09 Sep 14 7 Business Research Off-shoring Myths

Confused about off-shoring business research? There is so much hype among both, the proponents and opponents of off-shoring that it is hard to distinguish fact from fiction.

Here are a few myths I have encountered in the last more-than-a-decade I have been associated with offshore business research.

1. Off-shoring research is a new phenomenon

I mentioned that I have been connected with business research off-shoring for more than a decade and the practice is actually much older than even that. Some large corporations and database providers started offshore market intelligence operations as early as mid-nineties. Some well-known names include Mellon, Merck, GE, Oracle, Reuters, GM, IBM, Neilsen, Cisco, among others. While data on research off-shoring is scarce, estimates peg the average annual growth at over 70% in the 2003 – 2010 period. In recent years, medium and small companies have also jumped into the fray. Traditional market research firms have been outsourcing (onshore as well as offshore) fieldwork, panels, SPSS analysis, etc. to subcontractors for the longest time. So this is a fairly established best practice among corporates, though it is not very easy to find good case studies on it.

2. Off-shoring yields humongous cost benefits

Off-shoring is not only about costs. While cost benefits from off-shoring can be very substantial, they are sometimes over-stated. There is a very large differential in the salaries of analysts in the developed countries and the popular offshore destinations (like India and the Philippines), and only part of the differential translates into cost savings as there are overheads involved in managing offshore operations.

In addition to cutting costs, off-shoring offers many other benefits such as access to on-demand bandwidth, deeper local knowledge of emerging economies, access to additional/ specialised research competencies at reasonable rates and improvement in efficiencies (24X7 turnaround) as a result of operating across time zones.

3. Finding a research partner is easy

Yes there are a large number of research service providers in many off-shoring destinations. A handful of these are very large pure players in business research with more than 1000 employees; most of them are small players. Some of the large BPOs also have research services in their portfolio. So you do have a lot of choice.

However, choosing the right partner is critical. The partner should have the “right” size, culture, competencies, values, locations, etc. to suit your needs. Above all he/she should be trustworthy. All service providers make the same tall claims about their service and it is not easy to see through the marketing messages. How to choose the right partner is significant topic in itself and a topic for another blog (which I plan to publish shortly).

4. Only large companies can offshore

I have heard people say that they don’t offshore as the volume of work they have is relatively small. There is an apprehension that service providers may not give good service to small customers. Also, they are not sure if the overhead required to set up an offshore research partnership is justified for the volume of work.

There are in fact many small service providers who specialise in working with smaller customers. The key is to select an engagement model that makes it worthwhile for both the parties. You also need to consider your key imperative for off-shoring. Are you looking at cost savings alone, or do you also want an economical way of taking care of spikes in your work? Will your customers benefit from local insights or research competencies? Does your internal team lack certain specialised research competencies? If the need is clear, you need not worry about the management overheads in setting up a partnership. In our experience, the investment can be recovered relatively quickly even in relatively small relationships.

Besides, you can break down your project into smaller tasks and check your comfort level with potential partners before you jump in and go the whole hog.

5. Anyone can manage offshore partnerships

Partnerships are essentially between people. The people managing an offshore partnership at both ends are critical to its success. It is very important to have manager who is committed to making the partnership work, willing to invest time in setting it up, is articulate, a good communicator, and highly organised to be able to manage remotely. When you collaborate across organisations, countries and cultures, there are bound to be a few hiccups, particularly in the early days. If the people managing the relationships are farsighted and able to get past these, they can make a success of it and reap the benefits. If one of the managers enters into it with a negative mind-set, the relationship is more likely to fail.

6. Quality is lower in offshore research operations

As in all industries, there are both, high and low quality service providers out there; which is why partner selection is of critical importance in off-shoring.

A “good” partner may in fact exceed the quality expectations of its clients. Since research off-shoring is being done for many years, the established service providers have mature processes and the best practices have been established. The offshore partners are typically bound by SLAs (service level agreements) and sometimes have far more stringent quality control mechanisms and measurement systems than internal teams for the similar tasks. Further, since they typically work with multiple clients, they are able to bring in more robust best practices from all their experiences.

7. Only routine research tasks can be off-shored

Many offshore partnerships typically start with routine and repetitive tasks and then move up the value chain as the teams get comfortable with each other and confidence is built on both sides.

While not all research tasks can be comfortably off-shored, the repertoire has widened over time. Offshore teams currently undertake all kinds activities – from routine MISs and news monitoring to designing market strategies. The suitability of a task for off-shoring depends on the capabilities of the offshore partner, and also on the nature of the task. It also depends on the degree of confidentiality associated with the task and whether it requires the analyst to have a deep understanding of the company and its business. For example, while an offshore team collect intelligence on a new market, an analysis of whether the company has the capabilities to succeed in the market may be best done by the key strategists within the company.

I plan to deep dive into each of these myths with examples from our own experience with offshore research. So look out for the forthcoming blogs in this series!

Also, you are welcome to share your experiences with off-shoring research – myths as well as best practices.