Various studies indicate that the data analytics outsourcing market is growing rapidly.
Some, like this one from Market Research Report Search Engine, predict the data analytics outsourcing market will be valued at a staggering US$20.68 billion by 2026, growing at a CAGR of 29.4%.
Others forecast a CAGR of between 15% and 20%.
All of which underscores the fact that outsourcing data analytics is something companies, especially Small and Medium Businesses (SMBs), must not ignore. Why? There are several reasons, 5 of which we examine here.
More than any other reason, analytics provides companies with a competitive edge. As the business world looks to more data-driven innovation, the business becomes less error-prone; hence, even if they cannot afford to have their own in-house team of analysts, outsourcing offers a way out.
Analytics is soon becoming the only lifeline for organizations in today’s swim-or-sink business environment.
Reason 1) For increased productivity and competitiveness
There are still businesses out there that think they can survive without analytics. Not only are they wrong in their assumption, but they have probably also never heard of the term ‘Amazonification’.
Even an ounce of competition proportionately increases the urgency for analytics. That’s why you need to utilize your company’s Big Data. Period.
You will perhaps understand “Amazonification” better if you study what Amazon did.
For that matter, check the track records of companies like Amazon and FedEx, which have been utilizing data analytics for over a decade now.
Amazon, with its army of in-house data scientists, has built algorithms based on its customers’ daily needs.
It has access to vast amounts of data on its customers, and this helps it build a picture of its shoppers. It uses all that data to target them with relevant products, multiplying the chances of a ‘buy’.
There’s not a single industry left that Amazon can’t disrupt. All of it is based on data. The industry calls this the ‘Amazonification’ of data.
Many SMBs look enviously at Amazon and are eager to implement analytics, but don’t have the resources. For them, outsourcing marketing analytics is the way out.
Reason 2) Who can do the job better – a third party or you?
If it’s an outlying function, it’s probably not worth your time and effort to hire someone, especially for it. Better to outsource at such times.
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Third-party providers offer specialized services and ensure they meet global standards. Maybe if not all of the analytics, but some.
The benefit of outsourcing to a 3rd party today is accountability. A third party clearly defines the return on investment (RoI).
One needs to create a “value-driven engagement” in which data analytics vendors are assessed based on the business results they produce, not on the time and materials they consume.
A successful vendor output translates into success for the client, creating a mutually beneficial relationship for the company and the vendor.
Reason 3) This is a given – cost
Especially for SMBs, funds are always a significant factor. Even if a company can afford it, hiring a full-time data scientist or even an analyst is not cheap.
Add to the salary other overheads such as taxes and employee benefits, and you suddenly start wondering if it was the right call. And, what will you do if you realize you need more than one analyst?
That’s why going to a data consulting firm makes sense. SMBs need to do a cost-benefit analysis, for time is money, and in most cases, it will show that the value of your benefits far outstrips the value of your costs when you outsource analytics.
Mind you, costs include not only physical resources but also the human effort involved over time, plus related fees. Costs and benefits must be assigned monetary values to reach a decision.
With the increased competitiveness in the business environment you can’t afford to waste time. It is critical to get the things done right quickly and grow while the market conditions are friendly.
Outsourcing also leaves the head honchos with more time to focus on core operations. Neatly packaged analytics help the C-Suite make better, faster, and more informed business decisions.
Reason 4) Not getting the right candidate for the job
All of us know that there’s a shortage of data analysts in the market today – there are more jobs than eligible candidates. This massive shortage of qualified data scientists has left many hiring managers struggling to find candidates, let alone find those with the right skill sets.
Even after hiring one, in such a competitive field, the candidate is bound to be poached by other companies. Hiring also means investing time. Even if you do not have the budget to outsource, your company could do it on a per-project basis.
Reason 5) Customer-centricity
Reaching out to your customers or clients in a scientific manner is a key output of analytics, especially in marketing and predictive analytics. Data analytics is vital for customer-centric companies in the B2C world.
Analytics allows such companies to learn more about their customers and even anticipate their needs.
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Every company that deals with millions of customers knows that segmentation, targeting, and positioning (STP) is the only way to reach the right customers with the right message at the right time through the right channel.
A survey across business functions showed that over half of the respondents used outside partners for some or all of their analytics needs. Many cited skills gaps as a significant obstacle.
In fact, 55% of those companies reported working with third-party partners to address skill gaps. Sixty percent of respondents who use outside partners stated that internal staff did not have the bandwidth for the analytics needs of their companies.
Bringing in outside partners with analytics as a core competency enables organizations to scale up and scale down while adding critical capabilities.
