Shades of Outsourcing

Ashwin Mittal, Kedar Sohoni, Alex Gofman, Daniel Moskowitz, Howard Moskowitz Page 1 of 15

Asia: From the World’s Research Back-Office to the World’s Research Strategic Partner… A Dialogue between Collaborating Researchers in India & the USA Ashwin Mittal, Director Kedar Sohoni, Director Cross-Tab Marketing Services Pvt. Ltd. 171B, Mittal Tower, 210 Nariman Point, Mumbai 400021, India Phone: 91-22-22022043 Fax: 91-22-22854253 Email: [email protected] [email protected] Alex Gofman, Vice President & Chief Technical Officer Daniel Moskowitz, Vice President Howard Moskowitz , President Moskowitz Jacobs Inc. 1025 Westchester Ave. White Plains, NY 10604, USA Phone: 1-914-421-7400 Fax: 1-914-428-8364 Email: [email protected] Abstract Immense pressures on bottom lines are prompting research agencies as well as end clients to search for and seriously consider more efficient ways to handle traditionally labor-intensive, costly research processes. This paper shows a successful case history where a high-level market research company based in the United States ‘trained’ and then ‘offshored’ part of its complicated modeling systems, making its offshored supplier an essential part of its new higher-order consumer research ‘ecology’. We present methods by which we have jointly developed a seamless system for an offshoring operation to fully participate in high level consumer research, ranging from basic data analysis, to table creation, factor analysis, graphics mapping, modeling and on to providing ‘insights’ from the data under direction from the U.S.-based project team. These insights are then incorporated into the report. Finally, our system becomes a 24 hour data factory, electronically facilitated. We capture data from respondents in specified formats from product tests and concept (conjoint) studies. These data shipped to our outsource supplier, converted to tables and to high-level graphs show the relation between sensory and liking attributes. With increasing trust, the outsource team also takes on the task of interpreting the results, providing this interpretation in both basic, and now formalized presentation documents, from which subsequent reports can be written in the U.S.

APAC 2006, Mumbai, India


Introduction … Today’s reality and the issue of offshoring. It’s hard to open a business paper or even a regular newspaper without at some point being confronted with the reality of outsourcing to another country, usually called ‘offshoring’. Companies world-wide have begun to recognize that they can do just as well by exporting some of their tasks to other countries as they can by keeping these tasks ‘at home’. Such exports make eminent sense economically, at least in the short term, because they significantly increase corporate profits by lowering the cost to deliver services. In essence, the quote from Financial Times summarizes the issue: “Subcontracting as many non-core activities as possible is a central element of the new economy” (Financial Times, 31 July 2001, p. 10). When we talk about tasks, we’re usually talking specifically about IT-based activities. According to Eischen, the term ‘offshoring’ is used specifically to describe outsourcing of information technology (IT) related high-tech services to offshore locations (Eischen, 2004). However, IT itself is a general term. There is neither common understanding nor use of the terms outsourcing and offshoring in the media or across industries. Some define outsourcing and offshoring by pulling the practices apart into two core issues: who does the work and where it is done (Topolewski, 2004)? Such economic news is not lost on the pundits and the researchers looking into the social and economic consequences of such offshoring. The consequences are significant, and are recognized by almost everyone involved. Whether these consequences are good or bad for the economy is a different matter altogether. Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Offshoring can be defined as relocation of business processes to another country, especially a country overseas. This includes any business process such as production, manufacturing, or services (www.wikipedia.org; Grossman, Helpman, 2005). Terms “outsourcing”, “offshore outsourcing” and “offshoring” are frequently used interchangeably despite important technical differences. To be consistent, we use “outsourcing”, in the corporate context, to refer to the organizational practice that involves the transfer of an organizational function to a third party. When this third party is located in another country the term “offshore outsourcing” is used. “Off-shoring”, in contrast, represents the transfer of an organizational function to another country, regardless of whether or not the work stays in the corporation. In short, “outsourcing” means sharing organizational control with another organization, or establishing network relations within an organizational field. "Off-shoring”, on the other hand, represents a relocation of an organizational function to a foreign country, not necessarily a transformation of internal organizational control. (Kobayashi-Hillary, 2005; www.wikipedia.org).



