Telstra to set up India captive centre with Infosys

Australian telecom major Telstra, which has been outsourcing technology work to Infosys for nearly a decade, is planning to set up a captive offshore centre in India. Notably, Infosys will help Telstra set up the captive centre with around 200 people to begin with, as the telco looks to work on emerging technology areas at lower costs, people familiar with the development said.

“Telstra is always reviewing opportunities to find new ways to improve customer experience across all areas of our business,” a Telstra spokesperson said in an e-mail response. “No decision has been made as to whether an offshore captive centre will be part of that plan.”

When contacted, an Infosys spokesperson declined to comment.

Infosys is among the largest technology vendors for Telstra. Telstra’s move to set up a captive centre in India, analysts say, is in line with what they call a “second wave of captives” in the country.

“We cannot call this a trend yet, but we’re observing that many companies are getting or planning to get their work back in-house,” said Pareekh Jain, research vice-president (engineering services) at HfS Research. “For example, AstraZeneca started this a couple of years back in India and opened its captive centre in Chennai. Today, this centre has about 1,500 professionals.”

In April, India’s software lobby National Association of Software and Services Companies (Nasscom) said global in-house centres, as it calls captives, have become an integral component of the fast-growing Indian information technology-business process management (IT-BPM) sector and contribute a 20 per cent share or $22 billion in IT-BPM exports from India. The country has about 1,050 captives employing 790,000 professionals.

India’s software and back office exports stood at $108 billion in the last financial year, said Nasscom.

Last week, British liquor major Diageo said it would hire 1,000 professionals at its newly opened captive back office in Bengaluru by 2017.

Global in-house centres, or captives, operate in India across all service lines —  IT services, BPM, engineering services, and product development.

Banking, financial services and insurance; software; telecom; and semi-conductor are the key industry verticals with a growing focus in aerospace, health care, retail, and automotive, Nasscom said in April. “They are also playing a diversified role for the global enterprise across and are viewed as cost centres, centres of excellence, programme management offices and an innovation hotbed for emerging markets,” it said. Analysts say that global firms are struggling in their shift to adapt newer technologies and business models and look at working on smaller models in closed units before they implement across organisations.

“Such moves can be the next operational strategy for improving the effectiveness of IT and business processes or can be a part of future-proofing customers’ operations. Customers are facing tremendous disruption in their core industries with the new-age companies and would like to have some technology capability in-house, especially in newer areas such as digital, which can help them navigate digital disruption,” said Jain of HfS Research. He added India’s traditional advantage of the large base of English-speaking and higher-educated talent pool continues to be an attraction for global firms. “India is becoming a hotspot for talent in newer technologies for the same reason the country was popular for traditional IT services.”
CAPTIVE AUDIENCE

• Telstra captive centre in India in line with global trends
   
• Infosys, among largest vendors for Telstra
   
• India witnessing the second wave of captives
   
• Captives contribute 22% of India’s $108-billion software and business process management exports
   
• Over 1,050 captives employ 790,000 professionals