Outsourcing Survey March 2012

Table of Contents

Section Overview Executive Summary Outsourcing Practices Classification Appendix

Page 3 9 11 22 30

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OVERVIEW

Background The Center for Measurable Marketing within the Marketing Department at the Stern School of Business, New York University wanted to conduct a survey among market research business decision makers to determine and track the trends in MR outsourcing including: • Preferred destinations.

• Services that are outsourced.

• Estimated volumes.

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Research Objectives The overall, objective of the research was to determine: • Familiarity with outsourcing. • Attitudes about outsourcing. • Current usage; both domestically and offshore. Attitudes and current usage on outsourcing included determining: • Current level of outsourcing as a percent of total research volume. • Types of research services currently outsourced (data collection,

data tabulation, data compilation, etc.). • Satisfaction with outsourcing. • Amount of outsourcing that is offshore. • Reasons for outsourcing and attitudes toward outsourcing. • Future usage of outsourcing. 5

Research Objectives (Cont’d) Related to the amount of outsourcing that is offshored there was to be additional learning: • Types of services that are being offshored. • Geographic locations for offshoring. • Reasons for offshoring. Suggestions for increasing amount of offshoring.

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Research Methodology • The data was collected online involving a structured questionnaire

designed by The Center for Measurable Marketing with a few open-end responses.

• The study was conducted among North America, Europe and APAC based providers of market research services; only respondents who make and/or influence outsourcing decisions at their company/firm were targeted for the survey.

• The survey was sent out electronically on March 2, 2011 and responses were not accepted after March 16,2011.

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Research Methodology and Sample Sample

• There were 97 C level respondents from Market Research companies.

• Each respondent participated in or was solely responsible for outsourcing decisions.

• 1326 people were invited to take the survey from across the globe.

Company Profile of the Sample

• Majority of the companies provide full-service custom research service.

• They mainly focus on ‘consumer packaged goods’ and ‘healthcare’ business verticals.

• Average number of employees in companies is about 90.

• Average annual revenue of companies is over $12 million.

• Most of the respondents have been in the companies for at least 10 years.

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EXECUTIVE SUMMARY

Executive Summary I

• Majority of outsourcing decisions are made globally at the head office.

• Most study respondents are employed in companies headquartered in the US.

• Most outsourced work is executed domestically, i.e. in the same country from where it originates.

• US and India are the most frequently cited destinations for outsourcing.

• A maximum of 24 units out of 100 units is outsourced by most of the companies; majority outsource services are interviewing a combination of online and CATI data collection.

• The primary reason given for outsourcing is cost-effectiveness.

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Executive Summary II

• Key criteria for selecting a new MR vendor relates to pricing; domain expertise and word-of-mouth.

• India is anticipated to receive more outsourced work in the next year.

• MR services outsourced to India are mostly data tabulation and survey programming.

• Those who outsource to India consider ‘cost’ to be the most important factor, consistent with overall rationale for outsourcing.

• Major reasons for not outsourcing to India are lack of need to outsource there and problems with communication.

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OUTSOURCING PRACTICES

Typically less than 24 units outsourced 63% of the respondents said that their companies outsourced up to 24 units out of 100 units.

5% 6%

23%

63%

3%

0%

20%

40%

60%

80%

More than 75 units 50 - 75 units 25 - 49 units 24 units or less Don't know

Total (n=97)

Mean = 25 units Q9 Of the services that your company provides to clients how many units are outsourced?

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Primary locations for outsourced work are US, India, and Western Europe Most outsourcing takes place domestically or in the US, regardless of how many units are placed.

46%41%

31%27%

0%

10%

20%

30%

40%

50%

60%

Domestically UnitedStates

India WesternEurope

Total (n=97)

Q8 Where is your outsourced work executed?

14

Data collection is the most frequently outsourced service

95%

55% 58%

32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Data Collection /Interviewing

Data Preparation /Analysis

QualitativeResearch

Reporting

Total (n=97)

Q11 We would like to determine the types of marketing research services that you currently outsource.