An interesting article noted a variety of alternatives to offshoring by which outsourcing is offered to potential clients (Offshore Outsourcing World, 2004). Here are some of the alternatives (also, from Prikladnicki, 2005; Kobayashi-Hillary, 2005): 1. Nearshoring: outsourcing to neighboring countries, e.g. no farther than Canada or Mexico for US companies. 2. Inshoring: for those who prefer to bring foreign workers into the host country. 3. Insourcing is the opposite of outsourcing; that is insourcing (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal but 'stand-alone' entity such as a subcontractor that specializes in that operation. Insourcing is a business decision that is often made to maintain control of certain critical production or competencies. 4. Rightshoring1: restructuring a company's workforce to find the optimum mix of jobs performed locally and jobs moved to foreign countries 5. Microsourcing: involves selected processes for outsourcing instead of a company migrating its entire IT department to, say, India. 6. Offshore Insourcing: contracting with a wholly owned subsidiary located in another country. Like a buffet table offering an array of sumptuous choices, outsourcing has evolved into a smorgasbord of complex services – and so are the descriptive terms that go with it. The buffet of outsourcing options reflects the maturation of the outsourcing industries. The fact that the menu is growing is a clear sign of dynamic and competitive market forces at work. We will deal with the buffet of market research ‘jobs’ (really activities) later on. American responses to the offshoring and outsourcing trend Can we blame the anti-outsourcing backlash in the US for the evolution of the different types of outsourcing? On the one hand a nice euphemism can go a long way "Honey, my career has been rightsourced to India" certainly sounds nicer than "I am jobless". Let’s look at some of the facts of the matter before we explore ‘the good, the bad, and opportunity’ of this trend. The magnitude of offshoring is certainly large. Forrester Research predicts that offshoring will cause 3.4 million US service jobs to be lost by 2015 because of this trend (Hilsenrath, 2004). The direction of offshoring isn’t always what people think; sometimes it is actually from outside the US into the US, which often comes as a surprise to many. Foreign direct investment by non US companies into United States (and vice versa, US investment in foreign countries) is called insourcing (Scholl, 2003; Wriston, 2004). Foreign firms routinely access US labor market and invest money on US soil. Both these activities create US jobs. The insourcing market for professional services to the US is large and growing. For example, the value of professional services such as legal work, 1

The term Rightshore™ is a trademark of Cap Gemini Ernst & Young, with a filing date of May 27, 2003.



computer programming, telecommunication, banking and engineering management consulting brought into the US jumped by $8.42 billion to $131.01 billion in 2003 (Topolewski, 2004). Even call center and data entry work offshored to US from foreign companies has been on the rise, increasing $7.94 billion to $77.38 billion in 2003 alone (Phillips, 2004). Finally, Global Insight’s research into offshore outsourcing indicates that there is net job gain in the US when offshoring occurs. Their research projects the jobs created in the US as a result of offshoring to be over 317,000 through 2008 (Global Insight, 2004) which is surprising for most especially when comparing it with the forecast (onesided) from Hilsenrath above. The hype in the US regarding the offshoring and outsourcing may die down as more companies figure out what work they can send overseas, and how to manage it from afar. In the meantime, the real innovation seems to be in finding new ways to sell it to an uneasy public. The latest term making its way through corporate America: "rightshoring" (Stone, 2004). Whatever the truth of the matter, there is no doubt that customers with complex queries requiring local understanding do not respond well to the scenario of their outsourced jobs being handled by far-off operators who repeat, parrot-fashion, a series of learned responses on which they have been ‘trained’. Convergys, one of the world's biggest providers of "contact-center services" and supporter of right-shoring, advises companies to shift simple queries offshore while retaining the more complex ones on the same shore as the caller. It estimates that about 80% of the companies that it is working with in Britain are planning to split their call-centre operations in this way (The Economist, December 13, 2003). In short, the companies try to keep the most important, core business in the country while outsourcing the less critical labor-intensive parts. As applied to Market Research Industry, providers tend to keep customers interface as established while offshoring the routine back-office operations. The Indian Perspective A perspective on India – making outsourcing attractive to the market research industry India's "go to" status as a premier outsourcing destination is a function of the country's vast pool of about 2.5 million mostly English-speaking college graduates that are ready to enter the workforce annually. Surprise: India's reign as the world's "Outsourcing King" may be slipping, even with its rock-bottom costs2 A report from Gartner, Inc. warns that a labor crunch and rising wages could erode India's market share of business process outsourcing (BPO) almost in half by 2007 (Scholl, Chohan, 2003). Indian industry watchers acknowledge that the country's outsourcing industry -- its golden goose of the moment -- is indeed facing a "serious" 2

