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OPINION23 November 2009

Will the ends justify the means in offshoring transparency?

News Opinion

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.

21 Comments

6 years ago

As a client I do not know whether my work is being done out of Michigan or Alabama or Canada. It sometimes is and sometimes isn't included in the proposal. Why should work being done in India or Ireland require to be disclosed any differently? And why require registration? Smells very protectionistic. If Tom feels so strongly about this, why not write an article in a research journal/ tweet and have clients ask their vendor if the work is being off-shored? Registration hmmm. What;s next -- wear a yellow badge if you off-shore?

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6 years ago

3 Month FTO Update on Next Gen Market Research blog: http://www.tomhcanderson.com/2010/02/05/foundation-for-transparency-in-offshoring-three-month-update/

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6 years ago

Transparency is transparency. By the looks of it there is room for all sorts of ideas on offshoring pro and con within FTO. That said, I don’t understand why some here think ‘protectionism’ is purely bad. All countries do need to employ certain protectionist measures. Europe does it, China does it, everyone must if a certain industry is worth keeping. It’s usually not in the best interest of developing countries to follow WorldBank/WTO verbatim. Economics should not be viewed as simplistically as it once was.

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6 years ago

Tom - If you were a company that doesn't offshore or even outsource (and prides itself on that and the service provided) - would you want to display a logo saying "Responsible offshoring" - probably not - Because that might give the impression to your customers that you do outsource/ offshore. But if you don't display a logo, that might then give the impression that you outsource/ offshore irresponsibly (as you’re not displaying the “responsible offshoring” logo. Therefore the “No offshoring” logo fits perfectly with that type of company. You are right the big MR agencies might not want anything to do with it, because there probably is still a stigma to offshoring – otherwise we wouldn’t be seeing the objections to the two different logos. But only by being transparent will the big MR agencies remove that stigma. i.e. if they can say “we offshore but we still do a fantastic job”. It’s possible in the short term the two logos might give a very marginal marketing advantage to those companies that don’t offshore – but that’s partly because there has been a lack of transparency in the past, which I think most people agree needs to be in place.

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6 years ago

Oh BTW a Fair Trade banana grower is represented by FINE and Fair Trade bodies, all of whom have signed up to free trade (i.e. the can't pledge not buy from abroad). Also the banana grower has to prove his supply chain is ethical at every step, including rules on wages, human rights, and the right to join a trade union. I do not think the MR industry would win an ethics competition with a Fair Trade banana grower (and before anybody shouts, yes lots of individual companies would, but not the industry as a whole)

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6 years ago

Interesting that most of the people who think the FTO is great post as annoymous. Most of those who have misgivings about the failure mention outsourcing and the ability of FTO to be used by people with a protectionist agenda post under their own name.

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6 years ago

"I think the FTO are as neutral as they can be. The aim of the logos are to show support for transparent offshoring, however it would be very misleading for a company that doesn't offshore to have a badge saying "Responsible offshoring". Hence the "No offshoring" option." You misunderstand - BOTH the current badges are problematic. If the FTO is about transparency, then an FTO certificate should simply be a badge that the company is certified transparent in whatever offshoring decisions it makes. Since presumably a criteria of this transparency would be a publically stated policy, the exact details of the offshoring policy (none or some) would be part of the website anyway. That, it seems to me, would be genuine neutrality. If the FTO is more of a "health warning" about offshoring - as to be honest the adverts suggest! - then that's fine too! Quite possibly such a thing is needed. But in that case it should be and will be seen as a pressure group rather than a neutral industry body, and my guess is most of the big MR suppliers won't want anything to do with it.

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6 years ago

Gary Austin - in the Market Research industry there is already transparency on outsourcing. The MRS code of conduct states: The Researcher must inform the Client as soon as possible in advance when any part of the work for that Client is to be subcontracted outside the Researcher's own organisation (including the use of any outside consultants). On request the Client must be told the identity of any such subcontractor. Transparency in outsourcing does NOT infer "foreigners cannot provide as good a service" as plenty of foreigners do a fantastic job in the UK! I want to know if valuable and confidential data that I give to a MR company is being shipped around the world and if so what protection/ controls are in place in that country!

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6 years ago

I think the FTO are as neutral as they can be. The aim of the logos are to show support for transparent offshoring, however it would be very misleading for a company that doesn't offshore to have a badge saying "Responsible offshoring". Hence the "No offshoring" option. I agree with Gordon Morris - I want to know where the products I consume were made so I can make an informed choice. I'd be a bit concerned if a supplier wasn't transparent - do they have something to hide? Only by full transparency will standards rise. Japan was in the past perceived as a poor quality manufacturing country - but they took pride in their 'brand' - "Made in Japan" - and rose to be probably the highest quality manufacturer in the world. I don't follow Ray Poynter's 'moral' argument that companies that don't offshore shouldn't be able to sell overseas. Does that mean a Fairtrade banana grower who only uses local labour and materials is not allowed to sell their crops overseas? Very protectionist!

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6 years ago

As a past client of outsourcing for region and now as an employee of such a company, I welcome any form of transparency or quality control in this area. Based upon our client list alone, I know that the MR companies using outsourcing certainly include many top drawer research organisations who do not compromise on quality. I am sure however the for all sides to support this, it must be neutral and independent from alternative agendas or motives, or else it may be seen as the fox guarding the chickens.

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