Outsourcing analytics can offer benefits — but requires a carefully constructed relationship.
The surge of interest in big data has led to growing demand for analytics teams. Having big data capabilities can help companies become more efficient and improve overall competitiveness. Companies with superior data analytics capabilities have found ways to build long-term advantages. FedEx Corp., for example, has for years used its team of analytics professionals to create and maintain a competitive advantage through enhanced revenues and lower costs. One of the factors that has helped Wal-Mart Stores Inc. become one of the world’s largest and most successful retailers is the strength of its analytics.1 Assembling analytics teams, however, is difficult. For one thing, many companies lack the in-house knowledge and experience needed to put together an analytics team. What’s more, the labor market for analytics professionals has grown increasingly tight. Fortune recently reported, “Online help-wanted ads for data analysis mavens have shot up 46% since April 2011, and 246% since April 2009, to over 31,000 openings now, according to job-market trackers.”2 The shortage of analysts — particularly those capable of developing and leading world-class teams that can enable a company to create a competitive advantage from its data and analytics — is driving organizations to consider outsourcing their analytics activities. However, choosing analytics providers and structuring effective working relationships that deliver value require managers to have a clear understanding of what they’re looking for and the potential risks involved. Analytics is the latest in a string of activities companies are outsourcing to business process organizations (BPOs). As the telecommunications boom that began in the late 1990s led to improving communications with emerging markets, Fortune 500 companies began shifting call centers offshore to locations such as India and the Philippines to take advantage of less expensive labor. India was especially attractive because of its large English-speaking population and highly educated labor force.3 Once call centers were established to handle customer service and telesales, companies began identifying other activities that might be suitable for outsourcing or offshoring: IT services, computer programming, legal research, application processing and accounting. Analytics was a late arrival to the business-process-outsourcing menu of services.