CNN News (Bhatnagar, 2005).



problem. More importantly, a number of emerging countries such as the Philippines, Malaysia, Vietnam and Eastern European nations including Hungary and Poland, are also starting to challenge India's leadership in offshore BPO (Bhatnagar, 2005). India can't afford to rest on its laurels, said Sujay Chohan, one of the authors of the Gartner report and vice president and research director of offshore business process outsourcing with Gartner in New Delhi. Unless India devises a long-term roadmap to improve infrastructure and consistently grow its skilled labor force, he said, India will see some of its offshore BPO clients shift business elsewhere. "Although India's infrastructure is improving, it is not keeping pace with the rapid growth of the industry," the report said. The Gartner report pointed out that whereas no single nation yet poses a direct threat to India as a high-quality/low-cost location, during the past two years more than 50 other countries have emerged that together could pose a viable challenge to India in the months ahead. Gartner estimates that India's current 85 percent ownership of the BPO market share could dwindle to about 45 percent by 2007. In dollar terms, that would be a significant blow to India. In 2004 India earned more than $2 billion of an estimated $3 billion global offshore BPO market with more than 250,000 workers. Gartner estimates that the worldwide offshore BPO market will grow to about $24 billion by 2007 of which India will earn about $13.8 billion. Questions to be asked in light of the outsourcing trend in general and India in particular According to Gartner, before you decide “To Outsource or not to outsource?” try to answer the following questions: 1. Why should you consider outsourcing the function? Is it to focus on your core business, to improve service levels, to benefit from industry best practices or to reduce your transaction costs? At the present time, cost is the key driver for offshore BPO, although cost reductions can be achieved via a captive center3 if the enterprise has a large quantity of transactions. Additional cost reductions can be derived only from a scalable, multi-client operation. 2. What processes are you assessing as candidates for outsourcing? Some organizations have begun to achieve end-to-end BPO, achieving results through process transformation and automation. Repetitive, transaction-intensive processes are the best choices for offshore outsourcing. Many enterprises considering sourcing end-toend business processing do not want to give up control of the process because of strategic and security concerns. In this situation, offshore insourcing or captive-shared service centers are viable options. 3. How well is the function being performed today in your enterprise? The answer to this question depends on the availability of process measurements inside the enterprise. If you find, at the end of the measurement study, that you have achieved

3

A company-owned offshore operation. The activities are performed offshore, but they are not outsourced to another company (source: Outsourcing Terms at www. OffshoreXperts.com).



better-than-industry benchmarks, then offshore insourcing is a good option. If the process performance is less than average, then outsourcing might be a better option. Strategic Considerations in Outsourcing Properly done the offshoring leads to a new paradigm for growth in high-level consumer research, allowing many overly process-constrained companies and practitioners to increase their efficiency, and turbocharge innovation and high-level insights. Outsourcing frees more time for the tasks that companies consider to be their core competence. When it is poorly done, the outsourcing strategy leads simply to another set of errors. The result is that the process is aborted, bringing all of the data analysis and reportage back in-house. One concomitant is that the failure of offshoring leads to less investment on new methods for analysis, and more focus on standard processing, preventing the business from expanding its horizons. In turn, if offshoring and outsourcing can work for a high tech, specialized market research company, then the odds are that it will work for most other types of companies in the so-called market research ‘space’. Armed with the foregoing discussion of outsourcing, we have developed our sourcing solution in steps that are excellently formalized by the Gartner guide to sourcing (Gartner, 2005). The principles underlying these four steps are worth repeating here; they influenced our decisions. They were valuable as a structure to think about outsourcing, even though we followed them in general rather than following them for each particular decision. Three principals for sourcing: 1. Recognize the impact of the important ‘other’, the partner: Decision-makers need to carefully craft their strategic sourcing plans so they allow for partnerships; these partnerships will enable their businesses to become more agile. The four steps take enterprises from the initial decision to strategic source through ongoing management of the partnership during the life of the contract. The process takes into account future objectives, new opportunities and the potential for change. 2. Know what you are outsourcing, and why: As a potential buyer, you should be certain about your company’s goals and direction before trying to determine which services should be handled by others and what to look for in a service provider. Then, you must set up principles of contract flexibility and realistic expectations about cost and service benefits before a service provider can be intelligently selected. Contract negotiations should not get dragged out. They should result in a contract that is flexible and includes clear performance measures. And once your partnership is underway, it must be regularly monitored and managed to account for shifts in circumstances, needs and opportunities for innovation.



