The CSFST framework was developed as the basis for analysis of Indian Captive / Near Captive units.
A Captive Unit refers to a fully owned subsidiary [A subsidiary is a company controlled by another company or corporation, called its parent (or parent organization) which is usually the corporate headquarters] in India. Usually, this unit is dependent on the parent organization for its business, revenues and potential growth. Typically, the parent organization is also the only customer for this unit. In essence, the present and future of this Captive Unit are driven by the parent/customer entity.
An Indian Captive Unit (CU) is a company which has been set-up in India to cater to specific requirements [say IT] of the company head quartered any where across the globe. The primary business of the global major may be IT related (Eg: IBM, Accenture, Google, Yahoo) or non-IT like Banking, Insurance, etc. (Eg: UBS, HSBC, GE). Almost 100% of the business and revenues are obtained from a single customer (also usually the parent).
An Indian IT Near-Captive Unit (NCU) is a company which is registered and head quartered in India; and provides IT services to customers world wide. However a significant portion (>50%) of the business and revenues are obtained from a single customer. This is synonymous with any Indian Independent Software Vendor (ISV) who has a high client concentration [Client concentration is the industry terminology which refers to what percentage of revenue is derived from a particular customer. A company which has 70% revenues from a single customer has a high client concentration; in contrast a company which has 10% revenues from a single customer has lower client concentration]
CSFST framework has 5 dimensions as listed below:
1) Customer Development and Engagement
2) Strategic Orientation
4) Systems and Processes
5) Talent Acquisition and Development
The CSFST framework is depicted below:
These dimensions form the critical determinants in the growth of a Captive / Near Captive. Each of these 5 dimensions has sub-categories to capture the finer aspects of each of these broad areas for any organization. An organization can face issues along any one/more dimension(s). The ideal utopian state would be to resolves all these issues by developing creative and adequate solutions.
In the next series of blog posts, each of these dimensions are elaborated further.
Extracted from the paper “Crossing the Chasm : Indian Captives / Near Captive Units” published by Nischala Murthy & Rahul Chaubey under the guidance of Prof J Ramachandran, IIMB