analytics outsourcing to India is gaining momentum, but the model is
substantially different from the traditional IT-BPO outsourcing model.

the last five years, an explosion of data, coupled with a worldwide low-growth
phase, has put pressure on companies to optimize their business decisions. Companies such as Lenovo, Pfizer, and Target have built analytics competency
centers in India or hired analytics partners to leverage data smartly.

India, as a geography, is an unmatched analytics hub because of its pool of talent in
quantitative disciplines like mathematics and economics, says Pankaj
Kulshreshtha, a Bangalore-based Senior Vice President of Analytics and Research
at the NYSE-listed Genpact. “There is also the adjacency to IT services that
provides useful context and the technology background,” says Kulshreshtha, who
oversees a team of 6,000 employees.

India, analytics is a major shift away from the process discipline of
traditional IT and BPO outsourcing, where the competitive advantage is in
running large-scale, standardized processes efficiently.

difference is that analytics is not a back office operation, but a
front-and-centre ingredient of a company’s strategy,” says Vinay Ramesh, Lead of Client Services at Bangalore-based Analytics Quotient. “In some ways, it is
every company’s secret sauce.”

analytics partners, customers are having the classic consulting conversation as
they look to tackle problems in areas such as supply chain, sales and marketing
optimization, or risk management. In choosing a partner, a high level of
analytical and technical competence is essential, as well as the experience of
applying those competencies to solve real world issues.

experienced in handling large amounts of data are invaluable, especially those
with members having advanced degrees in statistics and economics — not the
standard number crunchers or stats geeks but those who can work to derive
insights from the data, says Robert Gannon, VP of Marketing Strategy and Insights at the restaurant chain Ruby Tuesday.

partners need consultants who come with specific skills in areas such as
pricing analysis,  marketing effectiveness evaluation, or brand
marketing. On the technical side, team members have to be people
experienced with cutting edge software and data visualization solutions, says

good analytics partner has an entire ecosystem that brings multiple disciplines
together to create solutions that can be embedded in underlying processes in
the company,” says Kulshreshtha. 

need to have the ability to weave together seemingly disparate data sources
based on a solid business understanding, then deliver those with descriptive
insights in some form of visualization — a tool, an executive dashboard, or a
story. “Storytelling is built by synergising business consulting,
technology, data visualization, and statistics,” says Gannon.

engagements with India-based analytics firms typically evolve over time,
starting with a proof of concept that usually consists of a fixed, low-cost
pilot, where the outsourcer’s talent learns the customer’s business. These
are short-term, ad hoc projects that help answer specific questions, and the fee
is limited. “For the customer, it is a confidence test that a partner has the
subject matter expertise and the domain and technical skills,” says

this phase, the offshore engagement goes into a more scaled-up partnership, where the analytics provider could get involved in longer-term strategic issues
and a deliverables calendar for a continuous engagement. In this stage,
companies share costs for on-site support but pay for all analytics

maturity level, the partnership involves full integration of the analytics into
the business where the partners are an extension of the company’s team. At this
stage, it is typically a long-term contract that is profitable for the
analytics vendor and provides both multiples on onsite resources and teams of
people working in India.

retainer component is much lesser than a BPO’s. The pricing models vary
but resemble that of a consulting company’s, where partners mostly cost for
deliverables and complexity of projects, not for resources, says Ramesh of
Analytics Quotient. But unlike IT contracts, analytics contracts are not
headcount driven, do not have SLAs, and are guided by value instead of the volume of

unique nature of decision sciences — iterative
approaches, discovery driven experimentation, latent questions, muddily defined
business problems, etc. — require a very different contract and pricing model,
says Dhiraj Rajaram, founder and CEO of Chicago-based Mu Sigma, whose main
delivery center is in Bangalore. “We have found that an integrated capacity
subscription (combined of people, processes, and platforms) based engagement
model works best.”