3. Service business (read here market research) are different: Service providers have their own concerns. Winning vendors in the new sourcing landscape will be those who think strategically, rather than tactically. No longer will pursuit of the tactical "killer app" suffice among vendors; success will be determined by those with a service-oriented "killer attitude." Gartner’s four steps to good outsourcing Step 1. Sourcing Strategy: Be clear about why you are choosing to outsource in the first place. Understand what you hope your deal will look like when it is finished and a couple of years later. Who'll be in charge of the relationship once it's "in progress"? How resilient will the partnership be when unexpected situations arise? Only when you know your goals and direction can you determine which services would be handled most effectively by others. And only then can you clearly work out the appropriate selection criteria to use when looking for a service provider. Be wary of deals that are too focused on present circumstances. If you find yourself creating a sourcing partnership that resolves only current problems - particularly current money problems - your enterprise is not thinking strategically. Step 2. Evaluation and Selection: Evaluate potential service providers by establishing principles about contract flexibility and cooperative decision-making that will govern the deal. Have realistic expectations about cost and service benefits. Only when those elements are pinned down can the search for a service provider proceed successfully and efficiently. It's important to look around for good partners but you needn't follow the traditional route of creating and distributing RFPs. This can be time-consuming and expensive for all the parties involved. Many clients believe the easiest path to take in choosing a service provider is to simply use "tried and true" Single-Source outsourcing. Whereas the outsourcing provider may have been effective in one project, there is no guarantee it will be so in a circumstance that doesn't mirror the earlier situation. There are expert companies that allow you to narrow down your list to two service providers. Afterward, you can focus on the details of just two qualified offers instead of several. But nothing can replace “word of mouth” approach. Step 3. Contract Development. Hammering out the details of performance measures and terms that are flexible enough to withstand changes during the course of the partnership takes some expertise. Although clients and service providers want to make deals with each other, they want these deals for different reasons. One wants to tap into expertise and resources they don't have so they can save money. The other wants a long-term deal that can bring solid profits. A third party can make sure both parties are speaking the same language. Outsourcing deals are famous for being based on misunderstandings about cost. The up-front money looks so good because the contract buries surcharges in later years.



The cost of managing the partnership over time is rarely taken into account. Outsourcing is about strategic and efficient business practices. Do not expect it to be only about saving money. Contract negotiations should take place as quickly and carefully as possible. Performance measures must be made clear and the true costs involved in the deal must be realistically assessed. Just as important, the contract terms should be sufficiently flexible to withstand the inevitable changes that take place during the course of a partnership. Step 4. Sourcing Management. The outsourcing process does not end after the contract is signed. Your partnership must be maintained as a living, breathing entity. It must be monitored and nurtured.

