To understand the Virtual Captive outsourcing model, it is important to get a full grasp of two other service delivery models for offshoring: captives and 3rd party outsourcing. A captive is a fully owned offshore extension of a company. Its benefits include full control over operations and the other advantages that come with augmenting the company with a team in a different geographical location – quality labor for lower costs, risk mitigation, etc. However, this would require a huge amount of investment and long-term commitment, thus implying high risks. On the other hand, in 3rd party outsourcing, another entity owns and manages the company’s envisioned offshore team. The provider here takes care of the entire setting up process and manages offshore operations as it runs. While there is less, even close to zero, risk for the company, they also relinquish control over their offshore team.
Luckily, weighing pros and cons are not necessary, because there is such a thing as a virtual captive, or the hybrid model, that combines the benefits and strengths of the two models. It makes use of the expertise, facilities, and other resources of a 3rd party provider, and what’s good is that the decision-making power and control stay in the hands of the parent company. The parent company is free to customize the operations according to their preferences. Moreover, once you set up a virtual captive, some providers would allow you to acquire full ownership, from management to all other processes. As the offshore team grows in number and as the company processes stabilize, taking over ownership is possible through a Build-Operate-Transfer agreement.
The Philippines, having proven itself as a major player in outsourcing, is the perfect location to set up a virtual captive. A virtual captive in the Philippines will allow you to handpick Filipino talents to make up your offshore team, as well as mitigate risk and save on capital expenditures through this setup.
A virtual captive in the Philippines is the best way to start with offshoring. A virtual captive in Manila, the capital of the Philippines, can be set up in a matter of weeks, relying on the expertise, management, and infrastructure of a provider and the easy access to new talent.