Outsourcing analytics can offer huge benefits for client — but requires a carefully constructed relationship. The last decade has seen large amounts of data gathering in various forms be it loyalty programs or otherwise and companies are looking to monetize this huge data store via various means. Data is money and in most cases has a shelf life. The companies that have data are looking for various means to run analytics, help disseminate data either for themselves or for their clients. Selling insights instead of just selling data is another big emerging business with top dollars. Companies have invested hiring resources just to run their analytics 24/7 and in order to reduce costs are looking for outsourcing partners. There are lots of good examples of front-runners that have been doing this for a while but the big surge seems to be around the corner.

The surge of interest in big data has led to growing demand for analytics teams. Having big data capabilities can help companies become more efficient and improve overall competitiveness. Companies with superior data analytics capabilities have found ways to build long-term advantages. FedEx Corp., for example, has for years used its team of analytics professionals to create and maintain a competitive advantage through enhanced revenues and lower costs. One of the factors that has helped Wal-Mart Stores Inc. become one of the world’s largest and most successful retailers is the strength of its analytics. The ability to cross sell or up-sell is ably aided by analytics.

Assembling analytics teams, however, is difficult. For one thing, many companies lack the in-house knowledge and experience needed to put together an analytics team. Technologies are still emerging. What’s more, the labor market for analytics professionals has grown increasingly tight. The shortage of analysts — particularly those capable of developing and leading world-class teams that can enable a company to create a competitive advantage from its data and analytics — is driving organizations to consider outsourcing their analytics activities. However, choosing analytics providers and structuring effective working relationships that deliver value require managers to have a clear understanding of what they’re looking for and the potential risks involved.

Analytics is the latest in a string of activities companies are outsourcing to business process organizations (BPOs). As the telecommunications boom that began in the late 1990s led to improving communications with emerging markets, Fortune 500 companies began shifting call centers offshore to locations such as India and the Philippines to take advantage of less expensive labor. India, Philippines and some more Latin American countries are especially attractive because of its large English-speaking population and highly educated labor force. Once call centers were established to handle customer service and telesales, companies began identifying other activities that might be suitable for outsourcing or offshoring: IT services, computer programming, legal research, application processing and accounting.

Analytics was a late arrival to the business-process-outsourcing menu of services; companies that tasted success with other areas of outsourcing have been more successful in moving analytics offshore slowly and steadily.

This isn’t to say outsourcing analytics isn’t done at all today. “A number of well-known Fortune 500 companies outsource and offshore at least some of their analytics. It’s safe to say that outsourcing analytics will grow in the future. The shortage of analytics talent — “particularly those capable of developing and leading world-class teams that can enable a company to create a competitive advantage from its data and analytics” — is putting outsourcing on the agenda. The enormous cost advantage will eventually accelerate

Outsourcing analytics can be a wise strategy, too, as long as managers “have a clear understanding of what they’re looking for and the potential risks involved. For the MIT SMR report, Bell and Fogarty studied four multinational companies that used one or more offshore analytics outsourcers, as well as four analytics outsourcers operating in India. Through their research, they discovered differences in how analytically challenged and analytically sophisticated companies approach outsourcing. Regardless, care and management of the relationship with the selected analytics outsourcer will determine success or failure. “Outsourcing analytics requires a carefully constructed relationship, and the negotiation and evolution of this relationship needs to clarify who does what, who owns what and how each party can use the information it has,” they said.

In conclusion, future looks bright for outsourcing companies to tap into this market. From today’s smaller margins mainly due to early adopters playing carefully and outsourcers trying to grab market and entrench they, this market is poised to change. With heavy investments into Big data there is a market share for everyone that is ready to dive in with his or her credentials. Outsourcing companies investing in people, process and technology stand to gain the biggest in this sphere.