After establishing its credentials as 'the back office of the world', the Indian outsourcing industry has been witnessing increased sophistication. It is now building its reputation in knowledge based services, or analytics.

Imagine unsorted data going through a black box and coming out as useful information. In knowledge services the black box is the mind. And there is no universal pre-defined process to reach a conclusion.

At the very basic level analytics comprises data manipulation. Companies need help in culling out meaningful information and reviewing it. This essentially involves presenting data and at the next step analyzing data - studying data and identifying trends, be it buying habits of consumers around Christmas or market price movements. For instance, a client could ask a service provider in India to analyze data on hotel room pricing across North America and formulate business models to offer discounts. Here the research and analytics service provider uses historical data, buying patterns and statistical tools to develop business models.

Such jobs now being sent to India mark the maturing of the delivery capability of third party service providers. Doing analytics out of India was something that would have raised eyebrows not too long ago.

BPO and Analytics

Interestingly, Business Process Outsourcing (BPO) and analytics are two different businesses with specific requirements in terms of skill sets, experience, infrastructure and scale. In BPO there is a pre-defined way to solve a problem i.e., the key activity is 'process' focused - a set of rules and guidelines govern the process, be it setting up a bank account, selling an insurance policy, providing technical support, or serving customers via voice and email-based contact. Rigorous adherence to robust methodologies and processes is the main determinant of success

In contrast, analytics and knowledge-based services require a deeper understanding of a client's internal and external situation. Domain and industry expertise is key. Work is completely context and need driven. Work for a client need not be an ongoing process with large, dedicated teams. Often, work might be performed as a unique, one-off project for a duration ranging from three days to six months.

The build up

Outsourcing of high value-added knowledge services started from India in the late 1990s with captive units such as IBM India Research Labs at IIT Delhi, GE's Analytics Center of Excellence and the McKinsey Knowledge Center undertaking some knowledge-oriented functions to meet their in-house needs. However, the sector started gaining prominence a few years later when some third party players started addressing the nascent opportunity to provide high value-added services from India. Their success has encouraged third party IT and BPO services providers to offer more sophisticated analytics solutions to clients the world over.

Today there are about 50 Indian providers with 3,000 to 4,000 employees who offer analytics to overseas clients. These players offer a wide range of high value-added services to clients the world over, including business and financial analytics, primary and secondary research, technology R&D, engineering design, paralegal support and clinical data management. Clients include world leaders already offering similar services as well as financial institutions, manufacturing companies and services industry companies.

Strategic move

To players such as EXL, adding analytics to their service offering makes tremendous strategic sense. The services are specialized and enable differentiation. The risk of commoditization and the resultant erosion of margins are lower. Charge rates and margins are many times what clients are willing to pay for IT and BPO services. Relationships with existing clients can be deepened. What is more, existing infrastructure is utilized since research and analysis can be performed during non-peak hours. And yes, employee attrition is a fraction of what BPO companies suffer from, sometimes as low as in single digits annually.


Since its inception in January 2005, EXL's Research & Analytics group has worked on several assignments including development of financial and statistical models to optimize capital structure, forecast business volume, predict market index levels, identify borrowers with a propensity to default, as well as evaluate and select new business geographies. EXL is also assisting clients by servicing on-going processes in the areas of capital markets portfolio reconciliation and research, performance analysis and reporting of mutual funds and real estate investments, interpretation and formatting of financial statements, knowledge management for investment banks, analysis of mortgage loan processes and others.

Clients coming to EXL for such work include wealth management companies, investment banks, mortgage banks, utility, hospitality, manufacturing, pharmaceutical, insurance and consumer finance companies. Most companies do not have in-house specialists who can look at a problem and come up with viable solutions and models. Handing tasks out to experts not only saves money and time but also gives access to a talent pool that may have done similar assignments for multiple clients and can therefore offer a better view of the business situation.

Cost advantage too

While Indian players get better billing rates, clients get even better savings than ITO or BPO. That's because, for one, there are wider gaps in wages of professionals undertaking such tasks. For instance the typical compensation of a recent IIM Ahmedabad (India's premier management institute) graduate is about $20,000 a year while someone from Harvard Business School could be taking home more than $120,000 a year. American PhDs might be even more expensive. In India you could hire a top-end PhD at wages lower than what an Indian B-school graduate would be taking home! No wonder companies are coming to India for analytics work.

Better served

Some hotel chains are offshoring analytics tasks to try and understand habits and preferences of their guests to serve them better and build long-term relationships. So next time when you are traveling to Singapore and check in at a hotel that knows your preference for a particular wine and low carb items don't be surprised. The vital information could have been part of a report that an analyst generated from work that was wired to India. Now service providers here don't just want to answer customers' calls but also be part of larger business solutions.