Is MRO a friend or foe?

Editor’s note: Akbar S. Ahmed is president and COO of Delixus, Inc., a San Francisco market research services outsourcing firm.

Have you ever lost a bid and wondered how your competitor could make a profit at that price or how they could deliver so quickly? If so, then maybe they were using marketing research outsourcing.

Marketing research outsourcing (MRO) is an emerging trend which will change the cost structure of the U.S.  research industry and enable clients to demand more rapid project delivery combined with higher quality. More importantly, MRO will enable U.S. marketing research companies to profitably deliver on these increased demands.

While MRO will change the marketing research industry, the key for your business is to leverage MRO before your competition to gain a competitive advantage.

What is MRO?

Marketing research outsourcing typically includes processes such as statistical analysis and analytics, data management, survey programming, quality assurance and support services. Although a wide variety of processes can be outsourced, the key to successful outsourcing is to focus on processes that will provide the greatest ROI.

There are three main categories of services that will provide the greatest ROI: currently subcontracted services; quality-improving services; services that shorten project delivery times.

Services that are currently subcontracted are the most obvious candidates for outsourcing, such as: coding; crosstabulations; statistical analysis and analytics; survey programming.

Quality assurance services - such as report proofing, crosstabulations proofing and survey testing - are another great outsourcing opportunity.

Services that help shorten project delivery times can use MRO to gain strategic advantage. These services are provided by internal staff and by the MRO partner. The goal is not to replace U.S.  workers with overseas equivalents, but to identify the most efficient way to complete work to shorten project delivery times.

MRO vs. captive center outsourcing

It is important to make a distinction between MRO, which involves the use of an MRO partner, and captive center outsourcing, which involves a wholly owned foreign subsidiary. MRO is a team-building model that is designed to use the power of collaboration between the U.S.  and the country hosting the outsourced services.

Captive center outsourcing, the type referred to by most media articles, is a model whereby U.S.  employees are displaced by overseas workers. In this model, a U.S. firm creates a wholly owned foreign subsidiary and moves jobs overseas to the subsidiary. Often, this model is chosen by firms with limited revenue growth who are in a cost-cutting mode of operation.

The benefits of MRO

MRO can provide three main benefits to the marketing research industry: lower costs, shorter project turnaround times, higher quality. Each of the three benefits enables marketing research companies to deliver higher per-project ROI to their clients.

It is vital to understand the three types of MRO firms to prevent a situation where you accidentally fund the competition. The three types of MRO firms are: partners, competitors and hybrids.

Partners, also called pure-play MRO firms, focus on providing services to U.S.  marketing research companies. Partners, such as our firm, aim to help U.S. marketing research companies gain a competitive advantage and defend against competitors and hybrids.

Competitors are full-service marketing research companies that directly compete with your company for projects. Competitors are easily identified as they target the same industry verticals as U.S.  full-service firms, such as pharmaceuticals, IT, banking, etc. They also boast client lists that may match yours, such as Microsoft, Wells Fargo, GM and other client-side companies.

Hybrids provide services to U.S.  marketing research companies and offer full-service marketing research. The vast majority of MRO companies are hybrids. The hybrids fund their true strategic objective of becoming a competitor by providing support services to your company. Beware! The hybrid seeks to use your money to compete against you.

Choosing an MRO partner

The image of your business is directly related to the quality of the work you deliver, which is impacted by the quality of your MRO partner. Therefore, selecting the right MRO partner is an extremely critical decision that requires an understanding of the key attributes an MRO partner should possess.

Attributes that differentiate MRO firms from the rest of the pack include: adherence to quality processes such as ISO 9001 and Six Sigma; experience; customer references; U.S.-based project management; and written training manuals.

MRO in practice

A leading U.S.  marketing research company, name withheld upon request, contracted with our firm to outsource some of its statistical analysis, data management, survey programming and quality assurance work. The initial pilot included the hiring of 20 offshore staff over a 12-month period with an automatic renewal for a five-year term.

The pilot project utilized a variety of personnel including: five senior statistical analysts, 12 data management personnel, and three survey programmers.

The marketing research company needed to meet a rapid deadline for a project utilizing cluster analysis. It was critical that a factor analysis be ready by morning so that active variables could be identified and selected for use in the cluster analysis. The director of analytics was faced with the unpleasant task of asking his statisticians to work throughout the night. The other option was to take advantage of the 12-hour time gap between the U.S.  and India and outsource the work.

The company chose the second option. It sent the raw dataset to Delixus, whose job was to perform a factor analysis overnight and deliver a list of active variables by morning. The time difference meant that Delixus could deliver the completed work by morning and the director’s team would be refreshed and ready to evaluate the returned analysis during the day.

The future of MRO

Marketing research outsourcing is here to stay and will have a lasting impact on the industry. For the industry as a whole, MRO can lower cost structures, shorten project delivery times and improve quality. Customers will be able to demand more for less money. Companies will be able to meet those demands while maintaining or improving current profitability.