A captive center is an offshore unit that a company wholly owns and operates itself, delivering work for the parent rather than for outside clients. It is also called a Global In-House Center (GIC), and it is the model from which today's Global Capability Centers evolved. Because the parent owns the entity, employs the people directly, and keeps the intellectual property in house, a captive center offers maximum control, in exchange for taking on the cost and responsibility of running a local operation.
What defines a captive center?
The defining feature is ownership: the work happens inside the company, not at a vendor. The main characteristics are these.
- Wholly owned: the parent company owns the entity and runs it as an extension of itself.
- Direct employment: the people are employees of the company, not a third-party vendor.
- IP stays in house: intellectual property and know-how remain with the parent rather than a supplier.
Captive center, GIC, and GCC
These three terms describe broadly the same idea at different points in its evolution, which often causes confusion.
- Captive center: the original term for a wholly owned offshore unit, often cost-focused.
- Global In-House Center: a later name for the same wholly owned model.
- Global Capability Center: the modern, strategic version that drives innovation and product work, not just cost savings.
Captive center vs outsourcing
The clearest way to understand a captive center is against the outsourcing model it is often compared to.
| Feature | Captive center | Outsourcing |
|---|---|---|
| Ownership | Parent company | Third-party vendor |
| Control | High | Limited |
| Setup effort | Higher | Lower |
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