Introduction

Captives originated to capture cost arbitrage and it continues to be the single largest driver for offshoring to captives. In pursuit of adding value beyond cost arbitrage, the Center of Excellence (COE) concept provides captives with a powerful mechanism to develop focused expertise and capabilities.

COEs are an organizational model uniquely differentiated through deployment of talent, unilateral focus, and investment support to pursue additional sources of value. This is achieved by tasking a specific group, with relevant skills, resources, and leadership to unlock new sources of value.

While many types of COEs can be deployed, there are five basic archetypes:

• Process optimization and reengineering COE
• Global sourcing COE
• Analytics COE
• Technology-led innovation COE
• Standards COE

Each COE has unique objectives and associated competencies and hence must be carefully selected and designed. Among the several factors that a COE design must consider, the critical ones are: talent model, commitment from parent organization and captive’s alignment with the parent organization.

COEs not only help unlock greater value from captives, it helps them remain tightly integrated with the parent organization. Hence, helps captives create and drive lot of impact.

This report addresses the following areas:

• How COEs unlock greater value
• Five COE archetypes
• Design of COEs – key considerations
• Common mistakes in capturing benefits of a COE

It also includes a diagnostic assessment to gauge the need and readiness for creating COEs in your organization.

Special thanks to our Guest Analyst, Vinit Vishal, who helped envision and develop this research.