According to Saritha Rai, business analytics outsourcing to India is gaining momentum, but the model is substantially different from the traditional IT-BPO outsourcing model.
Business analytics outsourcing to India is gaining momentum, but the model is substantially different from the traditional IT-BPO outsourcing model.
In 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.
For 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.“The 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.”
With 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.
Teams 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.
Analytics 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 Gannon.
“A 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.
Partners 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.
Customer 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 Kulshreshtha.
Beyond 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 provided.
At 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.
The 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 deliverables.
The 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.”