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Hi everyone! This is Eric Bell, founder of the Market Research Global Alliance, here with the founder and managing director of Anderson Analytics, Tom Anderson, and also the founder of The Foundation for Transparency in Offshoring. That also stands for FTO. And I want to give you the FTO's mission and then we're going to discuss a little bit about what FTO is all about. What some of the conversations have been like and relations should support it or not, just based on your views. So, the FTO is an independent non-profit organization dedicated at educating buyers and suppliers of consumer research and analytic services and considerations related to offshoring, and establishing sensible, clear disclosure standard for offshoring practices. FTO holds no position or against offshoring research services, but maintains transparency and open dialog between research buyers and suppliers. And it's critical and designed to help make informed, secure business decisions. FTO defines offshoring as the movement of a business process done at a company in one country to the same or another company in a different country, usually do to lower costs of operations in a new location. FTO Certification is free. Market research suppliers may self-certify. Market research clients are encouraged to require their suppliers to certify and show their support for the transparency initiative by visiting www.offshoringtransparency.org. So, I don't know if I said that all on one breath. But welcome Tom Anderson.
Thank you Eric.
How are you doing today?
Pretty good. Pretty good. Yourself?
I'm doing great. I'm really excited to talk to you about this. I know we've talked about this for a few months, almost since the inception, but I know we want to kick off and see how it did. For those of our MRGA members listening and some of the Next Gen members that I'm sure will be listening as well, and other researchers around the web. What inspired you to create the FTO effort?
Well, it's sort of just happened, I guess. We have been involved with offshoring into various degrees. My formal employer before I started Anderson Analytics, several of my friends worked in the offshoring industry. And at one point, I even considered going to work in selling offshoring services before starting Anderson Analytics. But when I started Anderson Analytics, actually my first employees were offshore. However, in 2006, we decided to stop offshoring, and some time after that, my friend, Raul Sehgal at __03:40__, contacted me about being on a panel by offshoring, at the _____ actually, and I agreed. And before that, I surveyed the NGMR membership and we had 855 responses, then I saw that there was a big gap in terms of knowledge of our transparency. About 20% of our respondents where client-side researchers and the rest were supplier side. And there was a big gap in terms of knowing how much offshoring was going on, what kind of offshoring we are in the value chain, the types of projects, and so forth. And I guess, depending on whom you have talked to on the supplier side, roughly about 60% of suppliers thought that there should be transparency in offshoring and of course virtually all client-side researchers wanted transparency in offshoring. Go ahead.
Yeah. It makes a lot of sense. Just in general, one would think that there's something that would just naturally happen and it turns out it almost sounds like unless a buyer of market research services knows exactly what to ask, they may not even think about.
Well, in fact, we saw that even on the supplier side. A lot of employees at companies that do offshore are not aware. It's something that's -- well, in many cases, actually purposely kept hidden.
Why do you think that is -- what are some of the reasons behind that?
Well, I don't know. I guess the main reason for offshoring is obviously cost savings. Allegedly, you can save as much as -- cut costs by a third or two thirds or more. So, obviously that's not something maybe that you want to advertise per se, but I think it's still something -- obviously, you can pass on some of those ratings to the client. It's nothing to be ashamed of.
But, unfortunately, at some companies, that has not been the case anyway.
Okay. In a resting dilemma -- even -- I guess, comes down to the ethical standards of some companies undertaken what they should or shouldn't share and I'm sure as -- any security concerns are -- I'm sure quite varies by case. And maybe if there are some examples a little bit later on, on our conversation here, maybe there might be some good examples you can share if you feel comfortable with it. Just out of curiosity, what was the purpose of FTO, for those who haven't heard of it? What got you started on the idea? And I know you kind of mentioned it a little bit in the beginning of the --just kind of kicking this off. But what really inspired you as the chairman to really push this effort hard?
Well, again, I've worked with several companies in different respects both as a supplier in conjunction with other market research firms and so forth. And it basically is the lack of transparency that causes or creates problems in many cases and that goes obviously with qualities, it can be impacted for your label practices. As you mentioned ethics, but probably the foremost concern is legal protection, specifically IP and also data privacy, depending on what places you're offshoring to, that can vary widely. Some countries have virtually no IP protection. So, that's something that really needs to be looked at on a case-by-case basis. So, that's the primary reason for starting the FTO and I think most of the members involved, while we all may have different feelings on offshoring and for what purposes, it's useful or not useful, the one thing that we can agree on is transparency.
