Blog Article

Where’s best for your business?

Posted by Sivaramakrishnan Balasubramanian

Sivaramakrishnan Balasubramanian

Onshore, nearshore or even reshore? Centralized or decentralized? The best mix of locations for your business depends on many different factors. What’s important is to make sure that you have the right people in the right places to deliver your strategy, now and tomorrow. In this fourth blog post introducing the ‘5 RightS’ of Strategic Workforce Planning, we examine “Right Site”.

Cost, growth, market dynamics, the need for innovation or “hot skills”: this is just a sample of the things that determine where your workforce should be located. Today, “right site” needs your constant attention. Fast-moving, unpredictable change can easily leave businesses with skills gaps, or an excess or undersupply of important talent in key markets.

Building local skills

In the United States, cheaper energy from newly accessible domestic shale oil and gas is driving down the cost of manufacturing. Labor cost factors that once drove production overseas during the 1980s through the early 2000s are slowly beginning to reverse. American manufacturing is witnessing a steady revival, giving rise to the term “reshoring”. The challenge now is to rebuild and augment the local manufacturing skills base to match demand.

This need to build local skills is also important because the “offshoring” trend is now happening in a previously unaccustomed direction – from East to West. Chinese PC maker Lenovo has established a manufacturing facility in the United States to make sure customized products and services can be delivered quickly in that market. At the same time, driven by the need for proximity to North American customers, an Asian oil & gas pipeline manufacturer has expanded its production capacity in the US.

India, with its strong network of IITs (Institutes of Information Technology) has for some time been a go-to destination for companies seeking a strong pool of technology expertise. Tech giants including Microsoft, Facebook, IBM, Intel, Philips, Panasonic and Samsung have all recognized the value of India’s technically skilled workforce, making the country an attractive R&D destination.

Combined “right site” strategies

Texas Instruments was the first multinational to realize the potential of this workforce and set up an R&D center in India. However the company took a strategic decision to outsource manufacturing to other organizations in India, in order to focus on building its R&D resource in the country.

In another example of a combined “right site” strategy, a successful multinational retailer consciously chose to decentralize commercial decisions at country level while centralizing cost reduction opportunities at global HQ. This way, decisions that required intimate knowledge of local customers, products and suppliers were executed at a country level. However, it also meant creating a strong central team in corporate HQ to find cost synergies in private brand packaging and development. The workforce had to be hired and developed accordingly.

Virtual space

In some industries, notably technology, it doesn’t matter where you are. Rapid advances in collaboration technology mean that “right site” becomes less about physical location and more about time zones or the quality and robustness of communications infrastructure.

Critical mass

The concept of “right site” is closely linked with the other “5 RightS”, most notably “right size”. It is always particularly important to ensure that relocating people or functions doesn’t damage the decision-making structure. This means making sure there’s a “critical mass” of people in each location so each business can make the right decisions at the right levels, keeping the whole organization agile.

Given the global spread of markets and talent today, “right site” is an integral part of any workforce management programme.

The following questions will help you think about whether there’s an opportunity for your business to use a better mix of locations:

  • Are people in different job families in the right physical location?
  • Do strategic shifts (e.g. globalization) require a different distribution of staff across regions or locations?
  • Will you get additional resources where you need them?
  • Are you currently in a high-cost area and should you relocate resources in cheaper areas?
  • Do you have critical mass in the right locations?

There are big rewards for business that get “right site” right.

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