Initially, analytics did not perfectly plug into the conventional outsourcing model, as the level of data sensitivity is exceptionally high. These vulnerabilities made some of the clients set up or expand captive units instead of outsourcing their secure data. However, in the past decade, third-party providers have armed themselves with commendable expertise in analytics. Thus, the analytics space that was once dominated by captives of large companies is now embracing large vendors offering end-to-end specialized solutions to specific verticals.
For those companies, whose data security concerns are still making them hesitant about AO, vendors are offering onsite delivery teams – at clients’ premises, client country- so data is not required to reach offshore.
AO started with financial and marketing functions. MNC’s when they had set up their captives in India, were one of the first companies to benefit from it. At the start, heavy lifting in terms of data analysis was being outsourced and then entered the higher end statistical modeling. Nowadays, high end business consulting (based on the data) is being outsourced. Next phase will observe companies start services where they will own data and provide consulting/analytics based on the owned data as well as customer data.
Anoop Sagoo, BPO cross operating group lead, Accenture, expressed, “BPO today is about mining the huge volume of transactional data that is being processed – and using industry expertise, analytics and innovation to help a client operate its business better and drive business outcomes. The ability to undertake analytics on transactions, understand the insights and then identify opportunities to improve and add value to the client’s business is what our clients expect from BPO.”
Over the next five years, the top strategic technology investment at outperforming midsize operations is business analytics, according to an IBM report in CIOs. Thus, this space is expected to grow in the coming year and also there is expected to be an increase in the percentage of service providers offering analytics services from offshore destinations.
Analytics has become a critical component without which tactical and strategic decisions cannot be drawn. Today, companies can choose from a host of platforms and services based tools that can be deployed to make intelligent use of information enabling business decisions that impact both top line and bottom line.
Arun Kharbanda, business unit head, Research & Analytics, WNS Global Services stated that analytics will continue to grow because it helps their clients to grow the topline by understanding customer behavior better. He added, “This in turn helps optimize various business measures like cost reduction/ optimization of price, inventory and shipment to reduce demand-supply mismatches, improving sourcing to reduce cost of procurement, quantifying probability of adverse outcomes to reduce risk, improving compliance adherence and provide strategies to minimize risk; improving predictability of and minimize variations in planning.”
AO- Outlook 2012
Analytics service providers include BPOs, KPOs, BPO/KPO arm or department of large IT-BPO Company, specialist market research (MR) firms, and other boutique Research and Analytics (R&A) firms.
The coming year will not see much change in the major markets that are being served by analytics service providers. That is US, UK and to some degree, the rest of Europe will continue to demand this space as they move up the value chain. Some providers will be focusing on Australia and Japan.
The delivery locations are also expected to remain the same. India, China and Eastern Europe are the most prominent destinations on the analytics outsourcing map. Others include nearshore countries to the US such as Mexico and Costa Rica, and offshore destinations such as Singapore and Sri Lanka.
On the buyers’ front, Fortune 500 companies are the big-league clients for this knowledge service. Pankaj Kulshreshtha, senior vice president, Genpact's analytics and research department articulated, “Genpact has a large concentration in America and a large portion of their current revenue comes from this region. It has footprints in Europe, China, India and Australia. In the coming years, it is expecting to grow significantly in Europe and Asia-Pacific Region.”
In 2012, WNS – whose clients are based in the US and European Union region – would also expand its client base in the Asia-Pacific region.
The next 10 years of the analytics landscape will be drastically different from the last one. “With structural shifts in demographics, that will reflect more prominently in the international trade and economics, where outsourcing will no longer be a choice. The KPO industry in India has gone through a “concept selling” phase in the last few years for a majority of clients who have so far utilized BPO services. At the same time, some clients have been able to create a competitive advantage for themselves through establishing Analytics Centers of Excellence programs that have resulted in improved decision making across multiple business groups, markets and geographies,” opined Kharbanda.
Industry verticals such as shipping and logistics, manufacturing and supply chain were initially not very active in this space, but they now offer good opportunities. From an offering standpoint, web and web related services are very much in demand from the market, as are packaged solutions that combine consulting services with delivery.
“As a business partner, clients will expect a far greater expertise in vertical industry knowledge from their providers as well as the latest combined BPO and IT outsourcing capabilities. Providers will need to possess industry, technical and functional knowledge. They will need the proven ability to deliver end-to-end processes and deploy analytics in order to identify opportunities to improve and add value to a client’s business. And they need a strong transformational capability by making change management a priority,” said Sagoo.
Viral Thakker, executive director, performance and technology services KPMG pointed out some of the emerging/growth areas in analytics:
Customer analytics for the energy and utilities sector
Fraud analytics in retail banking
Cyber-analytics to detect cyber crime and terrorism
Learning analytics to assess academic performance
Other trends that could emerge are:
Cloud-based BI tools could see proliferation
Social network data mining for customer analytics
‘Big data analytics’— Big data refers to the tools, processes and procedures allowing an organization to create, manipulate, and manage very large data sets and storage facilities.