Market research: Uniformity in offshoring strategy across markets

Wednesday, 26 August 2009

With increasing competition, a majority of the research agencies, irrespective of size and location are aggressively looking at reducing costs. Sluggish growth rates, especially in the US and European markets has also been a major concern for most of the research agencies.

Offshoring work to India began in 2000 as an initiative to drastically cut costs in high volume, low value activities like data collection and data processing. Offshoring is gaining traction within the market research industry with greater awareness of success in offshoring amongst other industries, extensive use of technology in research and evolution of a strong offshore service provider base.

Outsourcing across Geographies

The US and European market research industries are different in terms of their market structure and scale. US is a relatively uniform market in terms of language, industry, culture, market size etc. as compared to the smaller and more diverse markets in Europe. However, these differences have not affected the level of offshoring activities within these markets. This can be attributed to uniformity in offshoring strategy adopted by research agencies across markets despite differences of size, nature of operation etc.

This scenario was reflected in a survey of market research agencies conducted by ValueNotes - with two thirds of the total number of respondents offshoring at least one of their services in market research.

Exhibit: Offshoring covers two thirds of the ground

Source: ValueNotes’ report on Market Research Outsourcing - Buyer Survey

Offshoring in other emerging markets like South America, South Africa and Middle East is relatively low and is mostly done by divisions of large research agencies. Buyers in these markets typically offshore work related to global studies mostly for the Fortune 500 clients.

Offshoring is primarily driven by the lack of “quality” research manpower, unavailable in many emerging markets. Also, offshoring allows these research agencies to maintain a lean workforce. Lean workforce in these markets are critical given the fact that volumes of work from emerging markets are relatively low, intermittent in nature and do not merit a full fledged setup.

Companies in Asia Pacific, especially consulting companies from mature markets like Singapore and Hong-Kong, outsource or offshore most of the work to cheaper destinations such as India. The higher levels of offshoring in Asia can be attributed to contagious time zones and the growth in research work focused on emerging markets like India and China. However, we believe that the level of offshoring in Asia will be comparable to those of emerging markets when we consider the Japanese market. The Japanese market research industry is the fifth largest in the world and largest amongst all the Asian countries. However, language barrier and lack of cultural proximity has ensured negligible offshoring volumes from this market bringing down the overall offshoring in Asia.

Offshoring Destinations – Diverse Choice!

The propagation of technology has increased the scale and speed of research, while enabling outsourcing of various activities. Today, research agencies have a wide choice in terms of destinations and service providers to outsource/ offshore their activities.

Exhibit: India leads and Eastern Europe lead – Latin America not so far…

Source: ValueNotes’ report on Market Research Outsourcing - Buyer Survey

Note: The above percentage refers to the total respondents’ offshoring to India, Latin America and Eastern Europe and constitute 59% of the total population. Rest 10 % of the total population offshore to other destinations and 31% not offshoring at all.

While majority of the respondents that offshore to India include companies from the US most of the respondents that offshore to Eastern Europe are from European research agencies. Lower offshoring from Europe to India or Latin America can be attributed to lack capabilities with service providers at these locations to serve the needs of the European research industry.

Going forward, both the need and choice of destination for offshoring will continue to diversify in the near future. Several factors like – increase in global scale of research, new research methodologies – technology and changing cost dynamics of offshoring work to these locations will require research agencies to take a more strategic and long term view as far as offshoring is concerned.

The above article is based on the recently released report by ValueNotes, “Market Research Outsourcing - Buyer Survey ”. To know more about the report, please contact us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .

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