The MJI & Cross-Tab perspective By way of introduction – The MJI & Cross-Tab world-view Moskowitz Jacobs Inc. (MJI) is a specialty market research firm, whose expertise resides in the early stage screening and optimizing of communications, packages and products. MJI is best known for its branded technologies (IdeaMap®; StyleMap®, etc.), which allow companies to identify the key features of communications, as well as revealing new, hitherto unsuspected segments of the population. MJI is almost twentyfive years old, and prides itself on its track record of innovations, client service, and market successes. Cross-Tab Marketing Services is an India based firm that provides outsourcing services in the market research and analytics domain to global clients. Cross-Tab is also a full service market research agency in the Indian market. This gives the company a strong domain understanding of market research thereby enabling it to add substantial value to client engagements. With this introduction the natural question is ‘can MJI outsource its work to Cross-Tab, when it is known for its intellectual leadership and expertise?’ This is an important question for the research industry. Marketing research for many years was considered to be a cottage industry, with many small firms and of course a number of medium and a very few large size firms. Most of the large-size firms specialize in data delivery, such as audits and tracking. Problem solving, e.g., strategic direction for a company in a market, is often left to the smaller ‘boutique’ companies, whose practitioners are well known for their expertise. MJI falls into the category of smaller, specialized market research companies. Perhaps its key differentiator from most of its competitors of the same size is the fact that it develops and uses its own custom software, with the software embodying state-of-theart innovations for screening and optimization. It was important that any firm that MJI would collaborate with should have capabilities that go beyond just cost saving, but



should also be able to understand its products and methodologies and deliver utilitizing them in a value added way. What specific considerations about Market Research led MJI to outsource its work to Cross-Tab? The follower of the market research industry from the early 1990’s to today will inevitably discover a business world in transition, which would eventuate in outsourcing as a smart business practice. During the formative years of market research, sometimes referred to as the ‘golden years’, generally by those who weren’t there, the industry was beginning to develop from an informal set of practices to a set of professionalized activities. The 1960’s witnessed the era of market research gurus – the first group of market researches that started using advanced research techniques, such as Volney Stefflre, Al Achenbaum, Ron Gatty and Russ Haley, among others. These individuals were attuned to the research techniques of their time, brought a combination of insight and discipline to their empirical data gathering, and in general were feted as advanced thinkers. The business conditions of the 1960’s – 1980’s were such that smart people were able to open shop, put out their ‘shingle’, attract clients, and make a reasonable living. The pressure on prices had not yet reached its full intensity, and the clients commissioning the research were able to wait until their research ‘supplier’ or ‘guru’ had a chance to get the data back from the field, back from the ‘tab house’, and review it. Certainly there were time pressures, but for the most part the work pace was relaxed, even if there were some nights that seemed unduly frenetic. Those were the exception, rather than the rule. There was time to have truly professionally inspired lunches with new suppliers, to find out what novel techniques were being proffered, and to discuss with one’s associates at meetings those developments in the field, both personal and technical, that sparked interest. Starting in the middle 1980’s, however, matters changed. The introduction of the personal computer and the accompanying availability, first of spreadsheets but later of full statistical programs, heralded a new era. The ‘tab house’, that affectionate category of the business specializing in running tabulations for market research clients, soon lost business to the solo practitioner armed with a PC. More importantly, however, timelines in research changed, most practitioners believing for the worst. The ‘tab house’ could always be relied upon to provide a cushion of time. ‘The data is at the tab house’ was a standard refrain that would buy time for the researcher. The PC ended all that wonderfully innocent naiveté because the client knew that the researcher could do the analysis in a few minutes, even if, however, the analysis had to be done at 3 AM. Deadlines could be shortened, and were, with the full realization by the client that the supplier did have the data; it was simply a matter of pushing the right buttons, extracting with that push the gasping effort of a supplier desperate to ensure that next job, and somewhat able to do so by pulling ‘all nighter’ analyses.



