The First Facility Management Blog

For over two decades, sourcing for services across both IT and business process sectors has gone global, with services providers from various countries offering a multitude of competencies. The globalization of service delivery has caused vigorous debate as industry, government, and the media have argued its impact on the U.S. economy.

In response to this (along with changes in cost structures due to the current economy), many IT service providers have been reconsidering U.S. locations as potential sourcing destinations, including lower cost, mid-sized metropolitan areas and rural communities. Many companies have found that low cost domestic sourcing can offer a key solution, complement global strategies, and help both U.S. and foreign firms expand their reach in the U.S.

“In today’s economic climate, everyone must find ways to work smarter and in a more efficient manner,” said Jeff Lande, executive vice president, TechAmerica. “Companies, governments, and others need the best talent at affordable rates, and many enterprises have moved to a global delivery model to innovate and execute on a 24/7 cycle. Since some of the best resources are right next door, increased attention is being given to sourcing to lower cost, domestic regions as part of an enterprise’s overall strategy.

“It is important to note that when companies are evaluating domestic locations, they are doing so in the context of a global environment,” continued Lande. “Some companies will be looking for a low cost domestic location as an alternative to an offshore location, while others will be looking for a domestic location to complement their global strategy. Foreign based companies may be looking at a U.S. destination to build local capacity, expand services, and gain market access. No matter the reason, the framework and model described in this report can be utilized.”

TechAmerica Foundation’s new report, Low Cost Domestic Sourcing: A Guide To Location Selection, provides a framework to help government agencies and private companies work through the evaluation process. For a pdf summarizing the report, click this link.

The property market in China is showing more resilience while India has been hard hit by the global economic downturn, according to the recently released RICS Global Commercial Property Survey. Most of the Chinese indicators remain in positive territory, with both supply and demand holding up and expectations generally upbeat. Fourteen percent more Chartered Surveyors expect an increase in floor space to be let and sold throughout China in the coming months, while 18% more Surveyors are reporting a rise in capital values.

On the other hand, India has experienced a significant commercial property downturn in Q3 2008. Rising interest rates, higher inflation, and a continuing lack of liquidity is impacting significantly on business confidence. Forty-five percent more Chartered Surveyors reported a fall in occupier demand compared to just 6% in the last quarter. The balance of surveyors reporting investor purchases plummeted from a flat zero balance to -73.

RICS Chief Economist Simon Rubinsohn said, “The worsening economic climate is taking its toll on the commercial property markets in most parts of the world, and the credit crunch has now extended its grip into emerging markets. Large interest rate cuts by central banks should eventually provide some support. However, with liquidity still tight and tenant demand softening further pressure on the commercial sector is inevitable in the near term.