Off-Shoring Investment Research

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New York- With companies counting their pennies (or the fed’s billions, if bailed out and if not paying lunatic bonuses), off-shore outsourcing, a practice that started way before the economic crash, has acquired a pragmatic advantage nowadays: it can bring some economic relief to stressed companies. Members of the investment research community are increasingly turning to off-shore outsourcing for their primary research. Integrity Research is closely following this trend.
Around 16 percent of the global market research spending can be off-shored, according to a study published this January by ValueNotes, an independent research firm based in India that offers custom research and business intelligence services. Primary research conducted by investors in the form of custom surveys and field work, among others, is potentially off-shoreable.

Indeed, a recent article in tradingmarkets.com reveals the potential savings from off-shoring. “Off-shoring jobs result in a 20-30% cost savings in labor costs. A McKinsey study showed that outsourcing has economic benefits for the US and that for every dollar spent, it receives $1.12-1.14 in return among other indirect benefits.”

Regardless of the potential benefits, off-shoring has traditionally been a controversial child of globalization. Opponents such as Paul Samuelson, the 94-year-old American Nobel Prize winner, argue that, at the macro level, off-shoring hurts American employment and salary levels. This position has gained traction in the current environment. The US Congress has debated whether banks that have received federal aid should off-shore. In fact, Congress members were quoted this week questioning JP Morgan Chase about their off-shoring practices and the effects on the national economy.

Furthermore, the Obama administration is facing alarming levels of unemployment, which has led it to place strong emphasis on keeping jobs within the US. It remains to be seen what of this anti-off-shoring noise translates in to actual policy that restricts the ability of financial institutions to cut costs by commissioning projects abroad.

In the meanwhile, investors continue to off-shore part of their primary research activities cutting their costs. India leads as an off-shoring destination for investors’ research projects given its advantages in its high percentage of urban and tech savvy English speaking workforce – not to mention the 110 service providers based in the country offering all kinds of research services.

Integrity Research is covering the outsourcing and off-shoring space, specifically in the ways it relates to investment research.  We will keep our readers on the loop.

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