Captiveslike GE, BA, SwissAir, and American Expresswere the harbingers of what is today called offshore BPO in India. At one time, they accounted for the lions share of business services exports from India.

They no longer do. That is an extremely simple statement many would not be able to digest. If we give some numbers heresay their revenue share in the overall exports has gone down to 45% or 42%that will probably be headline stuff.

Unfortunately, we are not confident enough to give that big number. The reason is not difficult to imagine for anyone who knows this segment. Unlike the third partiessome of who shout from the rooftops on their growthcaptives are secretive about sharing any number, primarily because of fear of backlash, as most of them are consumer-facing companies. Some of them go out of their way to ensure that the numbers are not leaked by employees, partners, or suppliers. In the absence of any such data, we had to manage with the best we could do.

And, that does not give us a big number to share with you. But, what we can tell you with a lot of confidence is that they no longer export more than the third parties.

The reason why big numbers are quoted is because at one time, they did dominate the business services export. And, despite the fact that many of them have ceased to growsome have in fact gone down on their headcountthe myth lives on: that captives are big. The absence of data only intensifies the myth.

The Changing Equation
The captives versus the third party BPO debate continues to simmer globallywith the epicenter of that debate in India. While the news of offshore captive centers opening are still common, a slightly discerning look would reveal that many of the new captives are small IT design/development centers, and not large scale processing centers like those of HSBC or Standard Chartered.

If anything, some of these are turning third party. Till three years back, Genpact was a captive. Its changing from a captive to third party model sent two messages: it is not possible to continue as captives and still keep growing; and that large, trend-setting companies like GE are now quite confident about outsourcing. For the analysts, however, that means the captive-third party balance changed drastically, with a big chunk now being classified under third party. WNS, which had taken that route earlier, may have been a pioneer, but its numbers did not have that kind of impact on the balance.

Since then, Unilever has sold stake in its third party to Capgemini. Now, with the 8,000 people Citigroup Global Services up for sale, that equation may change even more in favor of third parties. There is also the likelihood of Scope (captive arm of Stanchart) and JP Morgan, two other major players, transforming themselves into third parties. There are rumors in the market that the Prudential captive (PPMS) operations was being eyed by a few companies including UKs Capita Group.

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