The global market research (MR) industry has seen a decline in the past couple of years with revenues at $32.5 billion for the year 2008, according to a report by ESOMAR. Given the current recessionary crisis, although the MR industry’s overall growth has been slightly sluggish, it has shown better revenue figures when compared to other sectors. Global MR companies have resorted to budget cuts as one of the precautionary measures to deal with cost pressures caused by the recession. Budgets were slashed by 9.5% in 2008, and by 2.9% for the first half of 2009.

Market research industry: keeping a watchful eye

The market share of the top 10 research companies has been 55-60% for the past 3-4 years with established players diversifying and expanding their markets globally. Large global companies like The Nielsen Group, TNS, Kantar Group, Synovate, etc, have penetrated global markets and have established long-term relationships with FMCG companies and other industry leaders. The opportunity for mergers and acquisitions is very high in the global MR industry given the large number of unorganized and small players. Niche players, with regional expertise in markets like Latin America, Africa and Asia, are attractive acquisition targets for captives of large global MR firms.

Research companies have seen layoffs and a reduction in travel and salary increments with a view to reduce cost pressures. Companies have now evolved to using more innovative methodologies and techniques to be able to offer more to their clients in order to remain competitive.

Market research outsourcing industry: cautious recovery

Market research offshoring (MRO) vendors have played a pivotal role in the growth of the industry and are now moving from a vendor role to one that is more consultative and partnership oriented. Revenues from the nine year old Indian MRO industry are about US$200 million - $220 million for the year 2008. The industry has about 130-140 service providers, and consists of third-party vendors and captive delivery centers of multinational research and media agencies.

MRO Vendors

  Source: ValueNotes Research

The delivery portfolio of the Indian MRO vendor has evolved over a period of time as service providers have moved from standardized task-based services to a full service end-to-end format with a range of inter-related service offerings. Few Indian service providers have grown in terms of scale and service offerings and are now competing with global MR agencies and onshore service providers for business. Established service providers like Integreon, Ugam Research Solutions and Annik have gained a strong foothold in the buyer markets in the US, Europe and Asia. These companies have created strong brand awareness through strategic expansion and adding multiple service capabilities. Recently Ayala backed Integreon, a globally reputed knowledge services provider, acquired Grail Research, a unit of US-based management consulting company Monitor Group. Ugam Research Solutions, offering services in 45 languages across 60 countries, crossed the 1,000 employee mark in September this year.

Paradigm shifts

The growth in the Indian MRO industry has been flat since the debacle of Lehman Brothers in September last year.

•   MRO vendors have been prudently building on their service capabilities and expanding their presence in diverse geographies. Last year exëvo opened a new center in Argentina to capitalize on the huge untapped Latin America market. The company received a positive response from the European market when they opened a new center in London.
•   MRO companies have moved their focus from offering low value traditionally outsourced services like data collection and data processing, to high-end analytics and data mining services. MRO vendors have either acquired capabilities or have organically built on their current expertise. Integreon’s acquisition of Grail Research will help them expand their expertise in fast growing segments such as research & analytics and business intelligence.

Opportunities in MR services

                                                                           Source: ValueNotes Research

Going forward, MRO vendors would look at offering services higher up the value chain, like analytics, panel services, project management and data mining, in order to compete for clients on a global scale.
Technology would play a vital role in building capabilities and moving up the value chain for MRO service providers. Automation and role of technology in offshored processes can be viewed at two levels.