Should You Offshore Your Analytics?

The author accessed Indian analysts at a fraction of UK wages but ran into problems and eventually ended the analytics pilot.

There has been much on LinkedIn and Twitter in recent years about the shortfall in analytical resource, for the U.S. and UK especially. Several years ago, I had the learning experience of attempting to offshore part of my analytics function to India, Bangalore to be precise. It was all very exciting at first, traveling out there and working with the team as they spent some time in the UK. Plus, on paper, offshoring looked like a good idea, to address the peaks and troughs of demand for analysis and modeling. The offshoring pitch successfully communicated the ease of accessing highly trained Indian graduates at a fraction of UK wages. However, as with all software demos, the experience after purchase was a little different. I always expected the model to take a while to bed down, and you expect to give any new analysts time to get up to speed with our ways of working. However, after a few months, the cracks began to show. Analysts in India were failing to understand what was required unless individual pieces of work were managed like mini-projects and requirements specified in great detail. There also appeared to be little ability to improvise or deal with "dirty data," so significant data preparation was still required by my UK team (who were beginning to question the benefit). Once propensity modeling was attempted, a few months later, it became even more apparent that lack of domain knowledge and rote learning from textbooks caused problems in the real world. Several remedies were tried. Further visits to the UK, upgrading the members of the team to even more qualified analysts (we started with graduates but were now working solely with those who held masters degrees and in some cases PhDs). Even after this, none of my Bangalore team were as able to "think on their feet," like any of my less qualified analysts in the UK, and there were still not any signs that domain knowledge (about insurance, our business, our customer types, previous insight learned, etc) was being retained. After 18 months, with a heavy heart (as all those I had worked with in Bangalore sincerely wanted to do the best job they could), I ended this pilot and instead recruited a few more analysts in the UK. Several factors drove the final decision, including:
  1. Erosion on labor arbitrage (the most highly skilled cost more);
  2. Inefficiency (i.e. need for prep and guidance) affecting the UK team;
  3. Cost and effort to comply with data security requirements.
Since that time, I have had a few customer insight leaders suggest that it is worth trying again (nowadays with China, Eastern Europe or South Africa), but I am not convinced. On reflection, my biggest concerns are around the importance of analysts understanding their domain (business/customers) and doing their own data preparation (as so much is learned from exploratory data analysis phase). The "project-ization" of analysis requests does not suit this craft. So, for me, the answer is no. Do you have any experience of trying this?

Paul Laughlin

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Paul Laughlin

Paul Laughlin is the founder of Laughlin Consultancy, which helps companies generate sustainable value from their customer insight. This includes growing their bottom line, improving customer retention and demonstrating to regulators that they treat customers fairly.


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