Analytics in India
Analytics in India
Emergence of global analytics centers of excellence
By Rohit Tandon (left) and Arnab Chakraborty (right)
This is the first in a series of articles focusing on the rapid growth and widespread impact of India-based analytics and analysts.
India’s average quarterly GDP has been growing at a rate of 7.45 percent from 2000-2011. The country has witnessed exponential growth since the economic liberalization in 1991. The services sector accounts for a major share of India’s GDP. This started initially in the early ‘90s, with the IT services being delivered in a cost-effective manner from India. In the late ‘90s, off-shoring of back-office work in cost effective locations made India an attractive country for IT enabled services (ITES) and business process outsourcing (BPO) activities. At the same time, global corporations turned to India for software engineering and embedded systems capabilities and thus led to the emergence of global R&D hubs located in and/or supported by India-based analysts.
Today, the availability of high-quality talent to deliver solutions at a global scale in a cost-effective manner has made India an attractive location for knowledge services. Indeed, the growth of business analytics mirrors that of IT and BPO services in the 1990s and early 2000s. Since 2000, the analytics industry in India has gathered significant momentum, attracting widespread attention in the global arena. In the coming decade, analytics professionals will be as sought after in India as software professionals were in the ’90s. This article – the first in a series focusing on analytics and India – delves into the evolution of the analytics centers of excellence in India in order to understand what it takes to leverage India’s talent pool and to scale up the capability across the globe.
Figure 1: India’s investment in high education is paying off.
Demographic Dividend and Education System
India is the second most populous country in the world with more than 1.2 billion people (2011 census), and it has the potential to become the most populous country in the next 10 years. Fifty percent of its population is below the age of 25, and more than 65% of its people are below the age of 35. This demographic dividend helps India have a significantly larger working population that can play a key role in the world economy. It is expected that by 2020, about 136 million of today’s Indian youngsters will join the global workforce.
Over the last 15 to 20 years, India has focused on improving its education system, paying particular attention to higher education and scientific research. The efforts have yielded impressive results, adding a significant educated talent pool to the global workforce. This has also been a catalyst to India’s economic rise over the past decade.
India has significantly invested in institutes of national importance such as the Indian Institute of Technology (IITs), Indian Institute of Management (IIM), National Institute of Technology (NIT), National Institute of Industrial Engineering (NITIE), Indian Institute of Information Technology (IIIT), Indian Institute of Sciences (IISC), Tata Institute of Fundamental Research (TIFR) and the Indian Statistical Institute (ISI). All of these institutes have helped advance India’s talent leadership in the field of science, math, technology, operation research, management and fundamental research.
Birth of Analytics Centers of Excellence
The analytics journey in India began in the late 1990s when a few large global companies from the financial services and information technology domains were looking to set up and scale their in-house analytics centers. India, with its rich talent pool, became the test bed for a few initial start-ups. Companies such as Hewlett Packard (HP) saw the opportunity (as shown in Figure 2) to consolidate various disparate analytics efforts across the organization. To that end, HP decided to scale up its global analytics capability and capacity in a manner that would be cost-effective and would enable competitive advantage in the market place.
Figure 2: Consolidating disparate analytics efforts across the organization.
In the last 10 years, the analytics landscape in India has changed significantly. For example:
- The initial success led to a large number of global multinational corporations (MNCs) across the banking, insurance, retail, telecom, automotive and consulting sectors to set up in-house (captive) analytics centers of excellence.
- Some of the captives decided to offer analytics as a service to their customers, leading to the rise of third-party service providers.
- IT services companies and BPO service providers saw analytics as the next level of value addition and diversified into delivering analytics services for their clients.
- Boutique analytics solution providers emerged, with specialization in a specific industry vertical or a functional domain, to deploy deep analytics expertise.
Bangalore led the way for other Indian cities, providing the first analytics centers with a skilled talent pool. Gradually, cities, such as Delhi/Gurgaon, Mumbai, Hyderabad, Chennai and Kolkata, emerged as good breeding grounds in India for global companies to set up their analytics centers of excellence. Today, more than 10,000 analytics practitioners work across these cities solving complex business problems and deploying innovative solutions.
Figure 3: Science, math, technology and management institutes are located throughout India.
Analytics Capabilities and Solutions
The analytics capability development journey in India began with marketing and sales, and over a period of time, expanded into other functional domains. This development can be attributed to various factors:
- Strong championing of key competencies, such as customer analytics, market research and risk analytics, by a handful of firms that led to the development of the initial talent pool.
- Partnership with academic institutes, such as the Indian Statistical Institute/Delhi School of Economics to groom a work-ready talent pool.
- Development of training curriculums that led to enhancing proficiency in tools, such as SAS/SPSS and various statistical modeling techniques.
- Building up a virtual community of analytics leadership across the various companies that created a robust eco-system to share industry best practices.
- Ramp-up on domain context with talent exchange programs and job rotations between on-shore and off-shore employees.
- Pilots to test out capability development in new areas of analytics applications.
In the last 10 years, the analytics industry in India has developed robust solutions (see Figure 4) that cut across horizontal functions, such as marketing, sales, supply chain, risk management and are also customized to meet the needs of various industry verticals. Today, the various in-house analytics shops as well as third-party analytics service providers have gained significant expertise to deploy these solutions on a global scale.
Figure 4: India-developed robust solutions cut across horizontal functions.
The future evolution of the analytics practice in India will have few strategic options:
- Service provider model – Continue to provide analytics as a service in a global delivery model, to drive cost-effective deployment in partnership with on-shore stakeholders.
- Consulting model – Establish consulting capabilities with embedded IP/proprietary approach to help companies elevate their analytical maturity.
- Technology solutions model – Develop technology-enabled analytics solutions that operate on the cloud to help drive real time analytics and faster decision-making.
We foresee Indian analytics centers of excellence to evolve in all the three dimensions in the coming years, and play a pivotal role in building up the analytics practitioner community.
Lessons Learned from Analytics Success
The last 10 years of successful ramp-up of the analytics industry in India has provided some key lessons that can be leveraged for new analytics initiatives or to attain the next level of maturity. Organizations need to focus on the creation of a talent pool, collaboration, change management, process rigor and value creation to make India a sustainable global analytics hub. For example:
- Talent pool – Create industry-academia partnership to groom the talent pool in universities as well as develop strong internal training curriculum to advance analytical depth.
- Collaborate – Form analytics forum across the leadership team to discuss the pain-points of the practitioner community and develop joint solutions. This could cover a variety of issues, such as non-poaching of talent, driving co-innovation and industry recognition
- Change management – Gaining management sponsorship from client teams is very critical. This needs to be aided with continuous effort to build awareness and confidence with stakeholders around delivery capability in offshore locations, such as India.
- Process rigor – Invest in process framework for risk management, data security and quality approach in delivering solutions that help support business critical decision-making.
- Value creation – Building rigor to measure the impact of analytics deployment is very critical to earn legitimacy within the organization. This can be aided significantly by patenting the analytical methodology and making the solution best in class.
For all its advancements, analytics still has a lot of untapped potential. The ability of organizations to leverage India as center of excellence can be one of the key levers to move up the analytics maturity curve.
Based in India, Rohit Tandon (firstname.lastname@example.org) is a vice president and Arnab Chakraborty (email@example.com) is a director at HP Global Analytics. Both authors are deeply involved in building the analytics capability in India across corporations. Copyright Hewlett-Packard Development Company, L.P. All rights reserved.