Back Office HRO Solutions

In recent news, NJ based Netfabrics Holdings Inc. announced it has set up an Indian subsidiary, Netfabric Technologies India P Ltd to deliver BPO and HRO solutions for its clients. Aviva, the British insurance company, plans to move nearly 2,900 business process outsourcing (BPO) seats from third-party providers EXL and WNS to Aviva Global Services (AGS). Aviva has already transferred 1,600 employees from a third partner, 24/7 Customer, to AGS.
Many others like the above companies operating in the US and the UK are opting to set up their own companies in countries like India as subsidiaries to carry on their back office processes. They consider it a wise move to give outsourcing contracts to their own set ups so that they can retain the profits within the company and it also ensures the interest of security of data. This move is particularly seen with larger listed companies so that they can persuade their shareholders easily. A holding and subsidiary relationship is what companies are seeking in today’s world considering the fact that outsourcing to a third party is not giving them the right profits as budgeted. This is an easy option, especially in India, because all companies operating under service category (with certain exceptions) enjoy the 100% automatic route of foreign investment. However, in certain cases, companies do not prefer this move on account of the fact that this attracts the transfer pricing and taxes may be dearer for them. There are plenty outsourcing companies which are operating as a captive units of their parent companies in India. The advantages these companies enjoy are enormous. They can choose the right talent for the right job, they escape paying the service fee from third party companies, they can be assured with data security and they can also build a global organization with the same core values across the company irrespective of location. They can be ensured that their process knowledge can be retained within the company since they adopt in-house training rather than train a third party company staff. Moreover, HRO change management becomes an easy exercise with this option.