Offshoring of research activities surfaced as a high potential segment that picked up steam in the last four to five years. Analytics emerged as an extended function in conventional research areas.

Service providers in this segment include large BPOs, KPOs and pure play R&A firms. Over the last three to four years, several large BPOs including Genpact, WNS, EXL, Infosys BPO, TCS BPO and Wipro BPO, started offering R&A work besides the regular business process outsourcing work. These companies added the research aspect primarily as a value addition to their services portfolio. Alongside these large service providers, several KPOs and pure play R&A companies also emerged. Notable among these are Evalueserve, Ugam Solutions, Market Rx, Netscribes, Copal Partners, Aranca, Adventity, Irevna and Amba Research.

Impact on offshoring

The research divisions of large corporations including HUL and P&G have budgets ranging from $5 million to $100 million, which varies with the research needs of the enterprise. With the uncertain economic conditions, several corporations slashed their research budgets in the last two years. A majority of R&A activities were put on the backburner.

Over the last two years, mid-sized and smaller service providers were hit by margin pressures. While the large BPOs have been able to de-risk themselves by shifting their focus to other areas, many smaller service providers experienced short-term hiccups in terms of workload and had to downsize.

Cautiously moving ahead…

While the downturn resulted in a short-term negative impact on growth of the R&A outsourcing industry, the long term outlook for the segment looks positive as the global economy recovers. Though the slowdown has affected the industry, cost imperatives will help maintain the momentum of offshoring.

Service providers are maturing and have acquired financial, managerial and operational capabilities to build and run centres at multiple locations globally. Some providers have laid down strategies to build capacity (onshore, offshore and nearshore).

With the changing environment, the business model of service providers is undergoing a shift. ‘Multi-shore capability’ has become an important differentiator with several players developing multi-location delivery capabilities.

• Early this year, exëvo opened a new delivery centre in Beijing, China to support data collection and data processing to its existing and new clients.
• In 2009, Ugam Research Solutions increased its US presence and built its client service and project management capabilities.
• Irevna set up a new delivery centre and a client relationship office in Paris and Poland in 2008-09. Last year, Irevna also set up another client relationship office in Hong Kong.
• During 2009, Copal Partners opened a research centre in Beijing, and a business development office in Hong Kong.

The trend towards rapid creation of delivery and marketing capacity across the world will ensure that service providers have centres across the world to meet their client needs. Multiple sourcing models, and a widening array of options in terms of locations, will enable buyers to leverage best-of-breed capabilities and global arbitrage opportunities. Going forward, service providers offering multiple services to multiple verticals and multiple markets will be better positioned to cater to the needs of the clients.