Most law firms and corporates offshore their work requirements to either a third party service provider based out of a low cost location, or establish their own offshore-captive centers to cater to their specific requirements.
The establishment of an offshore unit garnering cost advantage over onshore units while performing high-end activities with world class quality has long been a part of the futuristic policies of fortune listed companies.
The focus on such an establishment is now more than ever before, not merely due to the global meltdown, but also due to the tightening IP budgets of these companies.
Typically, a captive centre is a company’s wholly-owned remote facility for performing core business functions. Captive centers can be broadly categorized into a ‘build, operate and transfer’ or a ‘build, operate manage’ model.
Build, operate and transfer (BOT) is like project financing, wherein the partner organisation receives periodic funding from an interested law firm or a corporate house for initial resource investments, designing, constructing and operating a facility on mutually agreed terms.
The process of establishing the offshore facility starts at the point when a decision on ‘the services scheduled to be rendered by it’ is taken. Based on this, an analysis is initiated to actuate the requisite resources in terms of infrastructure, manpower and training on determined service offerings.
The operate phase is the time to go live, i.e. the manpower starts rendering live services to the parent company and the quality is perfected over a period of time by means of periodic training from experienced professionals at the base or in-house location. This typically extends from a few months to years depending on the quantity and complexity of work processes.
This is also the time to gauge the quality of services so that the offshore establishment renders services equivalent to those rendered at the base. Many a time, new innovative services are created and validated during this phase.
Finally, the centre is transferred, which takes a few weeks to a couple of months. It is typically marked by signing the dotted line for transfer of complete operations and authority to the parent owner.
The build, operate and manage (BOM) model is similar to build, operate and transfer except for handing over of the operations and management to the parent company.
In this model, the partner organization engaged for developing the captive centre not only designs, but is also responsible for the management of the centre once it becomes fully operational. The service provider continues to receive periodic funding from the interested party. Very rarely the base office provides training assistance to the captive centre.
The BOM model can be sub-categorized into a hybrid or a partnership captive centre. Such captive centres have the functionality of both captives and an offshore service providers and act as an overseas establishment in the premises of a third party service provider. Typically, such centres start with low risk services and based on the quality delivered, the parent company may escalate and expand towards more complex service offerings.
The captive advantage
Using a captive centre helps a company align its activities with its core objectives, optimize its use of resources, innovate in creating company-specific processes, reduce operational costs, and promote efficient decision making.
Although a captive centre is geographically remote from the parent’s home location, it is typically more affordable than an onshore facility and more accessible than an offshore third-party service provider would be.
Captive centres are also highly customizable to suit existing IP service line requirements, whether these are patent prior art searches, drafting, preparation of office action responses, technical analyses of patents or technologies, preparation of invention disclosure statements, docketing or paralegal functions.
A captive centre can also be customized to provide client-specific services such as patent portfolio optimization, pre-filling claim strength analyses, competitor infringement watches, in-house parameter-based file history reviews, annuity maintenance and structural discarding or licensing out of non-core patents and patent applications.
With careful development and management, a captive centre can provide enhanced levels of IP and business knowledge, market sensitivity, innovation, productivity and best IP practices along with the benefits of a low-cost offshore location.
Amit Aswal is a patent engineer and leads the patent licensing and infringement unit at Clairvolex Knowledge Processes, a Delhi-based legal outsourcing firm.
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