When Is It Time for Outsourcing Research?

We often have to decide what to outsource and what to do ourselves. Should we call the plumber to fix that leak, or can we do it ourselves armed with a few tools and a DIY tutorial from YouTube? Can we find the problem with that car noise that comes on and off and fix it based on our 20+ years of experience as drivers, or should we call the mechanic?

 These days, we can find this decision-making dimension from Do-It-Yourself (DIY) to Do it-for-Me (DFM) segments in almost any product category, in B2C and B2B alike.

Slashed budgets, tight corporate resources, and growing confidence that technology and an autodidact attitude are the answers to this state of scarcity are cementing a corporate culture to do more with less. Cheaper and faster (and hopefully better) is the mantra we hear everywhere, but especially in the insights industry, which encompasses market research, data analytics/science, UX research, and other specialties tasked with data analysis to support business decisions.

Whether to go DIY vs. outsourcing is always in research clients’ minds. I hear it often in the form of a pervasive question: Why should we pay you to conduct research when we can do it ourselves using a software tool at a much lower cost?

The truth is that sometimes they don’t need our services. But, sometimes, they do.

What to Consider in Research Outsourcing Decisions?

To determine when companies should hire professionals like us, they need to consider a few things first:

• The opportunity cost of the time not spent doing other types of research that could be more valuable.
• The hidden cost in the forms of salaries paid to research team members vs. the value they add.
• The level of complexity of the research under consideration.
• The research skills and experience of the research team.
• The research team’s credibility among internal stakeholders.

Opportunity Costs

Thinking in counterfactuals is a strenuous mental exercise but is needed to gauge where we should allocate time and resources.

Every minute an internal researcher spends in the research design and implementation of a project is a minute they could spend in a different research project that may add more value to the company. That doesn’t negate the need for the initial project, but the cost of outsourcing it could be lower than the value of having the team dedicated to something else.

The reverse can also apply. The value of outsourcing could be higher and worthy than doing it internally given current constraints in time and limited team skills risking mistakes that could render the research results useless or misleading.

Furthermore, companies can rarely understand the cost of not gaining insights from doing certain types of research because they don’t have staff with the necessary skills.

In my experience, in most companies, research teams tend to use the same type of research all the time, driven by internal expectations, the team’s skillset, and the tools available to them. Companies with low research function maturity often don’t know what other types of research could be done to add more value to the business.

Hidden Costs

When companies only consider the cost of tools needed to do research (e.g., survey tools, data visualization, etc.) as the total cost of research, they often fail to factor in the salaries of the people using the tools and allocate the associated cost of their time. Then, there is the cost of staff training, so their skills are up to date.

Clients who question the value of hiring an external research supplier are often thinking about the many online tools available to capture quantitative and qualitative data at affordable prices.

In this calculation, they often leave out employee salaries as part of the cost of research. Research team members’ salaries act as invisible “free money,” as they fall outside the research budget by accounting metrics.

Research Complexity

Many simple research projects don’t require the support of a full-service research agency like ours. With so many user-friendly research tools out there, it is easy to set up short and quick studies by staff with limited or no experience in research when directional or qualitative data is needed. These studies usually take the form of “quick and dirty” online surveys.

However, research complexity is likely to grow beyond “quick and dirty” online surveys when business decisions with cost implications are on the horizon. Here, we should follow research standards and hold onto the research fundamentals. Quick and dirty research tends to yield incomplete or wrong data resulting in misleading insights when necessary rigor is absent.

Research Team’s Skillset and Experience

Companies that believe that technology is the answer to their research needs often don’t consider that individuals using the technology should be proficient in research design, quantitative methods (e.g., questionnaire development, sampling design, statistical analysis, etc.), and qualitative techniques (e.g., in-depth interview discussion guide design, qualitative analysis). We needed knowledge of the full gamut of methodologies to select fit-for-purpose research approaches and provide relevant insights (no pun intended).

For example, survey tools will NOT:

• Tell if a survey is the right method to capture the data you need to solve the business problem at hand.
• Design the survey for you.
• Indicate the most appropriate question formats for the analysis you plan to conduct.
• Flag problematic question formulations (e.g., leading questions, compound questions, etc.).
• Show how to design the sample to represent the target audience you need to include in the study.
• Do the proper data cleaning, processing, and analysis for you, even if it may have some data cleaning and reporting capabilities.

The correct answers are more likely to come from people who know how to select fit-for-purpose methods for the research problems we face.

The market research and insights field includes a wide variety of specialties with different complementary approaches and tools. Companies need experienced researchers to select suitable research designs, implement research methods, and translate the insights into business implications. Technology alone is not the answer.

The challenge is becoming aware and honest about what we don’t know. I have seen research teams taking on tasks they didn’t know how to do and making costly mistakes because they didn’t want to admit their lack of experience and knowledge to do them.

I recently was called to save a very long and complicated online survey project. Missing data due to programming errors and a glitchy online survey tool have led to thousands of dollars wasted on incentives paid to respondents who missed entire survey sections. Others didn’t qualify but still could enter the survey due to faulty programming logic. The client thought they could do it themselves even though the team assigned to the project has never designed, programmed, or fielded an online survey.

Research Team’s Credibility

It is not uncommon that some internal stakeholders and external investors receive research conducted by internal research teams with some skepticism due to various reasons (e.g., perceived low expertise, internal politics, corporate culture, etc.)

Outsourcing a research project or parts of the research process to a neutral third-party experienced research vendor can lend credibility to the research results since research suppliers don’t have a vested interest in the research outcomes. 

Companies often hire research suppliers for their expertise and neutral position to help internal research teams champion innovative research approaches that have been validated. This often builds trust in the research results and makes internal stakeholders more receptive to the derived insights.

When To Outsource Research?

The focus on lower research costs and fast research processes are the main drivers of the current DIY trend in market research and UX research. However, in some cases, companies may get the opposite.

As explained above, research can be costly and take more time if companies don’t consider the opportunity costs of research not conducted, the level of experience and expertise of the internal research team to handle research complexities, and the team’s credibility to support decision making.

A company should outsource research when:

• There is a high likelihood of not gaining valuable insights by not conducting certain types of research because the internal team is dedicated to something else (opportunity cost).
• The business problem requires a research approach that the internal team can’t design or implement based on their experience, expertise, or tools available.
• The internal team lacks credibility among internal stakeholders, or an impartial third party is needed to avoid the introduction of biases driven by the vested interests of internal stakeholders.

If none of these issues are present, then Do-It-Yourself research is a great option to conduct research at a lower cost and a faster speed and find solutions to particular business problems.

 

In my own experience, a hybrid model based on a partnership between the internal research team and external research suppliers is the most beneficial for both the business and the research team. In such a model, the internal research team manages some research projects, and research suppliers manage other projects or provide partial support to projects managed by the internal research team.