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Data and analytics are at the heart of digital transformation, enabling faster and accurate decision making and driving competitive advantage. The need for data analytics solutions has manifested across all verticals as businesses transform themselves and move towards digital channels.
Spurred by the digital transformation wave, the USD 27 billion offshore analytics market is expected to grow at 21.5% CAGR till 2025. Primary reasons for the growing demand for offshore analytics services are: quantifiable business impact, domain expertise of analytics providers, and lack of in-house talent.
The analytics outsourcing market offers opportunities to invest in an established but high growth sector with no clear market leaders. Our report provides insights in to the critical elements which will shape the future of the analytics ecosystem.
Role of AI in Analytics
Artificial Intelligence has become more important today due to increased data volumes. AI-led analytics is expected to deliver ~40% of the total value created by advanced analytics, translating into USD 3.5 trillion to USD 5.8 trillion in annual value. Analytics firms that can adapt their outsourcing capabilities to include AI expertise, will continue to be essential partners across enterprises.
Productization of Services
Pure-play analytics players are transforming themselves by productizing select use cases and bundling them with existing services. Productization will give a significant boost to the contribution of product revenue, which at present stands at less than 10% of the overall revenue for most of these players. Leveraging the product offerings will also help to break free from the linear-growth trap and increase profitability.
Talent Ecosystem in Analytics
Fresh talent emerging in the job market is barely meeting the high demand for domain-specific talent. As per the industry estimates, data analytics will account for 28% of all digital jobs in 2020; each of these places will remain unfilled for up to 45 days due to the talent deficit.
To address this challenge, analytics players should cultivate internal talent and invest in in-house academies and Centres of Excellence. Customized efforts linked to a company's goals and industry context will ensure that these efforts translate into business value.
Opportunities for Strategic and Financial Investors
The market will carefully evaluate the role of platform offerings and how players leverage the fragmented nature of the market for inorganic growth. Compelling demand from large IT/BPO players for scaled analytics assets promises good exit options for PE players entering at this point. Going forward, we expect a few large vendors to emerge as market leaders with a strong employee base, global delivery capabilities and scaled platforms.
To know more about the analytics ecosystem drivers for growth, market landscape, investors' perspective on M&A, and the trends that have the potential to transform the sector, download our latest report.
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