Yeah. And do you even think that companies realize that they are putting their clients and themselves on an IP or intellectual property potentially breaching position? It seems like it's something that people don't even realize that they're doing unless they know what they're looking for or kind of let things happen.
Yeah, you're right. I think they -- especially on the client side, there's surprisingly little knowledge on that side. I've seen more and more in contract now, certain firms are putting in language in terms of outsourcing and offshoring, but you need to tell them exactly where things are going in and if you're doing that. But the majority, I guess three quarters of firms, don't have that in their vendor contract still. So, that's certainly something that's not being considered enough. I think there's a false assumption that if you go to a large multi-million dollar marketing research firm headquartered in the US or Europe that something goes wrong that you can sue them, but that's not going to take care of the problem if valuable IP and data privacy is lost in a place where you don't have legal recourse.
Yeah. That makes a lot of sense. And obviously, there is a lot NDAs that go on for non-disclosure agreement. Go on another industry, and just something to think about, you may inadvertently be breaching it. This isn't something that __10:04__ scare anyone, just think through the process as you're making commitments to your clients and vice versa.
So, often things can be offshored, outsourced several times and those NDAs that you signed up initially don't cover those subsequence engagements that you're outsourced for...
They've been shared over and over again. Without even the request, they're probably even realizing it.
So, why do you think this -- why is it important for those that believe in these kinds of FTO to support it?
Well, I mean it's good for everyone. It's modeled in part based on the EU Safe Harbor. The EU has been ahead of the curve in terms of protecting data privacy of its citizens. And the EU Safe Harbor website, for instance, where American firms can sign on and say that they follow the EU Safe Harbor guidelines, is something that was free until last year. Now, there is a small fee. And initially, several large market research firms were signing up from the EU Safe Harbor, but lately, they have not kept up their certification __11:38__. Anyway, just like the EU Safe Harbor and even safe like eTrust, the FTO allows our company to self-certify, it's totally free and you get to say what kind of offshoring you're doing. So, whether it's Business Process Offshoring known as BPO or IT Offshoring known as ITO or KPO, Knowledge Process Offshoring, which has really worked a lot of the market research falls under in terms of doing analysis and so forth. And you also specify which countries you're offshoring to so that you can then -- well, it protects you and legally you're not defeating anyone. And it opens up conversation with clients if it's important to discuss whether or not their projects are being offshored and what parts of their projects are being off shored. Since I mentioned before in our research, among those 855 market researchers, there was difference in opinions in terms of what parts of other process. So, for instance, concept testing and add testing was viewed as more sensitive, but the clients than say CRM, analytics, and sales forecasting, and also different parts of the value chain like -- well, if you're doing invitations to a survey saying, "Who does the client's sample?" Obviously, that's PII and the clients were more concerned about that as well than suppliers.
Fantastic. So, coming down to the need of it is -- when this first came out, you got a lot of -- press both positive, negative, and a little bit in between. Why do you think there has been such strong opposition in some market research circles to oppose this effort?
Well, __13:49__ how strong the opposition is, I mean the companies I guess that have had the biggest problem with this would be the ones that are most heavily engaged in it -- which are the Hannah McGill top five. If you look at who is doing most offshoring, it's totally correlated with size of company, companies with over 5000 to 10000 employees, about 80% of them were using offshored services, whereas smaller companies, it's much less frequent, the sole proprietors, only about 15% or so are using offshored services. But it's not the size -- anybody can offshore these days, in fact Tim Ferguson __14:39__ before our workweek seemed to advocate that everybody should offshore. But it's Hannah McGill top 5 or the ones that are most engaged in it for the cost-cutting measures in large part. So, I think -- well they haven't come out directly against it. We haven't seen any Hannah McGill top five firms on FTO yet. We've seen some other fairly big firms like __15:12__ and a few others. But also one opposition I think came a bit from some of the trade orgs like _____ and CASRO and perhaps because there have been _____ about not having done anything for so long. I mean offshoring is no a new trend. It's something that's been growing and probably peaked around 2005 or so and they've done very little. Now, we have to talk about ISO, which is -- some say that there is protection in that, but really it's just...
