Where an organization does business plays a pivotal role in its ability to assemble a productive workforce, adjust to shifting market factors, minimize risk exposure, and—ultimately—turn a profit. Organizations making decisions about their location need a diligent methodology that takes into account each market’s workforce sustainability as well as future regulatory and competitive dynamics. They can no longer footprint simply on the basis of market demand or wage comparisons.
One commonly leveraged approach is to conduct a location strategy workshop that reviews, weighs, and prioritizes market factors according to overall business objectives and preferences. Organizations can make more informed and sustainable location strategy decisions when they drill into the key workforce availability, cost, regulation, and productivity variables needed to understand each market’s benefits and drawbacks.
This type of evaluation can be utilized to support capacity planning, workforce mix and resource allocation, as well as more holistic strategies related to offshoring or reshoring initiatives.
In the last two years, over two dozen global employers have engaged ManpowerGroup Solutions to analyze their productivity and cost data related to their offshore investments to conduct comparative reviews against other organizations and markets and determine where higher performance or better operating margins and labor costs may exist. In some cases, these projects led to minor shifts within region, in others there was a more substantive shift to another region.
Among ManpowerGroup clients, only 65% of new initiatives were deemed appropriate for off-shore investment in APAC, while evaluation of current investments resulted in near-shoring or re-shoring decisions 41% of the time.
There is by no means an exodus from APAC or any drastic shift in the value proposition of traditional off-shoring opportunities, and billions of dollars continue to be invested in outsourcing and off-shore efforts in the region. That said, as this document reports, there have been an extensive amount of legislative changes, market dynamics, and other economic factors that have an impact on precisely what the cost-benefit analysis looks like in off-shore scenarios. Depending on an organizations priorities, required skills, operating processes, competitive and client landscape, and precise locations within an off-shore market, the value proposition can shift significantly from one organization to another, making these trends less indicative of how another organization should view these investments.
Some examples of leading organizations taking this approach are below:
- Acquisition and redundancy analysis
- Location realignment initiatives
- Legacy skills management
- Cost based downsizing
Transition planning has evolved and it is no longer efficient to simply manage adjustments based on headcount, spend, or tenure.
Referencing the earlier discussion of Performance Management, HR Analytics has come a long way and now enables us to evaluate workforce performance more effectively based on the evaluation of both internal and external considerations to develop transition priorities and then map the process through execution.
Discussion of how competitors have shifted their transition strategies with recent divestitures such as eBay & PayPal, HPQ & HPE, Dell & its Software and the ongoing discussions or splits such as EMC & VMware, Amazon & AWS, and 3M & its Healthcare Software all suggest that organizations are adjusting their organizational priorities. From a workforce management perspective, this could represent more than competitive and market trending, it is also an opportunity to gain an advantage from a skills standpoint if location and skills analysis determine that the movement of these organizations make them vulnerable to targeted recruitment efforts.
Best practice in transition planning is to have a proactive strategy in place to support any offboarded workers in transitioning into another employment opportunity. These investments are necessary to minimize any competitive disadvantage, negative impact to employer brand, and potential impact on stock prices based on public perception. There are a number of processes and programs available to support this transition activity and enable IBM to maintain control and value throughout the process regardless of the drivers behind the transition activity.