I read Thomas Davenport and Bala Iyer's article 'Should you outsource your brain?' in the Harvard Business Review 'Breakthrough ideas for 2009' with mixed feelings. The title of the piece is provocative and fails to address the real issue. It talks about how companies are now also outsourcing their decision making analytics along with other less cerebral jobs to countries like China, India and Eastern Europe. Towards the end of the piece they mention a shortage of talent, deep domain expertise at the vendor's end and project structure of the off shoring engagement as some reasons for outsourcing important decisions to third parties.
Here is my problem with this piece(apart from the title). The issue I believe is not about whether companies should outsource their brains(decision making based on analytical insights would be a more appropriate term) but about how these companies can gain competitive advantage through analytics by leveraging a global talent pool of professionals. That this global talent pool happens to reside primarily in India, China and Eastern Europe is incidental.
Shortage or a lack of talent in analytics exists across the world not just the US. In India, for example while there are a larger number of people with statistics degrees, they still lack skills that allow them to apply the same to real life business problems. Statistics and analytical thinking are hard to teach and the teaching methods available at universities across the world do not match the requirement of the industry. It is then left up to individual organisations and passionate practitioners to train and mentor new professionals in this field or wait for them to learn by experience. In the short term however, this training and mentoring does not figure as a top priority in most companies. Thus as a result everyone is left fighting over the same small talent pool and no one wins.
Analytics required to take strategic decisions involves the working together of people with different skill sets, for example-the marketing manager, key people in marketing and other areas in charge of various customer portfolios and an analytical team of people adept at data management, statistical analysis and insight generation. For companies that are comfortable with analytical decision making the main challenge lies in the recruitment and retention of analytical talent. I know of instances where six months to a year are kept aside to hire middle level talent for advanced analytical jobs. Under these circumstances what should these companies do?
Graduate programs in statistics and mathematics in the US are flush with students from China, India and Eastern Europe. Most of these graduates go on to find jobs in programming, risk management, database management and bio-statistics. Ironically, the pharmaceutical industry in the US has managed to leverage these global talent pools much better than any other. The rest of us could learn from their experience.
Since analysis of data, technical model building and statistics are necessary to make decisions in analytically savvy companies, pulling in professionals from across the world to aid in the process is the smart way to go. What this does is give these companies the firepower they need to make sound decisions rather than those based on the past or driven by hasty analysis or the gut.
The trend for 2009 is not that businesses are outsourcing their thinking but that they are recognising that adding talent from across the globe to their rolls helps them get ahead in the game.