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Thursday, 18 December 2014

Will the ends justify the means in offshoring transparency?

The Foundation for Transparency in Offshoring should be welcomed for its efforts to educate clients about the extent of offshoring in the research industry. But the way it seeks to do so risks tapping into heightened post-recession protectionist sentiment.

It’s hard to argue against transparency, which goes some way to explaining the overwhelmingly positive reception the Foundation for Transparency in Offshoring has received since its official launch on Friday. Its chairman, Tom Anderson, is a savvy social media operator who has succeeded in building up a handsome following and a healthy amount of noise for the initiative through such channels as Twitter and LinkedIn.

The FTO’s stated goals are admirable and unlikely to court much disagreement: get better information for buyers of research services about when and where their suppliers offshore their projects, so they can better understand any data security or intellectual property risks.

But however commendable the foundation’s aims, there is much to argue about in the way it seeks to achieve them.

Start with the language used. The press release talks about an “offshoring cover-up” in research while the FTO’s official Twitter account refers to the industry’s “dirty little secret”. Anderson says that in most cases “research buyers don’t even know that their projects are being offshored”.

The evidence for this is a mix of the anecdotal and survey data. In November, 850 researchers – both buyers and suppliers – were asked whether their organisation’s research projects were offshored. 20% more clients than agency researchers said no, 40% fewer said yes and 100% more clients said ‘not sure’.

But this does not prove a “cover-up”. Digging further into the results we find that when asked for their views on whether suppliers should be upfront with clients about whether they offshore, 68% of suppliers agreed. Of those suppliers who do offshore, 61% also advocated transparency. One might suggest that what people say and what they do are two entirely different things, but that’s not a ringing endorsement for the honesty of researchers or the reliability of survey research in general.

So let’s assume for a minute that everyone who answered that survey walks the walk. This would suggest that “in most cases” research buyers would know whether parts of their projects were being offshored, not vice versa as Anderson claims. Meanwhile, the “transparency gap” as he calls it – the percentage difference in the number of client and agency researchers answering yes or no to the offshoring question – may be down to the uneven split between buyers and suppliers in the sample (19% vs 76%).

To reiterate: whether or not there is a “cover-up”, it is hard to argue against a call to ensure transparency in offshoring. The FTO’s way of doing this is to encourage agencies to self-certify whether or not they offshore, which parts of their projects they offshore and which countries they outsource to.

The FTO says it takes no position either way on whether offshoring is a good or bad thing, only that transparency is important. Those who do offshore get a little badge to say so, while those who don’t also get a logo to add to their website and other communications materials. Chairman Tom Anderson’s company, Anderson Analytics, is the first we’ve seen to bear an FTO badge – but it’s the “No Offshoring” kind.

In an interview with Research on Friday, he explained that while he does not offshore at the moment he has done so in the past and would consider doing so again. Writing in a blog post this time last year, he cited “quality and IP issues” as his reason for taking “a strict 100% no-offshoring stance”. Yet a month later, writing about Dell and its use of Indian call centres and the $150 they charge to allow customers to deal with a North American call centre instead, Anderson boasts: “At my company… we don’t charge anything extra and our clients will always work only with Americans. Perhaps the market research industry should start charging two price levels as well?”

Again, it’s important to make clear that Anderson says he is not anti-offshoring. “Some of my best friends are in the business of offshoring,” he says. Yet, with the FTO launching at the tail-end of a recession, with many jobs having been lost and many more still at risk, there is a concern that such statements and such things as a “No Offshoring” badge will tap into already heightened protectionist sentiments.

In such a scenario, an FTO badge declaring a company as being a “responsible” offshorer may work against it more than in its favour. ”Nielsen vs American workers” is how CNN anchorman Lou Dobbs reported news last year of the research agency’s $1.2bn outsourcing deal with India’s Tata Consultancy.

Transparency is important and should be encouraged. But the FTO may not achieve its worthwhile goals if it inadvertently puts companies in the firing line of the anti-offshoring brigade.

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Readers' comments (21)

  • Actually, I would argue quite the opposite. Publications such as yours looking for something exciting to write about, as well as the trade orgs which are basically run by the larger firms who offshore the most (think about who buys all the ads in these publications/events), ensure that the FTO will take a lot of unjust criticism.