Yeah. Well, they are interconnected. The ISO is about documenting and simplifying processes so that they can be done anywhere so that you can offshore them. So, if you have a process that's ISO certified, does that mean that it can be done anywhere without telling your clients? I think not. Obviously, that doesn't take care of the legal issues for instance.
Right. And you know it's interesting because I'm not a market researcher by trade. I'm a market research connector and understand the overall concepts on how everything interacts and connects. My background has been on market research sales. So, it seems like it's the right thing to do when you're talking to your clients. It's not like it's -- other workers being outsourced in Michigan are losing their job. We're talking about market research and data. Well, it makes sense and it was interesting when on this launch and obviously a lot people know that I'm on your board of directors and think that's an effort we're supporting because it's just the right thing to do in general. And I got some strong email concerns saying, "We're really surprised that the MRGA is backing us up," and my statement was, "there's not so much backing anything up," it's just being transparent and sharing the thing for your clients. But it's really up to -- the thing that I think really needs to be addressed is it's really up to the risk that you're willing to take when you're a doing research with your costumers and the long-term health of your business partnership if you're working with somebody. Do you want to jeopardize a long-term opportunity just by passing up and doing something so incredibly simple?
And also I think there has been some confusion on what offshoring is. And a few complaints came from smaller consultancies and a few from Australia and Canada even.
I think they've misunderstood what you're really saying and what you're trying to do. I think this might be -- yeah, this has been a question we talked about, but maybe mention what the intensions are, I can certainly say it's been my view -- you're really trying to do the right thing by the industry to make people aware. You're not trying to point fingers and say, "This is bad, don't do it." You're just saying, "I understand what's going on."
Yeah. Just being aware of what parts of the market research is offshored to, where and what if any of these issues then apply, is important. I think there has been some confusion there. But I think it's -- we have over 50 members now signed up and it seems to be growing so I think it's becoming more accepted. I know when it will be accepted by the Hannah McGill top five maybe when their attorneys start reading [Laughing]. How good it can be for them?
Yes. If they get complaints, so all it takes is zero.
One bad delivery on a project, where something doesn't happen because they weren't quite transparent enough, but we have to say that one of the ___19:36___, we just want to say, "Hey let's just take a look at this and understand what's it s all about."
Right. Yeah. I heard several clients now have started asking their suppliers about this so that may be another reason to look into this but we do have some papers written by the foremost attorney in offshoring in the US, Sonja Bolte and they're available free on the site and she knows a lot more about offshoring than I do.
Oh great. So, I will announce an MRGA group along with a Next Gen group because we both use the same social media technology a little bit later on in this radio interview, broadcast so that you can go and interact and plug into that website and follow the base on which ever site you'd like. You've gotten some interesting press and I thought that this would good forum for you to kind of defend your __20:51__ process and why you think there was such -- even initially and we're approaching close to a year anniversary on this launch. Why do you think there is such strong opposition in the media circles when you're announced as FTO?
Well, I don't know what... Well, I guess I'll just -- Research Library Live, Research Live Magazine can __21:21__ interesting article that made the process seem self-serving to Anderson Analytics and ____ pretty strongly the opposition.
Yeah. Research Live is just one small publication in the UK and I think they somewhat __21:42__ by SMR obviously as more have gotten into the discussion in the NGMR group and I think there was some things taken out of context there, but I wouldn't at all call that media opposition. There has been a lot of media for it as well. Anything from RFL communications.
Yeah. So, I guess we'll say for it or against -- I don't...
Right. So, yeah, I think for the most part, it's been positive and most people -- in terms of self-serving, I don't think self-serving, it serves everyone who is a member, who believes in transparency, sure, it's healthful to Anderson Analytics, our clients certainly appreciate transparency so [Laughing] it's not something I'm afraid to say that we're for transparency, truth, and so forth.
Yeah. If you keep talking like that, you're going to have to take your Twitter post down that says, market research is self-certified, dealing on whatever you have out there. [Laughing]
You're talking about life and truth and justice here. Just kidding. You know I love you. So, I think you pretty much already answered this question, but I had outlined can you defend your reasoning or is this surely a self-serving effort and one of the things I learned a long time ago was on business, it's always self-serving for the business and the way that we go, but I've always learned that it's not my job necessarily. Somebody writes about what their goal is, especially in the social media spaces we communicate, the space is my job to give everyone an equal platform to communicate the message. So is there anyone or any thoughts that you want to talk about, about defending why you're doing this?
