After founding the Foundation for Transparency in Offshoring (FTO), a couple of months ago, I find it has been rather heavily discussed on market research related social media.
A few of the criticisms have been surprisingly unjust, and clearly not based on fact. After thinking about it I found this rather encouraging. As esteemed psychologist Charles Osgood pointed out, “one indication of the validity of a principle is the vigor and persistence with which it is opposed. In any field, if people see that an idea is obvious nonsense and easy to refute, they tend to ignore it. On the other hand if a principle is difficult to refute and it causes them to question some of their own basic assumptions with which their names may be identified, they have to go out of their way to find something wrong with it”
It seems that the handful of smaller suppliers who have opposed the FTO in social media, at least in their arguments, are either not clear on the definition of offshoring and the differences between offshoring and outsourcing, or have no experience with offshoring. Hiring one of the foremost experts in the world on a certain methodology, or conducting a global study using local fieldwork personnel would NOT be considered offshoring. No, offshoring is moving business processes from one country to another in order to take advantage of significantly lower labor costs (often well under a third of the cost). Offshoring can expose clients to various risks related to quality, privacy and intellectual property. To offshore projects without client disclosure is irresponsible and unethical.
Surprisingly most of the trades have been very quiet on the formation of the FTO thus far. This shouldn’t be so surprising when you follow the money. After all 90% of the largest firms (think Honomichl 50) are not only those who are most heavily invested in offshoring, but also most likely to advertise with the various trades.
While these large MR firms don’t mind mentioning offshoring on a finance call with investors, they are extremely careful not to mention it in front of clients. So it has not been surprising to hear that senior leadership at a few of these firms are extremely upset about the FTO, calling it “unnecessary” and “alarmist”.
The FTO is reaching out to each of the major MR trades, and we will be updating our supporters of the feedback we receive in the coming weeks. Some have been more open to discussion and collaboration than others.
So far the largest support has come from clients, who are usually not so keen in expressing their views on social media. Many have contacted the FTO thanking us for our efforts in bringing this important topic to their attention. Some have also suggested a directory of FTO certified supplier companies. We currently have 30 companies certified and there are plans on providing a directory in the future.
Thank you for your continued support of the FTO. I hope that fellow responsible market researchers will encourage their employers and/or suppliers to self certify.
Finally, as we are a completely free non-profit organization, we welcome your help getting the word out about the FTO. If you are a blogger or webmaster of a market research related site and would like to show your support please feel free to use any of the banners below.
Thank You
Tom
Tom H. C. Anderson
Founder & Chairman
Foundation for Transparency in Offshoring
www.offshoringtransparency.org
@OffshoreTrans
Managing Partner
Anderson Analytics, LLC
www.andersonanalytics.com
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9 responses so far ↓
1 Tom H C Anderson // Feb 5, 2010 at 6:37 pm
FYI, full size banners are available here:
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2 Linda Gold // Feb 6, 2010 at 10:47 am
This is so important. I really appreciate every thing you are doing.
3 Lenny Murphy // Feb 7, 2010 at 11:22 am
The topic needs to be addressed Tom, and I applaud you for your efforts. Keep on stirring the pot man!
4 Linda Gold // Feb 7, 2010 at 11:35 am
This is something that has bothered me and many others I know on the data analysis side for a long time. Not just because it hurts us at home financially but because the poor quality of work we see hurts us all.
5 Tom H. C. Anderson // Feb 7, 2010 at 12:30 pm
@Linda,
True, the offshoring issues definitely go beyond data privacy and intellectual property to quality as well. The fact of the matter is that if you are offshoring in a non-transparent fashion you are making it much more difficult on yourself in managing quality, as rather than exposing problems the culture is one of hiding.
@Linda & @Lenny,
Thank you both for your support. You should consider joining the 30 companies that have self certified thus far. You can then carry one of the two logos on your site “Responsible (self-certified) Offshoring” or “No Offshoring”. Anderson Analytics http://www.andersonanalytics.com has chosen not to engage in any offshoring at this time due, in no small part, to the aforementioned issues and therefore carries the No Offshoring seal.
However, FTO does have members that have certified as “Responsible Offshoring” as well. This way their clients can have an open discussion with them about whether or not their projects or part of their projects are good candidates for offshoring or not.
6 uberVU - social comments // Feb 8, 2010 at 9:48 pm
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7 Antoine // Feb 10, 2010 at 9:58 am
Great, and something that is a big problem in Europe also. I think many falsely think they are protected by EU directive. FTO should educate the clients, they really don’t understand what is happening and the risk.
8 Meta Brown // Feb 13, 2010 at 10:31 am
Tom,
So, do you feel there are many research clients out there who believe that they are buying US-based research resources and are actually getting an inferior offshore product? When I was at SPSS, I occasionally was asked by clients if we could provide offshore resources (in other words, charge less.)
9 Tom H C Anderson // Feb 13, 2010 at 6:19 pm
Hi Meta, I wouldn’t say “many”, I would say “most” clients who work with any of the largest firms are probably getting some part of their project offshored without their knowledge. I know this from my own experience in research working with these firms and various clients, partners etc. This “Transparency Gap” was also confirmed in the recent research we conducted among 850 NGMR client and supplier researchers.
Sometimes BPO and KPO are more noticeable than at other times. The problem is that even if there are no quality issues, and only survey programming and/or banner tabs are handled offshore, that IP (new product/concept etc.) is still also moving offshore.
What does it matter? You can always sue your vendor if something goes wrong right? You may be able to sue and even bankrupt your supplier if you are willing to expose the issue in the courts. However, depending on where you offshored to, and the contracts in place, or rather more usual, not in place, that IP is not only lost but can be used overseas by competitors as they technically acquired the IP offshore without breaking any local law.
So to quote an example I heard from a colleague recently, if you invented the next alternative to the combustion engine, if something went wrong and you took your supplier to court over here and won. The courts would be powerless to stop anyone offshore from using that IP to compete against you. This may be the case if the offshore facility did not have air tight contracts with each of their employees (ex-employees) and/or with any third party firms which may have been outsourced to abroad.
So, if you are a client and think to yourself, “yeah, maybe my supplier is offshoring, but so what, I haven’t noticed any quality issues”, you may be sorely disappointed one day when your employer fires you for gross negligence. We’ll be posting additional legal papers on the FTO site in the next few weeks.
As for clients asking me to offshore, no I have never been requested to do so. I have offshored in the past both at other firms and continued to do so when I first started Anderson Analytics. However, for various reasons I decided to discontinue offshoring at Anderson Analytics in 2006. We charge a fair fee for our work and our clients value and are very happy with what we do. There is a tremendous amount of trust in market research. This trust is usually far more important than saving a few dollars for any client that I’ve work with, or any client I would care to work with for that matter. If you can manage quality, speed and security while cutting costs you should obviously do so. But this really is a different topic.
I assume the type of work you were doing at SPSS may have been a bit different from what we do. Could you elaborate a bit?
By the way, as I have mentioned before, several of those on the FTO board of advisors and companies who have certified with FTO, are for offshoring. But we do all believe that if you offshore you must be transparent and discuss the various issues involved with your client so that you can determine whether or not the cost savings are worth the possible risks, if any, and specifically which parts of their work, if any, should not be offshored to a certain locations and/or make sure acceptable security measures are in place.
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