Over the years Darren Sharma has been asked many questions about research outsourcing industry and has put together these responses to the questions that he is most frequently asked.

What does off-shore mean?

It’s not the only location but off-shoring is mainly about having analysts in India who support you. They could be consultants or they could be employed by your firm. English language, IT infrastructure, inherited English structure of education and plentiful MBAs at low wages are the benefits.

When did it start?

The software industry in the 1960s. In-house IT and back office in the 90s. Research from around 2002.

Call centres are really annoying

Yes, sadly, they often are.

Will you be looked at oddly for outsourcing?

No – everyone is at it. Almost every significant financial institution in the G7 has significant IT and back-office services provided out of India. When it comes to research, on the sell-side basically every one of the top-20 bond issuers has G7 equity and M&A analysts off-shore and nearly all of them have front-office credit off-shore too. That’s been going on since around 2002.

Up a few floors to risk management and the story is different. Around a quarter of the top-20 banks have risk off-shore, and, in all cases it’s been less than 5 years.

The institutional buy-side has been using off-shore research for just a few years. We can think of around 10 of the world’s biggest managers with off-shore proprietary research units, and the number is growing fast. The driver for this segment is post credit-crunch due diligence regulation.

Will clients and investors see out-sourcing as negative?

Everyone outsources – most legal opinions on any reds, structure or deal are done by third-party law firms. The interesting question is about research out-sourcing to India. These days, your clients are doing it and your investors are doing it, as are the consultants who advise your investors. So are the ratings agencies. So you are fine. In fact we’re probably at the stage where you will be looked at oddly if you don’t have a really efficient out-sourced research solution.

What sort of service will I get?

It will depend on the skill of the provider you engage, and what level of value-add you are comfortable with. Services vary from the equivalent of a City research assistant fresh out of college to what you would expect from a 2-year elite local MBA (that top end is, in any systematic way, only offered by Frontline Analysts).

Do you offer managing directors?

No. Our analysts give the same output as a 2-year elite MBA in the City or on Wall Street.

What does the industry look like?

There are “captives”, which are off-shore support operations which only work for the firm which owns them. This is seen as off-shoring without out-sourcing, depending on your approach to taxonomy. Invariably the research captive was a bolt-on to pre-existing IT and back-office operations and so much was carried forward from that world to the research approach. If you happen to run your research like you run back-office or IT, that’s fine…

There are also a number of third-party service providers. Many are excellent firms and our friends, who do what they do very impressively. Google will help you track them down. Frontline Analysts is unique amongst these in having a veteran City training/quality team at the heart of our process. Probity prevents us commenting on the market position of other firms here, but you might loosen my tongue with a cappuccino.

Isn’t turnover high?

Yes, it is pretty high in much of the industry. Where work is focused on facts alone, and you are rarely speaking to the person you work for, there isn’t the career building or love to stop you moving for a small rise. (I hasten to add, we’re not like that).


USD 6,000 per person per month is a ball-park number for what clients have historically been charged by the industry for an analyst.

Can I speak to an off-shore analyst?

Sure – hear it from the horse’s mouth. We can set something up. You can also simply mail an analyst in India on LinkedIn, where many keep their profiles.


There have been extensive research rules in place after dot.com (IOSCO/Spitzer), catering for research done out of multiple locations. There are out-sourcing rules in place, mostly to cater for back-office operational risk. Since research does not move client money, the latter rules do not bear. Regulators tell us that there are no extra special rules needed, and that makes sense to us. Compliance officer interpretation often comes down to having an authorised person or supervisory analyst sign off the off-shore consultant’s note.

Security of data and confidentiality

This is the sine qua non of any client’s engagement with the industry. Protections of various types – IT, physical, contractual – abound. I’ve never heard of any dealing ahead or other leaks from the off-shore research industry. The ultimate protection in our view is the same one that stops tongues wagging when friends from different firms get together on a Friday night in London or NY – professional pride and self-preservation.

Career progression

If you engage with an off-shore analyst over a period of years, it is likely that the consultant will be happy to work with you in-house, and maybe on-shore. Some firms cater for this in the initial contracts.

Don’t the good analysts take the first plane to London/NY/Sing for a job?

50% of them would if they could. Half of our analysts would not leave their family networks at any price. The half that do have wanderlust aren’t offered visas to nearly the extent they used to be.

Meeting participation

This one’s easy. In NY with a Toronto office? In London with colleagues in Frankfurt or New York? You dial them in. They come to you and you go to them from time to time, often with an element of jolly nice jolly in a nice place. All of these mechanisms can and should be put in place with your off-shore analysts.

What have Jedi got to do with research out-sourcing?

OK – hands up – I don’t often get asked this question in this way. What I do get is the objection that local young analysts have ‘market feel’. Unless you agree that market feel is something that is learned, and therefore can be taught, you must be declaring that your HR has access to Force-endowed Jedi.

Slightly more defensible is the idea of local analysts having local knowledge. I say ‘slightly’ intentionally. For example, a young English person (as I once was…) will style themselves as a European analyst. Try this today – ask one to name the leader of Sweden, or the third biggest city in France. Alternatively, ask a young Ivy League boy on Wall Street, perhaps assigned to retail stocks, to wax lyrical about the consumer preferences of female recent immigrants to California. The great thing about analysts off-shore is that they know what they don’t know.

Don’t say…

“They’re very good with numbers”

When a meeting contains that phrase, nothing good can come out of it. I’m not even going to dignify it with a rebuttal. There is a wonderful trajectory of this phrase being applied to Singaporean bankers in the 80s, Indian analysts in the 90s and noughties and now the relatively new analytical centres in China. Where next I wonder?

Are you really sure I won’t look odd?

Sitting on Wall Street, say, the buzz and kudos you get from hiring two Ivy League MBAs to bring you coffee and pull all-nighters at your command will be higher than the kudos from hiring two equally smart IIM MBAs in India. I don’t think that’s fair but it is what it is, for now. It’s a social capital issue, and I will say more if I ever wrap my head around M. Bordieu.

Moral implications

The local employment impact of outsourcing is positive, compared to what would happen if firms did not gain efficiency by outsourcing. A benchmark would be what happened to jobs in factories which did not automate. I should say that we never have and never will enter a revolving door where there is one person out while our person comes in.