Posts Tagged ‘captive operation’

The appropriate delivery model for the outsource strategy of an organization depends on many things. When your objective is just short-term cost savings, or the activities under consideration are non-core, non-critical, then typically, you may simply outsource those activities to some vendor. However, in some cases captive operations can be more profitable than outsourcing. When the IT operations are part of your core competency, outsourcing may not be a suitable approach. For instance, if you are a software development firm and wants to control the entire software development life cycle, then captive operation may be a better approach than outsourcing.

In any kind of outsourcing, knowledge transfer remains an important aspect. Initially the organization may require disclosing certain information to the outsourcing vendor. Then throughout the project new knowledge may created and issues can arose regarding the ownership of the intellectual property rights. When the activities are highly knowledge based, the complex intellectual property rights situation may even outweigh the short-term cost advantages of outsourcing. On the other hand, captive operation may be a better approach to simplify these issues and keep the intellectual property rights within the organization.