No. I think -- I mean it's basically giving back to the research community that's pretty much where most of my experience has been, pretty much since university days. I started working in the market research industry, starting with Nielsen BASES and have been in the industry ever since, after grad school as well. Obviously, being involved in social media and with the Next Gen Market Research Group I'm linked in, becoming so large and receiving so much. Because of data involvement, I felt that this was a good way to give back, in a way that -- there was a clear gap. But I mean the FTO is totally free, there is no advertising there, there is no cause for certifying or so forth. In fact, if anything, it caused some money in terms of just putting my developer to put up a site and so forth. So, it very much runs itself and it's in the spirit of social media, it's open to anyone and totally free.
Yes. I think personally, it's a great effort, I don't -- I guess it may be me being naïve, I guess. In the market research industry, there are some matters sometimes that I'm not aware of and I can be like a bull in a china shop, but I'm trying to figure stuff out. I think this is a great initiative. What's wrong with being transparent?
__25:31__ front. I mean seriously.
Even as I mentioned before, the US government has started charging for their EU Safe Harbor, just a modesty of I think $100 or so, for the cost of certifying. So that they can maintain the program, but there is no such cost and again the main cost was in just setting up the site and so forth. So, I'm not worried about anything like that.
And some of the story that was written between the alliance or they say it's for you to get more business, for you to put them because you're in the US. I mean you outsource sometimes, was that correct? There, you're doing all work within the US right now.
No. Yeah. We're not offshoring.
At the moment. We...
Let's check it out. That's just a choice you're business makes. First of all, I don't see why that would even be an issue in between but...
Right. I mean it's a difficult process I've learned to do so and it's something maybe that's best done in skill. That's something that I noticed when I started Anderson Analytics and started offshoring like I mentioned. So, my first employees were oversees, but it was not smooth of the process, though I used the same offshoring vendor that I had used at a larger company previously. It's not as easy as you think so -- it's individual business choice. Anderson Analytics is a boutique market research firm and our clients come to us and believe that an experienced analyst is doing the work and so forth so -- but in the future, if we change, thinking in that area, then we will be certified -- changing our certification on the FTO site. [Laughing]
And transparent about it, right?
Yeah so you can watch. [Laughing]
Great. And then I just wanted to have you explain a little bit about the FTO directory and have somebody that's just sitting there _27:54_ on them that this could be important to them. How do they use the FTO directory? What does that mean -- what should that mean to them and how do they use it? It sounds -- it's very pretty self-explanatory, but it's always good to hear it straight from the person that invented it.
Well, It really takes only five minutes to certify, believe it or not. And any corporate officer can do so. There's just a few -- a form there to sell out and then you are certified and your company will show up in the directory, and before interested, can check what types of business processes you offshore, if you offshore, and if so, where. For clients, there is a petition you can sign. If you want greater transparency. And we have several fortune 1000 companies who have signed the petition and a few of them are listed there on the website. And also on the site, like I said, it's linked to some research that we did on the issue of transparency and it's probably for the market research industry. The primary piece of research that's ever been done on that and two or three papers that you would otherwise have to pay a lot of money for on _29:15_ by Sonja Bolte as I mentioned who is also on the board of advisers.
Great. So, thank you so much for your time. Is there anything else you want to add to our conversation?
No. I think we covered most of it. Thank Eric for having -- giving me the opportunity.
Yeah. Great. I believe that topics like this are healthy in a great way to express far innovation and better unity industry wide and FTO becomes the answer, isn't the answer to the industry, would love to hear our memberships, thoughts of the dangers of ignoring offshoring, or why you think it's a great process for your company. We've heard Tom's views. I absolutely don't think there's any harm in supporting the opportunity like this no matter if you go with FTO or ISO or whatever the varying standard becomes for your company. Obviously, there are strong opinions both ways and I know Tom has his opinions on those. But may be that will be another discussion with him and some other industry leaders. But we will have these links up here for debate. For the MRGA, it will be www.mrgasn.com/groups/FTO and we'll leave the sound wide open so that I can implement your -- when you create it and I'll turn off the recording now.
Yes, you're offshoring self-certification. Visit www.offshoringtransparency.org. To learn more about Tommy Anderson and Anderson Analytics, visit andersonanalytics.com. Thank you for joining me today on the Live Chatter edition of offshoring transparency. We look forward to your engagement.
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