New launches of captive centers offshore continued to increase in the first half of 2015, according to research from outsourcing consultancy Everest Group. Companies in the manufacturing, telecommunications and technology industries, in particular, expanded their in-house presence offshore in the first and second quarters compared to last year. Manufacturers, for example, set up 18 new in-house centers in the first half of this year, compared to just six during the same period in 2014, according to Everest Group.\n[ Related: Offshore captive centers are again a thriving outsourcing model ]\nAnd these wholly owned service centers, which traditionally served as back-office delivery centers, are beginning to play a key role in IT transformation efforts. \u201cIn the past, global in-house centers (GICs) were playing service delivery roles for the enterprise,\u201d says Salil Dani, vice president of global sourcing for Everest Group. \u201cWhile most of the GICs continue to play this role even now, there are some GICs that are taking ownership for digital transformation for the enterprise.\u201d\nThere are a number of drivers behind this new shift in responsibility. More mature captive centers have established their credibility as reliable service delivery organizations, in some cases having implemented successful pilot projects in the digital transformation space, says Dani. In addition, some companies are finding the skills for these initiatives offshore.\nTesco, for example, operates its Hindustan Service Centre (HSC) in Bangalore. While it began as a back-office service center for the multinational grocery giant\u2019s operations, the unit now develops mission-critical projects for global transformation, according to the company. Ecommerce powerhouse Amazon and conglomerate Honeywell are also looking for similar contributions to the business from their captive centers offshore, says Dani.\nCompanies looking for more strategic contributions from their offshore centers do face some challenges, however. Finding a large base of digitally savvy talent can be difficult outside of India and a few locations in Eastern Europe, according to Dani.\n\u201cEven in India, the scalable talent pool is often small\u2014a few full-time employees per [GIC], and largely concentrated in cities such as Bangalore, Hyderabad, and Mumbai,\u201d Dani says. \u201cThis constrains the extent to which enterprises can leverage their global network of GICs in offshore and nearshore locations to drive enterprise-wide transformation.\u201d\nAdditionally, there may be limits to which a faraway center can support true end-to-end ownership of digital transformation efforts. \u201cGiven that digital processes are associated with significantly enhancing customer experience, these often involve significant [interaction] with business users and other corporate teams that usually reside onshore,\u201d Dani explains.\nWhy offshore captive centers partner with startups\nOffshore captives are also increasingly partnering with startups to drive innovation in the areas of data integration, mobility solutions, big data analytics, cybersecurity, customer experience improvement and marketing solutions, according to Everest Group. \u201cThere is also early evidence of partnerships in process improvement and automation [such as] workflow tools and employee engagement platforms,\u201d Dani says.\nThese engagements come in many varieties. Some in-house centers are setting up incubators or acquiring startups while others collaborate with startups on hackathons or open innovation initiatives. In certain instances, captive centers are working with startups as part of their relationship with an external IT service provider.\nThe benefits include faster speed to market, decreased cost of innovation, and brand enhancement that helps with captive center talent recruiting, according to Dani. Captive centers working with startups may also be laying a foundation for broader startup engagements with the parent company and facilitating internal cultural acceptance of increased agility and responsiveness, he says.