What Are the Differences between Captive and Third-Party Financial KPO?

The KPO industry is pegged to cross 30 billion USD in 2015 and grow at 30% annually. The market is run pure-play KPO establishments and captive operations, with some establishments following hybridized company model. Here is a pie-chart rendering of current trends.

KPO Market Share

You will notice that financial KPO grabs the highest market share at 60%. In India, KPO offers specialized career opportunities. Being a prominent and popular option, the financial KPO sector attracts new talent every year.

Keeping this in mind, FinanceWalk presents an informative article introducing you to captive and third-party financial KPO and their differences. If you’re currently working in BPO industry, read our detailed guide on transitioning from BPO to financial KPO.

If you’re interested to begin a career in finance, joining a KPO will be a good start.

What Is a Captive Financial KPO?

A captive financial KPO is an offshore unit of the parent company. Finance institutions like, for example, Goldman Sachs and JP Morgan Chase have captive operational financial KPO centers in India.

The reason for their existence is the need to outsource certain company functions to lower costs and maximize available local manpower and talent.

Setting up a captive financial KPO prevents and preserves their interests against copyright infringement, IPR threats, patent theft and other factors.

What Is a Third-Party Financial KPO?

Unlike the captive KPO concept, the third-party financial KPO is not restricted to a certain company. These are ‘pure’ KPO’s, offering multiple financial services to clients from various domains.

Such financial KPO’s maintain extensively well-defined requirements and deliverable schedules, work is based on available projects without a long-term commitment (unless specified), offer specific technical and skill-based expertise and has a low learning curve.

From a career – seeker’s point of view, you would like to know the differences between captive and third-party financial KPO, which will help in drawing better career decisions.

Differences between Captive and Third-Party Financial KPO

Each of them has its merits and demerits. Let’s identify some of them and map the inherent differences.

1. Conflict of Interest

Working in the captive model doesn’t raise any conflict of interest because all the employees are involved in working towards the same organization, following same goals and objectives.

However, with third-party financial KPO, a potential conflict of interest is possible between employees working in various departments and processes for various KPO clients.

2. Attrition Rate

Industry reports suggest that captive financial KPO has higher attrition rate than the third-party ones due to a couple of reasons.

Employees engaged with a smaller captive financial KPO are unsure about long-term career growth and tends to leave the organization when a better opportunity arises. Secondly, people working in smaller captives are often considered as “second-class citizens” doing less important and uninteresting work.

Either of these biases doesn’t exist in the third-party financial KPO sector. They offer long-term career growth opportunities and employees are treated equally. Attrition exists there too but not because of these two reasons.

3. Industry Exposure

Between a captive and third-party financial KPO, the earlier one offers comparatively limited exposure. This is because an employee in captive financial KPO is working for the parent organization and exposed to the segment that the parent organization deals in.

This is in contrast to third-party financial KPO service providers because they deal with various industry segments simultaneously and as such, the employees are engaged and exposed towards varied learning curves.

4. Financial Attraction

All KPOs offer financially attractive propositions, especially in the entry-level positions but as you gain more experience, the salary is not as attractive when compared to other industries with same experience years.

A comparison between captive and third-party financial KPOs tilts favor towards captive KPOs. Take a look at the table.

Captive and Third PartyWhile in the initial stage, captive KPO pays less than third-party KPO, the trend reverses 2+ years experience onwards. You can read the detailed report here. Further, the report suggests that niche analytics companies which are of small and mid-size like Fractal Analytics and Mu Sigma offer lower salaries (4.5 lakh at entry level and about 16 lakh with 10+ years of experience).

5. Scale & Growth

Company scalability is an important business growth dimension measurement parameter. Few captive financial KPOs are able to scale operations and efficiency due to which the growth of employees remains stunted. The employees work on a same profile for years without any considerable challenge or encouragement.

In contrast, the third-party KPOs don't lack scalable options. Scalability is their efficiency meter and as such, the employees enjoy utmost benefit. They work with various departments, learn new skills and rise high on the career ladder quickly.

6. Education

Education requirements are similar. The captive and third-party financial KPO seek field-specific education levels and skills. For instance, MBA in Finance will be useful here. Back up education with proven skills to make hiring easy for the employer.

These were the main differentiating factors between captive and third-party financial KPO.

Moving on, we present a separate list of captive and third-party KPOs in India. Bookmark this page and refer to the list in your search for current openings. Don’t forget to check out our beginner’s guide to KPO jobs in India.

List of Captive KPOs in India

  • HP DSAS
  • Think Equity India
  • HSBC Analytics
  • Citibank Analytics
  • Nomura Analytics
  • American Express
  • Fidelity Analytics
  • GE Capital
  • RBS Business Services
  • Barclays Shared Services
  • Target Analytics
  • Spencer Analytics
  • Amazon Analytics
  • Dell Analytics
  • HP Analytics
  • Experian India
  • Fair Issac India
  • Dun and Bradstreet

List of Third-Party KPOs in India

  • Aranca
  • Copal Partners
  • Evalueserve (Should Your Work with Evalueserve: A Review)
  • Genpact Analytics
  • HCL Technologies
  • HP DSAS
  • TresVista
  • Infosys Technologies
  • Inductis
  • Nett Positive Analytics
  • WNS Analytics
  • IBM Analytics
  • Mu-Sigma
  • Latent View
  • Accenture
  • Cognizant Analytics
  • TCS Analytics
  • Wipro Analytics
  • McKinsey Analytics Knowledge
  • Deloitte Analytics
  • PwC Analytics
  • AbsolutData
  • Fractal Analytics
  • Dunhumby
  • iCreate
  • Global Analytics
  • Manhattan Systems
  • Capillary Technologies
  • Nabler
  • Activecubes
  • ICRA Technology Services
  • Data Monitor
  • Opera Solutions
  • Ipsos
  • EXL Services
  • Meritus
  • Affine Analytics
  • TNS Global
  • Marketelligent
  • Datamatics
  • Aegis Global
  • Vehere Interactive
  • Cytel
  • Bridge i2i Analytics
  • Modelytics
  • Neural Techsoft

Conclusion

If you want a career in finance, both the captive and third-party KPOs are recommended. Select according to what your present profile, skills, and future goals dictate.

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3 thoughts on “What Are the Differences between Captive and Third-Party Financial KPO?”

  1. Just to clarify, the earlier query is regarding working in India

  2. Sir,

    I am an MBA student at Warwick Business School, UK. I have a bachelors in Law and have a 3.5 years of work experience in business development. I want to get into the financial services sector and I am looking to get into investment banking. As I am new to this sector, do you suggest I start from joining a KPO? or should i focus directly on investment banks? I have heard that exit opportunities from KPOs are limited.

    Any guidance would be highly appreciated!

    Thank you

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