India preferred destination for analytics outsourcing

The data analytics services market in India is expected to grow to $1.15bn by 2015 as an increasing number of enterprises deploy solutions to derive meaningful insights from their databases, says a study by financial services firm Avendus Capital. According to the study, India will remain the preferred destination for analytics outsourcing over Asian counterparts like China, Philippines, etc.

Global data analytics outsourcing represented $500-550 million market in 2010, of which India delivered $375 million. The Indian opportunity is expected to treble to touch $1,150mn by 2015, it said. Over the last decade, India has matured as the preferred outsourcing destination for IT and ITeS services, says the Avendus study. Exponential increase in data generation, cost savings, operational efficiencies, access to a highly talented workforce and improved quality are all underlying expectations in outsourcing analytics processes to India. Analytics outsourcing in India has been rapidly growing owing to these factors.

Data analytics services market's share of the total knowledge services outsourcing market is also expected to increase from 18.5% in 2010 to 20.6% in 2015. The ongoing slump in the economy has made it critical for companies to make smart, informed business decisions. Lack of in-house talent, increased outsourcing of core business activities, margin pressures and data explosion are drivers for increased demand for such services.

Avendus estimates that by 2018, US itself is expected to face a shortage of 1.4-1.9 lakh analytics professionals, which potentially represents a $20bn offshore opportunity.

North America, as a market, is likely to remain the largest market for analytics offshoring, contributing 65 per cent of the demand. Demand from other nations in Asia Pacific is also expected to increase with financial services leading the demand.

Data analytics offers higher revenues and margins than traditional outsourcing services. Compared to margins of roughly 15-20% in BPOs and 30% in knowledge process outsourcing (KPOs), data analytics offers margins between 25-30%, the report said. Banking, financial services and insurance, retail, health and pharma are expected to be the most penetrated verticals with 75% of the vendors catering to these segments.