Over the past five years, a business concept was introduced and welcomed by the global outsourcing industry. This was the Virtual Captive, an outsourcing delivery model which was originally made for the BPO segment, and was later used for the ITO sector. A company that is looking to outsource a part of the operation can either put up a wholly-owned extension of the company in an offshore location, or acquire the services of an offshore third party service provider.

A virtual captive, which is usually managed by a service provider, matches the systems and operational style with the operational agreement and the basic practices of the client. Along with that comes dedicated resources and infrastructure.

The service provider manages most of the day-to-day operations, but the mother company makes all the decisions. In most cases, the supplier is the one that handles the recruitment process, tailor-made based on the client's requirements.  However, it is the client's task to introduce the offshore team to the organizational culture and processes of the company. A great way to do this is by visiting the virtual captive, studying the reports and data sent by the service provider, and giving rewards to motivate the offshore team.

A virtual captive is a much preferred delivery model by most clients that need large offshore operations, for it is easier to set up. With wholly owned captives, the company would have to invest time and money in researching about the preferred offshore location's culture, policies, and laws regarding outsourcing and the construction of the captive site.

Some of the threats that come with the virtual captive delivery model are:

-The mother company might lose control over the whole operation, being that the time zones are different. This would mean that solving any issue might take time before it is alleviated. 

-It is also more expensive than other delivery models, being that it is a hybrid and it is made for large-scale operations. 

This type of delivery model is expected to be costly expensive when you transact with a service provider, rather than running a company-owned captive center. This is because most third-party service providers have fixed rates.