HR issues key challenge for offshore captives

Many organisations maintain wholly-owned subsidiaries abroad for business processing and information technology services.

Known as 'captive' centres, these corporate delivery centres offer many advantages over third-party outsourcing, particularly when confidentiality is a major issue.

However, captive offshore centres can presexnt unique human resources management challenges, requiring different management strategies and policies.

Said Avinash Vashistha, neoIT MD: "For successful management of offshore captive centres, HR must develop policies and practices that are highly flexible in order to adapt not only to local government labour codes but also to recognise cultural and stylistic differences. Most importantly, recognising and adapting to cultural differences can improve communications, productivity, quality and integration with the entire corporate organisation."

Talking about the white paper on 'HR Challenges with Captive Centres', which neoIT has recently published, Vashistha said: "Many captive centres have experienced difficulty in achieving their objectives in terms of scale, scope and cost savings. While this setback can be attributed to many factors, HR is one of the first major hurdles for setting up a successful captive centre. Companies that underestimate this step typically suffer scaling issues coupled with a lack of productivity and savings."

He said that offshore HR strategy has to differ considerably from the parent, for various reasons.

"HR departments will need to become more adept at managing disparate work forces and incorporating stylistic and cultural differences in communication and problem solving. Management will need to develop policies and practices to incorporate a more flexible approach to labour allocation and should not always try to mimic the parent organisation's systems and processes," added Vashistha.

Detailing further, he said regulatory and legal issues will be important as countries deal with the political issues that offshore sourcing is rising. The management structure will need to support relationships with offshore operations and assure that objectives, contracts, delivery models and measurement are well integrated and aligned.

"Failure to recognise these differences in onshore versus offshore human resources will ultimately impact an organisation's ability to achieve business and operational goals, customer satisfaction and cost benefits," Vashishta highlighted.

In addition to the cultural differences, factors like market positioning, recruiting, training and development, compensation and benefits and retention are the other issues which captive centres should focus on.