As the marketing research industry matured in the 1990’s pressures increased to accelerate data delivery, reduce costs, and at the same time present ‘innovative’ approaches to clients so that they could feel part of ‘moving the field forward’. Company after company closed its doors to the parade of suppliers, choosing instead to partner ‘strategically’ with a limited number of companies that ‘understood their businesses’. In actuality, such strategic collaborating often meant reducing one’s costs, using a prespecified and effectively low-balled job pricing for even high-level work, and dedicating someone on site to do the client’s tasks. These developments in market research essentially changed the nature of the industry from a cottage industry with a great deal of personal service to a commodity industry, primarily focused on delivering ‘data’. This development, really a sea change in the industry that often professionals don’t like to think about, made market research vulnerable economically, and promoted the search for ways to save money. What had been a hands-on industry, filled with practitioners excited about what they were doing, evolved into a harder, nuts-and-bolts, financially-driven industry. How MJI & Cross-Tab responded to the sea change in the industry Given such an evolution in the industry, it was natural that each company affected would respond in a way that was appropriate for its value structure, and the eco-system in which it worked. MJI was certainly no different. The issue was how to maintain an economically viable business in these tough times, recognizing the following trends that affected MJI, although probably not limited to MJI. Data processing morphed from file managers and data transformers into resource managers gaining more of a “researcher’s perspective” about the output. Junior researchers were able to focus on developing their project management skills without the burden of preparing top-line; senior researchers were relieved of spending hours writing reports. For table creation, the transition was easiest with basic research such as product screens. Category appraisals followed next, and afterwards by conjoint or experimentaldesign concept studies. The process was formalized within three months with full integration by six months. Certain aspects are still being refined but the internal focus now is migrating from process development to identifying more tasks that are ripe for outsourcing. Of course, there are projects that do not allow the timeline necessary to outsource, or perhaps the budget does not warrant it but that is a mindset that is beginning to change as well. In the last four years, there has been a growing trend of market research organizations offshoring parts of their processes to third part providers and captive centers in India. Offshoring is no longer a way to just lower fixed costs. Rather, we see a



corporate shift to create a research network or ecosystem with the client firm as the hub; the relationship becomes a two-way street. In a more formal way, we can summarize the MJI/Cross-Tab experience as follows: 1. Protect the image and strategic position in the industry by continuing to do high level work. MJI’s key competitive advantages lie in high level problem solving empowered by proprietary technology. It was vital to maintain this ability to ‘deliver the goods’, i.e., to deliver product optimization and concept / package design modeling and optimization. 2. Reduce the dependence on the knowledge resident within a single individual, any individual. Analysis of MJI’s strengths and weaknesses revealed rather quickly that the key strength of MJI was the ability of its people to size up a problem in its area of expertise, of course, recommend a solution, and then execute the study. The analysis of the data, typically done with the aid of MJI technology, ensured a time-appropriate (read ‘speedy’!), generally meaningful and business-enhancing answer. However, it was quite clear that a lot of the knowledge resided in the minds of the employees, who left every evening. MJI was vulnerable to poaching by competitors. Even though the technology and therefore the problem-solution might not be poachable, the individual employees certainly were. Employees are only human, and they too want the best for themselves and their families, a wish that often leads to job-hopping in the quest. 3. Identify key tasks that could be outsourced, and that did not impinge on MJI’s core competence. This was the hardest aspect of outsourcing and offshoring. The two major tasks were table creation and report writing. The ability to design studies, the ability to interact with clients, and the ability to profoundly understand the data were critical to MJI, and were not outsourced. 4. Identify a partner organization that could effectively deliver on MJI’s needs. After scouring the field of providers from India, MJI identified Cross-Tab as the best partner organization for its outsourcing needs. While Cross-Tab’s past experience, quality processes and proven delivery capability where very important the key factor was the strong domain expertise of market research, due to which CrossTab would be able to move up the value chain quickly and service all of MJI’s needs up to high end analytics and report writing. 5. Outsource report writing. Report writing was first outsourced to local professionals in the US, most of whom were single practitioner market researchers, generally from the ‘client side’, who had either taken early retirement, or who had moved out of the corporation at least two years previously. We wanted to make sure that the report writers could digest the issues from a corporate perspective, and that they would be around for some years, rather than using the outsourcing ‘gig’ as a temporary means of support while they looked for the next job. Eventually we have started planning outsourcing of some report writing to India as well. Although we had started with US market research professionals, we quickly found after eight months that a lot of the same quality writing could be done offshore by Cross-Tab, with greater cost savings, but also leading to greater MJI security. MJI could expand its volume without having to



