Analytics : Consulting, In-House or Outsourcing

Anunay has currently written an article in American Banker about Analytics Outsourcing (sorry, it need login, so I am not able to provide the link for the article). The article is titled "Catching the new wave of Globalization".

He has strongly put his points towards the need of Analytics outsourcing in the lines of other operations. I think, I agree with him completely.

There is a Business Process Metamorphosis. Every process start with a innovation by a specialized process solution vendor and it uses its expertise to serve prospective clients through Consulting route. When this process becomes a basic necessity of the clients some see an opportunity to open in-house division for it. But as the department grows and the cost involving to maintain in terms of both tangible and intangible assets becomes huge, some leaders think forward and outsource it. Then a new industry is formally born for the process which is different from the early movers. These new players are not only looking to prove some innovation but they look seriously to establish themselves as a potential process partner. They add tremendous value to their clients. And the party who adopts this for the first time will run much ahead of its competitors. And they deserve it.

I remember one example of Airtel India. Most of the network management and IT Management for Telecom industry was done in-house in India following similar rules in other developing countries. But Airtel came forward and outsourced both welcoming criticisms from all over. IT management was outsourced to IBM while Network Management to Juniper, Ericson and others. This gave Airtel board time to focus on other major priorities like expansion of retail outlets and focusing on customer service. The reward was awesome. Airtel jumped above the state-subsidized BSNL to become the country's largest Telecoms Company.

Now, similar changes are very look awaited in Analytics. Some of the US banks are off-shoring it by opening their captive off-shore centers for cost cutting. And they are gaining a lot. Citi is doing Analytics work mainly in India, Mumbai and Bangalore. The similar trend is being followed by various other banks.

But one point is missed. They are off-shoring but not outsourcing. It may be due to lack of good Analytics Outsourcing Vendors or the lack of interest by the parties to outsource due to the data sensitivity. What ever may be the reason, this is something that is coming in near future. The one who moves early will be highly rewarded.