Editor's note: Based in Plano, Texas, Brett Hagins is a senior account executive for Carbonview, a Jupiter, Fla., research company. He is also senior partner of Research Innovation and ROI, a Plano-based non-profit organization.

In partnership with Quirk's, Research Innovation and ROI conducted a study called the Four Rs of Research: Revenue, Risk, Results and Return. It involved an online survey, 75 in-depth telephone interviews with corporate research executives and a literature synthesis that involved adapting best practices from other functional areas, such as sales, to the corporate research function.

The broader study had three aims: maximizing the business impact of research; reducing unnecessary costs; and more explicitly quantifying the economic value of research. (Information about the full scope of the study is available at www.researchinnovationandroi.com.)

When new projects arise, companies with internal research departments are faced with the decision to conduct the research in-house or outsource the work to an external supplier. The decision depends on many factors, including the man-hours required, budget, level of specialization and the current workload of internal researchers. Each option has its own benefits and drawbacks. We endeavored to discover which is more successful. When it comes to the key dimensions of business value (i.e., big-picture issues that are not necessarily confined to technical research skills), how do departments that bring research in-house compare to those that outsource?

Our large quantitative survey of corporate researchers with at least some budget responsibility included three types of research departments: 1) those that primarily outsourced research to full-service suppliers; 2) those that primarily designed and executed research in-house; and 3) those that did an equal mix of both.

We asked researchers to rate their departments on several dimensions of business value but this article's focus is confined to a single question.

On a scale of 0 to 7, where 0 means "Poor" and 7 means "Excellent," how would you rate your research department in each of the following areas:

  • Providing specific, actionable recommendations
  • Understanding all relevant aspects of your business
  • Proactively initiating the right research
  • Leading the business and not lagging behind it
  • Providing high-quality data
  • Ability to persuade key executives
  • Having strong relationships with the right people 

Overall, research departments that conduct research in-house give themselves significantly higher marks in nearly all areas compared to those that outsource or split the work (Figure 1). Granted, this is self-reported with large numbers of researchers rating themselves - not their internal clients rating them.


More time

However, their reasoning for choosing in-house over outsourced did not match our own hypothesis. We suspected that part of the value of outsourcing research to full-service suppliers - even if one has internal staff with the technical skills to accomplish the task - is the added benefit of more time. Outsourced projects offer researchers more time to:

  • spend with internal clients and push them hard on how decisions will be made so that the guidance provided goes beyond the status quo (versus validating existing knowledge and recommending additional research);
  • better anticipate any barriers to recommendations work collaboratively to design studies necessary to overcome those barriers;
  • sell the research results and influence the people who are making decisions;
  • anticipate future research needs so that research can get out in front of the organization to drive decision-making - not just validate it; and
  • develop the broader base of business skills that is necessary to drive impact (versus focusing primarily on technical research skills). 

Not supported

Unfortunately, these hypotheses are not supported by the data when comparing top-two box ratings between different types of corporate research departments.

One possible reason for this is that at least some client-side researchers are not using their time to focus on the right things. I have worked for senior research executives who will redo the same chart 30 times and then demonstrate total apathy if their internal clients do not pay attention to or make decisions based on the research. There is also the issue of the client communicating well enough with the supplier and treating them as a partner so that they can go deep enough to drive real impact.

However, there is blame to go around on all sides. Whenever I talk to suppliers about real business impact, the sentiment expressed has most commonly been one of indifference:

"Once they have the report, we really don't care what they do with it. We don't get paid any extra if they use it."

"All we can do is give clients a map and point them to a destination - it is up to them to follow it."

In addition, many suppliers only scratch the surface, answering stated research questions and going no further. This results in perpetual recommendations for additional research and no action.

Most common reason

When we conducted subsequent depth interviews, the most common reason for bringing research in-house was cost-savings. However, there were also some who stated that the technical and business knowledge required for the supplier to make a real contribution was too big a hurdle. Instead, they brought the research function in-house because the suppliers simply were not close enough to their business to drive value.

Cost-savings is certainly easy to demonstrate if research is brought in-house. However, if companies cannot quantify the financial benefit resulting from the research - if they cannot prove it is driving decisions that would not have occurred but for their efforts - what happens the next time the organization needs to cut even more costs? Research that is brought in-house for cost reasons (i.e., because research has not proven its value and is therefore viewed as an expense rather than an investment) may be only one recession or one bad fiscal year away from going to the outhouse.

Decide for themselves

Ultimately, companies must decide for themselves whether in-house, outsourced or a mix of both types of research is right for them. While departments that primarily design and execute research in-house are keen to sing their own praises, each project should be considered individually to decide where internal researchers' time is best spent; which avenue will make the greatest impact on decision makers; and whether an intended supplier has the expertise to complete the project successfully. Always remember to look beyond the balance sheet before defaulting to internal researchers.