The amount of business data across organizations in various industry verticals has grown by leaps and bounds and will continue to increase in the coming years. Decision makers in these companies have started to process their business data into actionable bytes of intelligence. This has been made possible through technological developments such as rapid digitization of content and high-capacity servers. The past fifteen years or so has seen the death of instinct-driven decisions. Data which has been crunched, analyzed and processed is the new weapon for the management in any large company. Within the larger umbrella of business intelligence and research comes a critical process called analytics which has proved to be very useful for companies to guide decision-making. Loosely defined, analytics is the process of exploring and investigating historical data to gain business insight, review processes and plan for the future.
Dilemma of analytics service providers
Similar to other outsourcing services over the past decade and a half, the number of analytics service providers has grown exponentially. Stand-alone analytics players and larger IT-BPOs are competing for market share with captive units of companies. With increased competition and standardized pricing for most sub-services within analytics, service providers are now focusing their marketing strategies on verticalized solutions for industries with a high demand for analytics. Therein lies the biggest challenge – which industries have the highest demand for these services? Our recently published report on the analytics industry has highlighted the top industries in terms of demand for analytics. Focusing on these verticals will help service providers provider more effective and focused solutions for their clients.
Managing risk in the financial services sector
The banking and financial services industry has been among the earliest adopters of outsourcing, and, not surprisingly forms the biggest chunk for analytics services as well. Services within this industry focus on risk management and marketing. Expansion into newer markets, stronger risk preventive measures and personalized customer services for new products are among the factors that has driven the need for banking analytics. The post-recession era has seen tighter regulations and robust consolidation among banks which has brought the focus back on maintaining and sustaining current operations. Analytics solutions for the banking industry help identify early patterns of fraud, manage riskier investments like derivatives and gain insight on the needs of customers.
Retail – Streamlining operations and stimulating growth
The retail and CPG industry is the second biggest consumer of analytics solutions. This industry has been a relative late adopter of outsourcing, but has embraced analytics rather quickly as compared to most other industries. Global retailers are currently experiencing stagnant growth due to low consumer spending and the after effects of recession. Added to these are the fears of double dip recession. These companies have reached maturity in the developed markets and are looking to expand their operations in high growth regions such as the BRIC countries. Retail analytics solutions help companies tailor offerings for different customer segments across various segments and streamline their supply chain and inventory models. Demand forecasting and sales force effectiveness are some of the areas which can be better managed through analytics in this vertical.
Sales and new product development in the Life Sciences space
The biggest bug bear for healthcare and pharmaceutical companies is the high cost of R&D and its associated delays. Companies are struggling with internal business structuring, finalizing pricing and promotion strategies, and finding innovative solutions for the world’s health problems. With competitors working at break-neck speed to bring newer medicines to the market, analytics can reduce help these companies reduce the time to market by tracking customer behavior, identifying high growth regions and in positioning medical offerings. Other healthcare analytics solutions include performance management and complex clinical analysis.
Looking ahead
Analytics services began as horizontal offerings but have evolved into a more structured vertical-specific model through the unique demands and challenges from industries. Service providers have started to and must continue offering these verticalized analytics solutions to create concrete competitive differentiators and build domain expertise in these verticals. Our recent report on analytics outsourcing has predicted a mature, vertical-specific analytics landscape for the future with more specialist and niche players competing with larger analytics outsourcing service providers. Focusing on high growth industries such as financial services, retail and life sciences will help service providers reap maximum benefits from their analytics offerings.

 - Sameer Murdeshwar, Analyst, ValueNotes Sourcing Practice

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