Market Research Outsourcing

The need to conduct market research has changed over the years primarily driven by globalization, and rise in competition, among other factors. The marketing function, which was earlier restricted to creating awareness and building differentiators among products, has expanded and become central to the creation of these new products.

Large corporates are now spending anywhere from $5 m to $100 m on market research and analysis. Research agencies too have tried to complement the changing needs of clients with professional management, consolidation and creation of value through both delivery mechanisms and interpretation. The increasing use of technology has led to standardization and consolidation in the research industry, thus preparing the ground for greater outsourcing.

The Indian MRO space comprises over 110 vendors and most of these offer 'non-market research' services also. However, interestingly, the leaders in the category are largely market research-focused firms and not necessarily the diversified BPO and KPO firms. Indian MRO vendors began with servicing fairly "standardized" research needs and are steadily moving up the value chain.

ValueNotes estimates that Indian MRO revenues stand at $148 m in FY07, and are expected to grow at a CAGR of 36% to touch $800 m by FY12. According to Arun Jethmalani, CEO, ValueNotes, "This period (up to 2010) will witness value growth due to capacity addition in high-end services. Initially, the services outsourced were in modular format and delivered through short-term project based engagements. However, over time vendors have begun providing services in both transactional and tactical level activities performed by research agencies. There is a clear industry trend towards "integrated" services".

Going forward, Indian MRO companies are poised to move from research back-office operations to becoming strategic partners in executing research.

The Indian vendor landscape for MRO services is made up of

• Pure Play MRO Vendors, which are pioneers in this space like Ugam, Annik and Exevo
• Full service research firms in India like Prognosys and Tecnova
• KPOs offering services in verticals other than MRO like Evalueserve and Integreon
• Large BPOs like WNS and HCL
• Small BPO firms doing low end work like Cheers Interactive

We expect vendors to broaden their product/service portfolio, customer base, and geographical reach while adding global service delivery capabilities. Currently, vendors are rapidly scaling up their existing capabilities and are trying to build differentiators through specialized offerings or efficient technology platforms. A critical success factor for India as a rising destination for MRO services is acquiring and retaining talent. Says Pranav Dixit, Analyst at ValueNotes, Acquiring and retaining talent which can provide client ready output is critical towards achieving growth plans of Indian MRO vendors. The high attrition and rising wage levels along with adverse rupee dollar ratio will impact the profitability of the segment. These factors in turn could reduce the competitiveness of India over other destinations like Philippines and Latin America

Partnering with other entities in the MR value chain, marketing arrangements, and partnerships for high-end analytics services, strengthening front-end capabilities will be aggressively undertaken by Indian MRO vendors. According to Neeraja Kandala, Analyst at ValueNotes, MRO industry might witness some mergers and acquisitions post - 2009. While pure play vendors will continue to lead the MRO space; competition will intensify with the entry of large BPOs. End to end offerings will be the key to survival for pure-play MRO vendors.

The report: Market Research Outsourcing: The India Growth Story provides an overview of the buyer scenario and an in-depth analysis of the Indian vendor space along with profiles of major industry players. The report is designed to help:

• Research companies looking to outsource/off-shore MRO services
• Large BPOs, MR software vendors exploring MRO opportunity
• Large research agencies, MR vendors like data collection agencies, programmers wanting to outsource their work
• Other potential vendors to assess opportunities in India
• MRO vendors to assess the competitive environment in India
• Venture capital companies looking for investment opportunities
• Researchers looking for detailed information on MRO services offshored to India

This study, by ValueNotes is based on extensive interviews with key MRO vendors in India, supplemented with knowledge from secondary sources.