train a junior researcher from the mid-ranks, a process that was eventually becoming expensive and often times cost-prohibitive due to turnover. 6. Then outsource high-level table creation. By table creation, we mean the relatively laborious job of posting the data in certain ways. MJI had developed some rapid methods for creating tables, but we found that in many cases junior research associates would be spending hours manually crafting tables that could not be done easily by machine. Cross-Tab was able to effectively learn the MJI standards and post these tables in a standardized, client-oriented format. In a sense, Cross-Tab’s team became MJI’s junior researchers, an extended part of the organization. Our vision of where things are heading in outsourcing and offshoring. At MJI/Cross-Tab we believe that outsourcing and offshoring are ‘here to stay’. Despite the desire to build a company that is vertically integrated with all of the capabilities in-house or close at hand, the era of a somewhat virtualized company has arrived. When MJI began, the founding researchers believed that it was best to keep the data analysis and report writing ‘in-house’, but to subcontract the field work, i.e., interviews. Indeed, the notion of having one’s own field service did not seem reasonable. As MJI progressed, however, through the 1980’s, the goal of having one’s own ‘test laboratory’ became increasingly attractive, especially due to the development of more powerful personal computers that could acquire data from consumers, process these data quickly, and then send the results out automatically to the client. The late 1990’s and early 2000’s revealed, however, that it would be better not to have the overhead of a laboratory, and the DesignLab® facility owned by MJI was spun off. That triggered the beginning of outsourcing. We began to see the value of having the security of multiple field services that could do the work, but which we didn’t own, and therefore were not burdens. We learned this from 1994 to 2003. What really ‘did the trick’ to get MJI into outsourcing and offshoring was the sale of DesignLab®, MJI’s own test facility. We realized that the company could survive not having all of those financial burdens, and the sense that perhaps we were entering into a new age. It became obvious that MJI would also be safer in the turbulent economy if it also began to surrender complete control over report writing and over table creation. Explorations of outsourcing with report writing revealed that MJI’s performance would perhaps even increase somewhat because the reports were being written by individuals having 25-35 years of experience. This positive experience was also liberating, allowing MJI to outsource and offshore even more – namely table creation, and then outsource some of the report writing. In fact, our model of outsourcing is rightshoring. The next steps we plan comprise exploring the opportunities of delegating CrossTab the support of Ideamap.NET clients that involves deep understanding of experimental design, segmentation and other high-level market research techniques. We are also considering moving some of our sales efforts to the partners, as we more fully



adopt and accept the idea that MJI sits in the midst of an eco-system, rather than being a research company in ‘splendid isolation’. Past experience of high quality work done by Cross-Tab provides MJI with the confidence that all these processes can be effectively delivered by Cross-Tab. Matter of fact MJI is now confident that Cross-Tab will be able to go beyond just cost saving but also providing high level inputs as well. The process goes in the reverse direction as well. Outsourcing and offshoring brings MJI into new markets, hitherto not considered. With deeper involvement into MJI’s technologies, our partners become more and more proficient to handle not only parts of the process but the whole process some day as well. Cross-Tab will also be able to utilize it’s domain expertise to give important inputs along the way enabling MJI to enhance its products and methodologies and therefore improve its competitive standing in the market. By taking advantage of more competitive labor cost, we may be able to enter the Indian market with our products and services that was price prohibitive until now. By licensing the technology to our strategic partners and allowing them to do full support, MJI would be able to lower the price of the services to the level acceptable in the Asia market. Therefore, the path to success is quite clear: from simple microsourcing - to unit offshoring - to rightshoring - to strategic partnership. In net – what happened probably applies to thousands of companies. The world changed, the economics of the research business moved towards a streamlined production, we discovered that other people could do some of the work as well as we could, and most importantly, we lost our fear of outsourcing. Offshoring some of the tasks to India followed quickly. The result – a stronger, more resilient MJI, backed up by an eco-system of outsourced, partially offshored efforts. An even more encouraging set of results; more satisfied employees who work fewer hours but certainly more productively, happier clients who get their results from writers who have a great deal of experience, and a more optimistic management who sees that survival in these tough times need not be in the lonely and frightening world of splendid isolation. The ecosystem is there to help the work; in doing so, the eco-system helps MJI to embrace the future with optimism.



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