Superior technical skill, statistical capabilities and broader organizational culture including the emergence of proactive problem-solving teams have brought about a significant change in the landscape of offshore analytics. The growth in technology has enabled the breaking of the analytics process into distinct components which in turn has spurred a tremendous growth in offshore analytics.
Analytics outsourcing, a segment of the growing KPO industry, is basically the application of computing resources, operational research and statistics which is used to solve business and industry problems. Analytics outsourcing companies cater to different verticals across the value chain or are involved in end to end delivery of projects.
Key Catalysts in Offshore Analytics
Reetika Joshi, Senior Research Analyst at ValueNotes Sourcing Practice and co-author of the HFS analytics report titled “Where Offshore Analytics is Heading in 2011”, cites enhanced efficiency and relatively lower costs as the key catalysts for outsourcing analytics. However, she also adds that business value plays a far greater role in analytics delivery than pure cost arbitrage and efficiency. Joshi also puts forward other reasons for the growing analytics trend which include the availability of cross-functional and multi-skilled talent, reduced time to market ratio and the high cost arbitrage for lower end analytics.
Viral Thakker, executive director of the Performance and Technology Services Company KPMG, has this to say, "To remain competitive, organizations have realized the need to use analytics to reduce the time to market ratio for their services and products in areas such as marketing, product development, product launches, strategic decision making, etc., and outsourcing analytics significantly enhances the client service organization's ability to generate top-line revenue."
Scope Offered by Offshore Analytics
With greater complexity in the usage of analytics, there is a tendency to break analytics projects into distinctly executable parts and outsource them to different specialized teams.
Reetika Joshi outlines the four levels in the analytics services mix. They are
- Data analytics: Data analytics which include data entry, data de-duplication and data preparation takes up nearly 50% all of KPO-centric analytics work. It is a low-end service and offers low revenues to service providers.
- Intuitive analytics: Intuitive analytics involves the running of models and generating of new insights on a continuous basis.
- Model building: This advanced stage of outsourcing analytics, entails designing of models to predict various business outcomes.
- Solutions: Solutions include developing various ‘analytics components’ to address a clients’ specific need using an analytics platform or other tools.
In addition to the above standalone analytics, various other embedded or value-enhancing analytics are also offered by IT/BPO providers.
Key Service Providers in Offshore Analytics
The analytics industry features a large number of vendors offering end-to-end solutions to specific verticals. Recent outsourcing trends identify BPOs, KPOs, BPO/KPO arms of large IT-BPO Companies, Specialist Market Research (MR) firms and other boutique Research and Analytics (R&A) firms as the key service providers.
Viral Thakker, attributes this industry-wide phenomenon to the evolution of these firms from providing "rule based work" to providing "judgment based work" which is knowledge intensive and therefore gaining higher business value.
The Need for Data Security in Offshore Analytics
Data protection and privacy concerns play a more significant role in the KPO industry than in the BPO industry. Conflict-of interest issues and management of Intellectual Property (IP) are also more demanding in analytics outsourcing. Apart from enforcing stricter data security laws, Joshi also suggests creating captive centers offshore that specialize in analytics in order to maintain better control of company or customer data.
New Areas and Adjacencies in Offshore Analytics
Going by the recent outsourcing trends, Thakker identifies the following areas where analytics outsourcing will be strongest.
- Customer analytics for the energy and utilities sector (smart metering)
- Cyber-analytics and cyber risk management to detect cyber crime, acts of terrorism, foreign espionage and intellectual capital theft etc.
- Learning analytics to assess students' academic and extra-curricular progress, predict future performance and identify potential issues
- Cloud based business analytics
- Fraud analytics in retail banking
- Analytics from social network data mining
India's Role in the Outsourcing of Offshore Analytics
India possesses a high availability of skilled labor, especially vendors who are able to provide their clients with contextual domain expertise which is an important driver for analytics outsourcing. Moreover, the recent developments in technology and telecommunication have made it possible to gain access to real-time data and increase the speed of data processing and analysis.
The analytics outsourcing industry in India has also experienced rapid growth due to the relatively standardized nature of analytics and a growing awareness of the increasing quality of education systems in favored offshore locations. Recent analytics trends have shown India as a strong contender the changing landscape of offshore analytics.
Was this article helpful? Can you help more people to access it?
Would you be interested in reading more?
Must-read articles for anyone learning about or interested in outsourcing.
Despite overwhelming advantages, outsourcing does have a few disadvantages too.
How poor communications (or the lack thereof) can hinder progress and productivity.