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Outsourcing of data collection, regardless of type, is expected to increase in the coming year

11%

20%

8%

9%

9%

25%

13%

29%

36%

27%

7%

23%

23%

27%

13%

25%

40%

14%

9%

20%

81%

80%

69%

68%

64%

63%

63%

60%

57%

55%

53%

Online datacollection (n=27)

Content Analysis (n=5)

Data Cleaning/Data Preparation (n=13)Survey programming/scripting

(n=22)Data Tabulation

(n=22)PowerPoint Production

(n=8)Translations

(n=24)Online Focus Group Recruitment

(n=5)Secondary Research

(n=7)Telephone In-depth Interviews

(n=11)Statistical Analysis / Modeling

(n=15)

12%

17%

50%

26%

20%

14%

33%

25%

37%

50%

40%

35%

33%

26%

40%

52%

33%

44%

33%

25%

40%

53%

50%

50%

48%

40%

33%

33%

31%

30%

25%

20%

100%

Open end Coding (n=17)

Online Dashboards (n=6)

Process Improvement Applications (n=2)

Face-to-Face Interviews (n=23)

Online Focus Group Hosting (n=5)

Focus Group Facility (n=21)

Report Writing (n=6)

Focus Group Moderation (n=16)

CATI data collection (n=27)Questionnaire design (n=4)

Transcription (n=10)

Other 1(n=1)

Q20 Do you anticipate that during the next year that your company will be doing more, the same or less outsourcing of the following services? {Base: Those whose companies would be doing more or less outsourcing the next year as compared to the present year}

16

Mostly outsourcing is used to reduce cost and increase productivity/efficiency There are no differences by number of units outsourced

14%

25%

30%

31%

33%

38%

41%

43%

55%

0% 20% 40% 60%

Better access to new markets

Better access to qualified personnel

Increase service level provided to clients

Faster turnaround of projects

Increase in firm's overall competitiveness

Increased focus on core business

Improved organizational flexibility

Increased productivity/efficiency

Reduce costs

Total (n=97)

Q16 Which of the following are your main reasons for outsourcing?

17

Pricing is the primary criteria for selecting new vendors After pricing the criteria focus on ‘domain expertise’ and ‘recommended by peers’.

6%

8%

10%

12%

16%

31%

60%

68%

82%

0% 20% 40% 60% 80% 100%

Size of the supplier company by number of employees

Time zones that are supported by the outsourced vendor

Have Certified processes (ISO/Six Sigma certified)

Recommended by an independent evaluator who can provide…

The supplier has an office in the city/region where you have an…

Credentials of the leadership team

Recommended by peers / testimonials

Domain expertise (knowledge of the market research industry)

Pricing

Reporting (n=32) Qualitative Research (n=58) Data Prep and Analysis (n=55) Data Collection and Interviewing (n=90) Total (n=97)

Q18 When selecting market research vendors for outsourcing services what are the major criteria for your selection of a new vendor?

18

Qualitative research is less likely to be outsourced to India

0

10

20

30

40

50

60

70

80

90

100

Data Collection/ Interviewing

(n=90)

DataPrep/Analysis

(n=55)

QualitativeResearch

(n=58)

Reporting(n=32)

Domestic

USA

India

WesternEurope

Q8 Where is your outsourced work executed?

19

India is expected to have 43% more outsourced MR work in the next year

2%

7%

12%

13%

78%

73%

60%

50%

43%

20%

28%

33%

38%

43%

Domestically (n=45)

United States (n=40)

Eastern Europe (n=15)

Western Europe (n=26)

India (n=30)

Less Same More

Q19 Do you anticipate that during the next year that your company will be doing more, the same or less outsourcing in the regions you had indicated earlier? {Base: Those whose companies' outsourced work is executed at different destinations}

20

Cost reduction is the most mentioned reason for outsourcing to India 30 of the respondents said that their companies outsource to India and cost is the main reason.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Reduced Cost Productivity Improved OrganizationalFlexibility

Total (n=30)

Q16 Which of the following are your main reasons for outsourcing? [Among companies outsourcing to India]

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Of companies that have not outsourced MR services to India, two-thirds state, they would not consider outsourcing to India in the future The reasons given for not outsourcing are either ‘no need for them to do so (24%)’ or ‘due to language problems (21%)’.

37% 63%

Yes No

21%

2%

5%

5%

7%

10%

10%

14%

21%

24%

0% 20% 40%

Other

None / Nothing

Time differences

Competitive pricing

Proximity oflocation

Satisfied withcurrent one

Cultural differences

Quality level

Communicationproblem…

No need

Those who would not consider outsourcing any of their market researchservices to India (n=42)

Q32 Have you considered outsourcing any of your market research services to companies in India? Q33 Why have you not considered outsourcing/offshoring any of your market research services to India?

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CLASSIFICATION

Services currently provided More than 80% of the respondents indicated that their companies carry out ‘full-service custom research’.

6%

18%

25%

26%

30%

32%

35%

42%

60%

81%

0% 20% 40% 60% 80%

Other

CATI center

Online panels

Management consulting

Brand consulting

Field and tab services

Syndicated research

Marketing strategy

Specialized research methodologies for specificresearch areas

Full service custom research

Total (n=97)

Q42 Please mark all of the services that your company currently provides.

