Everest Research Institute: Third-Party Outsourcing Suppliers Can Provide 5-15 Percent More Savings Than Captives; Best-in-Class Captives Can Match Third-Party Performance

Third-parties outsourcing suppliers are typically 5-15 percent
less expensive than captives in terms of their total cost of
operations, according to a recent study by the Everest Research
Institute. The study makes a holistic comparison of costs across
operating costs, productivity, transition, sales and marketing and
margins. The cost advantage of the third-party model is derived
primarily from better leverage of scale, leaner operating
environments, more complex overhead management associated with most
captives, as well as higher investments that captives make in
knowledge transfer during offshore migration and creation of a more
global culture. However, best-in-class captives are observed to
operate at similar and even lower costs.

Although cost reduction is important, the study, Comparison of
Outsourced and Captive Solutions for Capturing Value from Outsourcing,
advises that a company's decision of which model to leverage must be
aligned with its near- and long-term strategic goals. The Institute
will also host a Webinar on October 11 at 8 a.m. CDT, to provide
multiple viewpoints on the third-party and captive offshore divide.

"Many of the factors that drive up the near-term captive operating
cost structure can be valuable investments in the long-term to create
business and strategic impact," said Nikhil Rajpal, Vice President of
Global Sourcing for Everest Research Institute. "To capture the value
associated with the captive model requires an investment of effort and
finances, and the company moving the work offshore as a captive
operation must maintain focus on cost-reduction opportunities where
relevant."

According to the study, the third-party model can be better suited
for companies who value goals such as minimizing location risk,
attracting scarce talent that is not core to the business, and scaling
costs to match demand for processes with fluctuations in volume.
Conversely, the captive model can further goals such as to gain access
to new geographic markets, increase access to management talent,
achieve end-to-end control, and enable greater integration with the
parent company.

"A company must identify the model that works best for its
specific objectives and situation," said Eric Simonson, Managing
Principal of the Everest Research Institute. "It is becoming
increasingly clear that the third-party and captive models are
differentiating themselves and should be compared based upon their
unique attributes. There are unique types of value that the third-
party and captive models are better suited to capture that can help a
company better reach its strategic goals and, in many cases, a
combination of both models is the optimal solution."

This report builds on to the results of a recent Everest study,
Captive Value Diagnostic Study Market Update, which surveyed over 100
key executives who operate captives across global companies. The
survey revealed that more than 85 percent of these executives believe
that their captive operations are delivering on cost savings and
service expectations, despite contrary opinions.

The Webinar will take place on October 11, 2007, at 8 a.m. CDT;
1300 GMT; 6:30 p.m. IST. To register, please visit:
www.everestgrp.com/Webinars.

To read more about the results of the captive studies, an extract
of both reports are available at www.outsourcing-center.com. To
purchase the reports or receive more information about other research
services, please e-mail info@everestresearchinstitute.com or call
+1-214-451-3110.

About Everest Research Institute

Everest Research Institute (www.everestresearchinstitute.com)
serves as a central source of independent and objective strategic
intelligence, analysis, and actionable insight for leading
corporations, service providers, and investors in the global
outsourcing and offshoring marketplace. The Institute addresses both
business process and information technology sourcing topics, providing
the global outsourcing and offshoring community with information that
empowers highly productive, sustainable sourcing strategies and
relationships. The Institute's distinguished Board of Advisors, senior
executives and thought leaders oversee the Institute's research agenda
to ensure that it fully supports the business needs of corporations,
service providers and investors.

Everest Research Institute members receive access to unparalleled
analytical and advisory services, including access to Everest
analysts, in-depth reports on major outsourcing and offshoring topics,
white papers on market-shaping events, and Webinars designed to
provide insight and information about important market trends. The
Institute's wealth of knowledge and experience provides members with
unique perspectives into today's marketplace and the competitive edge
required to take advantage of emerging opportunities.

Everest Group is a global operational strategy consulting firm
with offices in such leading business centers as Dallas; Gurgaon,
India; London; New York; Toronto and Melbourne. An industry leader
since 1991 when we created the sourcing consulting category, Everest
Group has earned a worldwide reputation for ongoing innovation as we
help clients achieve maximum value from their operations, which
includes sourcing strategy and implementation. Everest created the
Everest Research Institute (www.everestresearchinstitute.com) as the
central source of industry information. Please visit
www.everestgrp.com and www.everestresearchinstitute.com for more
information.