    It's easy to attack the important issues the FTO is trying to raise with unwarranted and irrelevant remarks about nationalism, protectionism, anti-globalization or whatever catch phrase you try to use. But for anyone who has actually worked with off-shoring market research to any degree, the issues FTO are trying to encourage openness and discussion around are clear and important.

    We can simply look at who sponsors the ads on your site to see why you might be biased on the issue.

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  • Brian Tarran

    Thank you for your comments 'Anon'. I can assure you – though I doubt it'll convince you otherwise – that what we write about is in no way influenced by what our advertisers do or don't do.

    And as I sought to make clear throughout the article, what the FTO is seeking to do in encouraging transparency in offshoring should be supported. The concerns raised are about whether they have the taken the right approach in trying to achieve this.

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  • The larger research agencies tend to offshore the most - and I have worked for a couple, however this is hidden as much as possible from clients in my experiences. Don't have a specific problem with offshoring but they should be more explicit in just what is being hived off to other countries.

    My experience with DP offshoring, is that the quality of the outputs and the coding leaves a lot to be desired - but just my experience.

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  • Brian Tarran

    And thank you for your contribution, 'Anonymous 2'. The point you raise about quality is interesting – certainly we've heard similar complaints before.

    I wonder which issue people consider is the more urgently in need of addressing – that of transparency in offshoring or quality? Can both be tackled at the same time and by the FTO?

    Will greater transparency lead to improvements in quality?

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  • Chiming in as a client, and ex-agency researcher,

    I have to say that the findings you mention are disturbing. Do 4 in 10 research agencies really believe that we, as clients, shouldn't be told from where or whom our insights come from? Cover up or no, that's a lot of agencies who don't believe in good standard business practice, and who I would never touch with a barge pole.

    When I buy my Nike shoes, I don't mind that they're made in Indonesia. Or that my Gap shirt was made in India. Or wherever. But these transparency requirements were brought in specifically to make it clear to the end consumer exactly what it was they were buying.

    Why should the research industry be any different?

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  • My hat off to Tom Anderson in establishing the FTO. I think fundamentally the concept goes abck to the precepts of good professional research: that we put our methodologies and processes on the table so we can be freely scrutinised: it is part of our overall professional transparency no different from our disclaimers about sample size, margins of error and sampling methodology. FTO takes the transparency to the back room.

    Inevitably the discussion around FTO will collide with discussion about trade protectionism (I suspect a much bigger issue in the USA than in Europe or Asia).

    More pertinently, the discussion will run into the issue of the quality of our chosen offshore providers. Many readers will have been bombarded with direct mail - direct email actually - offering data crunching services offshore (mostly India.) And clearly by the evidence of these approaches there is a wide range in terms of quality.

    But this is a subset of the bigger debate: the basic quality of services - whether we operate out of London, Chicago or Mumbai (or all three.)

    My personal feeling is that the FTO concept addresses part of the issue of transparency, (the "off-shoreliness") but the bigger issue is "the process-controlliness."

    Every MR firm has data moving around from computer to computer, from person to person or department to department.

    The weakest link may not be offshore: he may be sitting in the cubicle next door.

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  • Quick declaration of interest, I am a one person company and I don't buy ads, anywhere!

    I would have been a lot happier with the FTO if it had equally prioritised outsourcing, which can also have significant quality and Intellectual Property considerations.

    On a moral basis I do think that any company that pledges not to offshore should also promise not to sell services internationally.

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  • As the owner of a data collection firm in the states, I can say from my experience the clients I have talked to who do outsource often look for the lowest price. Many times they are not aware - or don't want to know - that their project might be outsourced offshore. Some data collection firms have a small operation in the US and much larger facilities overseas. The clients either don't know to ask where the data collection is completed, or don't want to ask. With the current recession the bottom line is the most important thing.

    While I obviously have a built-in bias, I think if a company has offshore operations it should be disclosed to every client all the time. If they want the pricing advantange of cheap labor they should be willing to be upfront and honest about it.

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  • Tom Ewing

    My personal perspective here is that transparency is good, and offshoring is an important issue, and hence the FTO is a Good Thing.

    But I do think if it has a two-badge system it's going to draw this kind of (largely unfair) criticism. If it's about the fact of transparency rather than the outcome - i.e. if the FTO means what it says about being offshoring-neutral - why not just have one badge, certifying the transparency? This would put companies who don't offshore, and companies who do so openly, on an equal footing in the organisation's eyes?

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  • Tom Anderson is a genius marketer, isn't he?

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