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Client industries served by MR companies in study 56% focus on ‘consumer packaged goods’ and 54% concentrate on ‘pharma/healthcare’ verticals.

11%

18%

19%

21%

21%

37%

37%

39%

41%

54%

56%

0% 20% 40% 60%

Financial

Manufacturing

Education

Auto

Utilities

Media

Retail

Telecom

Technology

Pharma / Healthcare

Consumer Packaged Goods

Total (n=97)

Q43 Which are the major business verticals that your company focuses on?

25

Current employees per company About 40% of the respondents said that they have 20-100 employees.

16%

27%

39%

14%

3%

0%

10%

20%

30%

40%

50%

Less than 5 5-20 employees 20-100 employees 100-500 employees Over 500 employees

Total (n=97)

Mean = 89 employees Q44 Can you please indicate the number of employees that your company currently employs full time?

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Annual Revenue 30% of the respondents belong to companies whose annual revenues are $2-$10 million.

Mean = $12,707,317

29% 30%

15%

3%

7%

15%

0%

10%

20%

30%

40%

Less than $2 million $2 million to $10million

$10 million to $30million

$30 million to $50million

$50 million plus Prefer not to say

Total (n=97)

Q45 Please indicate which of the following ranges most closely represents the annual revenues for your company in USD?

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Number of years with company 70% of the respondents have been with their companies for over ten years.

2%

10%

18%

70%

0%

20%

40%

60%

80%

One to three years Three to five years Five to ten years Over ten years

Total (n=97)

Mean = 10 years Q46 Could you please indicate which of the following most closely represents the length of time that you have been with this company/firm?

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Want an Executive Summary of the survey 88% of the respondents have expressed their desire to receive an Executive Summary of the results of this survey.

88%

13%

Yes No

Q47 Do you wish to receive an Executive Summary of the results of this survey?

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APPENDIX

Geographical area Most participating companies are headquartered in North America

67%

21%

5% 3% 1% 3%

0%

20%

40%

60%

80%

North America Europe Asia Pacific South America Middle East Other

Total (n=97)

Q4 What is the geographical area that the company/firm that you make/participate/influence in the outsourcing decisions for headquartered?

31

Outsourcing Marketing Research Areas All the respondents qualified for the research based on their company’s outsourcing of market research services. 70% of the outsourcing decisions are made ‘globally at the head office for the entire company’.

100%

Yes No

Q7 Please indicate whether your company outsources any part/process of the marketing research services that you provide to clients. Q17 Are the outsourcing decisions for your firm made globally, regionally, office by office or on some other basis?

0%10%20%30%40%50%60%70%80%

Globally at headoffice for the

entirecompany/firm

By each office Regionally ateach regional

office

Other

Total (n=97)

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Decision on outsourcing About 95% of the respondents whose companies make outsourcing decisions globally are the decision-makers.

94%

73%90%

67%

6%

27%10%

33%

0%

20%

40%

60%

80%

100%

Globally at the head officefor the entire company

(n=68)

Regionally at eachregional office

(n=11)

By each office(n=21)

Other(n=3)

Yes No

Q50 Are you the person making the decision for the outsourcing at the units you have indicated? {Base: Those whose companies' outsourcing decisions are made globally/regionally/by each office/other}

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Types of MR services outsourced Over 60% of the respondents said that their companies outsourced ‘online data collection’ and ‘CATI data collection’.

24%

26%

26%

33%

37%

45%

46%

54%

55%

61%

62%

0% 20% 40% 60% 80%

Data Cleaning / DataPreparation

Telephone In-depthInterviews

Focus Group Moderation

Data Tabulation

Open end Coding

Survey programming/scripting

Face-to-Face Interviews

Focus Group Facility

Translations

CATI data collection

Online data collection

Total (n=97)

Q11 We would like to determine the types of marketing research services that you currently outsource.

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Types of MR services outsourced (Cont’d) Over 60% of the respondents said that their companies outsourced ‘online data collection’ and ‘CATI data collection’.

Q11 We would like to determine the types of marketing research services that you currently outsource.

2%

2%

5%

5%

7%

10%

12%

13%

13%

15%

20%

24%

0% 20% 40%

Online Focus GroupModeration

Process ImprovementApplications

Content Analysis

Questionnaire design

Online Dashboards

PowerPointProduction

Secondary Research

Online Focus GroupRecruitment

Report Writing

Online Focus GroupHosting

Statistical Analysis /Modeling

Transcription

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