Shared Services Centers Continue to Thrive as MNCs Look at India for Innovation: Zinnov Study

Top Quote Sheer numbers of Global 500 firms having India Shared Service centers re-affirms the proposition of captive centers as a viable sourcing strategy, with Innovation being their key focu. End Quote
    QuoteIndia has the most number of shared service centers than anywhere in the world. 115 of the top Global 2000 companies have established here.Quote
  • (1888PressRelease) November 17, 2011 - Bengaluru : Zinnov Management Consulting, a leading globalization advisory firm, today released a comprehensive study on 'India Shared Services Opportunity' which reveals the emergence of contemporary Shared Services concept and highlights the enormous growth prospects it holds in the country. Zinnov's analysis of India's Shared Services sector contradicts the recent exaggerated claims of the captive centers downfall and shows that the country continues to be a hot destination for MNCs wanting to establish captive Shared Services Centers.

    Zinnov observed that MNCs which commenced captive operations to support the parent's Engineering Services / R&D needs have subsequently gone on to expand the range of services they source from India. This clearly indicates the country's growth towards creating a comprehensive business environment from the tag of being a low cost location or the availability of rich engineering pool. Taking advantage of the changing scenario, MNC centers are adapting themselves by expanding on their service offerings, delivery and business models.

    As part of the study, Zinnov analyzed seven sectors namely Automotive, Retail, BFSI, Insurance, Oil & Gas, Drugs / Bio-Tech / Pharma and Aerospace & Defense which contribute heavily to the growth of India's Shared Services space. Banking/Financial Services & Insurance are the most mature segments with most of the industry titans leveraging India for their Shared Services needs, says the study. Bengaluru leads the way as the preferred destination for most of the IT services while Pune/Mumbai and NCR have emerged as destination for Business and Knowledge services sourcing.

    According to Zinnov, Retail and Healthcare (Providers/Drugs/Bio-Tech/Pharma) are the emerging verticals as both the segments are witnessing significant adoption of technology in the recent past in order to scale up their business operations. The Shared Services provisioning in Retail sector is all set to evolve and grow in the years to come.

    The key drivers are an imperative to remain competitive in the markets the retailers operate in, entry into India domestic market and growing need to adopt the online and mobile channel. With significant capacity and capability in delivering typical back office services, India also is now a favored destination for building and delivering services around e/m commerce. 4 of the world's 5 largest retailers have re-fit their India centers to deliver cutting edge e/m commerce solutions and services. Aerospace and Energy/Oil & Gas, on the other hand are the other two areas where Zinnov sees immense traction as some of the global leaders in the space have turned their radar towards the country recently. Currently, the NCR region alone operates 6 Shared Services centers for Aerospace & Defense Engineering Services.

    The Auto sector too, with a huge consumer base in the country, expects a massive potential for Shared Services in the recent future. As the domestic business of the auto companies grows, the need for servicing India business and customers will also grow. This could trigger a move for globalizing their service operations via the India center. Chennai being the manufacturing base for many international auto giants is well positioned as the most preferred location for automotive shared service centers.

    The study goes on to note that captive centers are moving on from the head start given by cost and labor arbitrage, to "Innovation" as it becomes the key to demonstrating "India value proposition". However, Zinnov also cautions that a lot more needs to be done to build and sustain the new "India value proposition" as emerging offshore service locations are fast catching up on traditional levers of cost & talent arbitrage. "Unlike a decade ago, India has to now compete with 120 other emerging offshore destinations and cost and talent arbitrage are just not sufficient levers anymore."

    Shared service centers in India are leveraging the presence of Start-ups, R&D centers and Service Provider eco-system to deliver cutting edge technology solutions and innovate on processes and business models.

    Talking about the Shared Services Center scenario in India, Mr. Sundararaman Viswanathan, Manager-Consulting, Zinnov Management Consulting said, "MNC centers that support scaled operations, drive innovation, and have reached the critical mass, are a huge success and are delivering optimal value to the parent. We are also noticing an interesting trend of emergence of Combined Services Center which is designed to deliver end-to-end services."

    "The India value proposition for most of the companies has shifted from cost and labor arbitrage to innovation and value addition. Those companies that have recognized this trend have become strategic partners taking on Global Leadership roles and those who haven't are fast becoming redundant", he added.

    Last but not the least, the study highlights the emergence of Shared Services Centers in India with significant upsides that could help drive better operational efficiencies. Some of upsides of a Shared Service Center according to Zinnov are: Better leverage on economies of scale and hence the ability to deliver more for every $ spent on services provisioning; End-to-End process ownership provides for an integrated global career path and hence helps in improving retention rates at India centers; Build true Integrated Centers of Excellence and hence deliver better efficiencies to the parent; Provides the center with a clear vision and hence enables the site leadership to make strategic investments and Helps create and operationalize a sustained innovation agenda.

    To download the report, please visit this URL:

    About Zinnov Management Consulting

    Founded in 2002, Zinnov - meaning Zeal in Innovation - is a leading management consulting company providing advisory services in the area of Global Sourcing, Emerging Markets Expansion and Human Capital Optimization to Fortune 1000 and reputed SMB companies. Zinnov works collectively with clients to tackle prevailing organizational challenges by analyzing the changing dynamics, improving performance, and building institutional capability. The services delivered to its clients through advanced reasoning and analytical techniques, provides solutions that help in integrating organizational vision, business definition and processes.

    For further information, please contact:
    Kinjal Chhetri Panwar
    Senior Marketing Manager, Zinnov
    Email: kinjal ( @ ) zinnov dot com
    Phone No: +91 9466132313

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