The global data analytics outsourcing market is expected to grow at a compound annual growth rate (CAGR) of 29.1 percent and generate $5.9 billion in revenues by 2020, according to a recent study published by Allied Market Research. Companies are outsourcing analytics to third parties to make informed business decisions, reduce costs, mitigate risks and improve customer service.
The explosion of data generated by businesses around the world is driving the growth of outsourced data analytics. The report found that most enterprises lack in-house analytics capabilities or a skilled workforce to run analytics initiatives, so they are sending work to third party specialists.
The major consumers of outsourced analytic services are the banking, financial services and insurance (BFSI) sector, accounting for about 33 percent of market revenue in 2014, followed by the healthcare industry. Better availability of transactional data, the focus on data-driven decision making and increased data generation in the retail, telecoms and entertainment sectors are also fueling increased analytics outsourcing activity.
The study reported that data analytics is shifting from descriptive to predictive and prescriptive analytics, with predictive analytics increasingly being used by organizations for forecasting, statistical analysis and modeling. While descriptive analytics accounted for 79 percent of the overall market revenue in 2014, prescriptive analytics is expected to grow the fastest (37.7 percent CAGR) from 2015 to 2020.
Much of the demand for outsourced analytics comes from North America and Western Europe. Asia-Pacific is the leading provider of data analytics outsourcing services, with India, China and Philippines as the main analytics outsourcing destinations. India and the Philippines, in particular, are known for their mature business process outsourcing (BPO) environments and consistent attractiveness ratings due to a large population of highly skilled workers, lower labor costs and efficient technology infrastructure.