Size and growth 64 Distribution of offshore captives in China by – Headcount 67 – Parent revenue 68 – Parent geography 69 – Industry vertical 70 – Functions supported 71 – Locations 72 Deep-dive into key industry verticals 74Appendix 80 Recent offshore captive set-ups (H2 2010 and H1 2011) 81 Glossary of key terms 97 Additional research recommendations 98 Copyright © 2011, Everest Global, Inc. 6 EGR-2011-2-PD-0601
  7. 7. This research report provides an in-depth analysis of theglobal captive landscape and trends Distribution of offshore captives by parent revenue Distribution of offshore captives by industry vertical 2011; Percentage June 2011; Number of Captives 100% = 1,142 100% = 1,142 <US$xx billion G xx% xx% F US$xx billion xx% A >US$xx billion xx% xx% E xx% xx% D xx% xx% US$xx billion xx% C xx% xx% US$xx billion B Distribution of offshore captives by delivery location Distribution of offshore captives by type of cities June 2011; Percentage June 2011; Percentage 100% = 1,142 100% = 1,142 E C D xx% xx%xx% B xx% C xx% xx% A xx% xx% B ASource: Everest Group (2011) Copyright © 2011, Everest Global, Inc. 7 EGR-2011-2-PD-0601
  8. 8. The report analyzes the captive market across six keyindustry verticals Banking, Financial Services, and Insurance (BFSI) Energy & Utilities Telecom (E&U) Key industry verticals Technology Healthcare Manufacturing, Distribution, and Retail (MDR) Copyright © 2011, Everest Global, Inc. 8 EGR-2011-2-PD-0601
  9. 9. This study also provides an analysis of the recent trend (2009-H1 2011) within the global captive landscape Distribution of offshore captives by parent revenue Number of offshore captive divestitures Percentage 100% = 1,142 64 76 42 xx xx% xx% >US$xx billion xx% xx% xx% xx% US$xx billion xx% xx% xx% xx% xx US$xx0 billion xx% xx% xx% xx% US$xx billion xx% xx% xx <US$xx billion xx% xx% xx% xx% Up to 2011 2009 2010 H1 2011 2009 2010 H1 2011 New captive set-ups Distribution of offshore captives by functions Distribution of offshore captives by industry vertical Up to 2011; Percentage 2009; Percentage 2010; Percentage H1 20112; Percentage Percentage 100% = 1,142 100% = 64 100% = 76 100% = 42 100% = 1,142 64 76 42 G xx% xx% xx% xx% F x% xx% xx% xx% E xx% xx% xx% xx% xx% xx%ES / R&D xx% xx% xx% xx% xx% D xx% xx% C xx% xx% B xx% xx% IT xx% xx% xx% xx% A xx% xx% xx% xx% BP3 xx% xx% xx% xx% Up to 2011 2009 2010 H1 2011 New captive set-upsSource: Everest Group (2011) Copyright © 2011, Everest Global, Inc. 9 EGR-2011-2-PD-0601
  10. 10. The report also covers a detailed analysis of the focusgeography – China China offshore services market size Distribution of market by sourcing models 2010; US$ billion 2010; US$ billion 100% = ~XX 100% = ~XX BP Captives Xx-xx% Xx-xx% Xx-xx% IT Xx-xx% Third-party service provider Distribution of offshore captives by headcount – range of FTEs 2011; Percentage  Xx  Xx 100% = 78  Xx  Xx  Xx  Xx xx-xx xx%  Xx  Xx Beijing Dalian  Xx xx-xx xx% Nanjing Jiangsu Xian Shanghai Chengdu xx% <xx Sichuan Wuhan Suzhou  Xx  Xx Shenzhen  Xx xx%  Xx Guangzhou xx-xx Zhuhai  Xx Foshan  XxSource: Everest Group (2011) Copyright © 2011, Everest Global, Inc. 10 EGR-2011-2-PD-0601
  11. 11. Appendix: Additional research recommendationsThe following documents are recommended for additional insight on the topic covered in this Research Report. Therecommended documents either provide additional details on the topic or complementary content that may be ofinterest1. Market Vista: Q2 2011 (EGR-2011-8-R-0579a); 2011. This report summarizes the key trends and developments for Q2 2011 in the global offshoring and outsourcing market2. India Captive Market Landscape: Challenging Common Myths and Charting Future Role (ERI-2010-2-R-0472); 2010. This report provides an in-depth analysis of the India captive landscape and insights into key trends. The report also challenges common myths associated with captives and provides deep insights into their evolving role and value proposition3. Captives are Staying Alive (EGR-2011-2-R-0565); 2011. This report is intended to help educate the market regarding the often mis-represented story of the evolution of offshore captives. It is a pointed narrative of the evolution of the captive model – with an eye towards how captives have often been misunderstood and misperceived For more information on this and other research published by the Everest Group, please contact us: Amneet Singh, Vice President - Global Sourcing: amneet.singh@everestgrp.com Salil Dani, Research Director: salil.dani@everestgrp.com Ritika Dhingra, Knowledge Associate : ritika.dhingra@everestgrp.com Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Phone: +1-214-451-3110 Dallas, TX 75240 E-mail: info@everestgrp.com Copyright © 2011, Everest Global, Inc. 11 EGR-2011-2-PD-0601
  12. 12. About Everest GroupEverest Group is an advisor to business leaders on the next generation of global services with aworldwide reputation for helping Global 1000 firms dramatically improve their performance byoptimizing their back- and middle-office business services. With a fact-based approach drivingoutcomes, Everest Group counsels organizations with complex challenges related to the useand delivery of global services in their pursuits to balance short-term needs with long-term goals.Through its practical consulting, original research and industry resource services, Everest Grouphelps clients maximize value from delivery strategies, talent and sourcing models, technologiesand management approaches. Established in 1991, Everest Group serves users of globalservices, providers of services, country organizations and private equity firms, in six continentsacross all industry categories. For more information, please visit www.everestgrp.com andresearch.everestgrp.com. Copyright © 2011, Everest Global, Inc. 12 EGR-2011-2-PD-0601
  13. 13. Everest Group leads clients from insight to actionContact us for more information about our consulting, research, and industry resources. Dallas (Corporate Headquarters) Canada info@everestgrp.com canada@everestgrp.com +1-214-451-3000 +1-416-865-2033 +1-214-451-3110 New York India/Middle East info@everestgrp.com india@everestgrp.com +1-646-805-4000 +91-124-496-1000 +91-124-496-1100 United Kingdom Netherlands & Continental Europe unitedkingdom@everestgrp.com benelux@everestgrp.com +44-207-887-1483 +31-20-301-2138 www.everestgrp.com | research.everestgrp.com | www.sherpasinblueshirts.com Copyright © 2011, Everest Global, Inc. 13 EGR-2011-2-PD-0601

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