Next Step Forward: Outsourcing Analytics

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D2E Consulting

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Address: 900 Astorway,

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Ability to analyze big data, in the coming years, will hold the key to success of business

organizations. Data analytics is concerned with digging deep inside data sets to unravel

market trends, customer’s likes and dislikes and important business information.

Analytical findings can give companies an advantage over their competitors. These

findings can further help business organizations to take better decisions, formulate new

marketing strategies, opportunities to generate more revenue, to enhance productivity,

improve customer service and also develop unexampled business ideas.

Should organizations outsource?

Big data analysis is usually done by data scientists, who use statistical software and

predictive analysis to delve into unstructured data to provide meaningful responses.

Organizations today are facing the dilemma of whether to develop an in-house data

analytics team or outsource their analytical work. According to an article published in

MIT Sloan Management Review, confidence in analytics has helped large organizations

like FedEx and Wal-Mart to sustain their position as market leaders for decades. Both

these companies have a team of analytics professionals who have helped them to

consistently reduce cost and increase revenue.

Internet of Things, increased use of smart devices and development of smart cities is

generating a huge amount of data and is bolstering the need for an analytic workforce. A

report titled “World Data Analytics Outsourcing-Market Opportunities and Forecasts,

2014-2020”, published by Allied Market Research predicts that the data analytics

outsourcing market will register a compounded annual growth of 29.1% and will touch

$5.9 billion by 2020. This growth will be further augmented by small and medium-

sized organizations who will find it extremely expensive to amalgamate a team of

analysts.

The reason which has led to organizations gradually

outsourcing analytics are-

a) Gap in demand and supply- Acute shortage of data scientists have led to a gap

in demand and supply of skilled workforce. A skilled data scientist should

have an expertise in mathematics, computer science, statistics, and

management. He should be able to visualize and provide adequate solutions.

b) Specialized Processes – Data analysis consists of a whole range of specialized

processes. It involves managing data with the help of data integration tools

followed by data validation and cleaning. The next step is developing a model

and testing it. The last step is to report insights and develop business rules.

c) Expensive – An in-house data analyst team is uneconomical and time-

consuming. On the other hand, outsourcing is cost-effective and less time

consuming.

However, security is a major concern as far as employing the third party to analyze data

is concerned. Organizations should be extremely careful before outsourcing their data

analytics job. Protection of customer information should always be a priority when

sharing information with consultants. Moreover, after the analysis is done, strategic

decisions have to be taken in-house.

Growth of the BPO sector

The late 1990s saw the telecommunication industry registering a boom. This led to

many large organizations shifting their call centers to Asia, firstly as it was cost effective

and secondly because of a huge population that could converse in English. Gradually,

other sectors like computer programming, financial accounting, legal research and

health care jumped on the outsourcing bandwagon. The 21st Century marked the entry

of analytics in the BPO (Business Process Outsourcing) process. India became the hub of

the emerging analytic market. A.T .Kearney in its 2016 Global Services Location Index

mentioned that India is the leader as far as IT outsourcing is concerned. Following India

is China, Mexico and the Philippines have evolved as leading outsourcing markets.

Creating a profitable partnership

The offshore analytics BPO in India started either as a wholly owned subsidiary of the

parent company or as third – party vendor. Dell Global Analytics in Bangalore is a

wholly owned subsidiary of Dell Inc in America. Research reports have mentioned that

factors like the distance between the main office and its offshore plant, proper

communication facility, language knowledge, and technical skill are some of the key

factors for a successful BPO partnership.

According to an article published in MIT Sloan Management Review, mentioned that

company that is situated in markets where it is difficult to get skilled workers generally

opted for an analytics BPO to provide the necessary solutions to give them an added

advantage over their competitors. The article also highlights an issue that analytics BPO

uses this partnership to showcase their talent and market successful applications

developed by them in a much larger market. On the other hand, companies who have

their own in- house data analytics team also enter into a partnership with offshore BPOs

to help them with some generic analytics. This helps them to stay focused on advanced

analytics.

Creating a proper balance is the key to success. Analytically challenged organizations

can leverage competitive advantage by entering into a partnership with the right kind of

offshore analytics BPO. The situation is somewhat different for superior organizations

who work with an offshore analytics firm to receive basic analytics at low prices along

with some tax benefits. Intellectual property ownership is an important consideration

for both clients and a partnership can only be fruitful if both the parties seek to benefit

from it.

Thank You.

We hope that the information has been helpful.