Offshoring business critical work was once a no-go area for big
businesses. But a deal signed by pharmaceuticals company
Astrazeneca shows that
businesses are growing more comfortable with handing over
mission-critical data to third parties.
The company is on target to save £150m in five years following a
£47m agreement with
Cognizant two
years ago. The supplier took over the management of the
pharmaceuticals giant's product research operations, including its
IT infrastructure - a heavily regulated and business critical
business process.
Cost-cutting is not straightforward because there is no room for
error. Any inaccuracies with the data collected during clinical
trials could be disastrous for the business. It could lead to the
wrong decisions being made during product selection or leave
Astrazeneca open to intervention from regulators.
"The integrity of the data has to be beyond question," says
Amanda Sax, head of data management at Astrazeneca. "We have
outsourced the data management, but we are accountable to
regulatory bodies."
The majority of the savings come in staff costs. Before the deal
was signed, Astrazeneca had 1,000 people involved with data
management in some way, although many were not full-time. There are
now 350 Cognizant staff, including 300 workers in India and 50 more
in the US, UK, Japan and Sweden, working alongside 50 full-time
Astrazeneca employees. Cognizant can ramp up the number of staff to
match workloads.
Astrazeneca has made further savings by reducing the number of
IT systems. "Cognizant has rationalised our processes and systems
and designed simpler tool sets and processes. For historical
reasons, we had over 50 tools and applications for managing data,
but this is now under 25," says Sax.
It is too early to say whether the quality of data has improved,
but Sax says that the efficiency drive will continue.
The companies have jointly formed a $10m innovation fund, which
will be invested in developing systems and processes to automate
and standardise the way they manage Astrazeneca's data.
Asked whether putting almost an entire business unit in the
hands of a supplier risked business continuity, Sax said: "Of
course we have to make sure we have addressed risk and if we had to
bring it in-house or find another provider, it would be easy
because of the rationalisation."
Robert Morgan, director at consultant Hamilton Bailey, says it
is risky to outsource business critical data. "Liability remains
with the customer. And it's not just about litigation but the
reputational damage that can be caused if mistakes are made."
But Mark Lewis, Lawyer at Berwin Leighton Paisner, says many
companies are looking to outsource strategic research and
analytics. He says Indian offshore service providers are involved
in strategic analytics at board level within large businesses.
"This explains the growth of the research and analytics
outsourcing sector."
Offshoring grew as a movement because businesses wanted to
reduce how much it cost them to run simple business processes such
as call centres. But offshoring has evolved and now, as Astrazeneca
has shown, businesses can offshore critical operations.
Forms
Cognizant designed forms used by Astrazeneca when it works with
doctors to test drugs. Astrazeneca uses the results of the trials
to select which products to license. Data from the forms is fed
into a database built by the supplier. Cognizant checks the data
for accuracy, before it is approved by Astrazeneca and locked
down.