Location Strategy

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Location Strategy: Trends in the Global Services Delivery Landscape

The global services market witnessed a phenomenal 2021, recording a solid comeback post-COVID-19 with 13-15% growth. Now, several economic indicators imply that a global slowdown is around the corner, leading to rising concerns on how the slowdown will impact the global services sector.

Everest Group predicts that the global services sector is likely to remain resilient in the near term amid deteriorating macroeconomic conditions. We expect the global services market to soar to US$300 billion in revenue and 11 million FTEs by 2023.

Talent Genius™

This on-demand analytics platform combines Everest Group’s extensive location and talent insights with ongoing market research to provide global organizations with the data they need to develop comprehensive workforce strategies and find and retain top talent based on evolving market dynamics.

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Trends across geographies

Asia Pacific (APAC)

Asia Pacific (APAC) continues to dominate the global services space with a 40%+ share in the total pie. Multiple global organizations have a significant presence (10,000+ employees) in the region, primarily driven by the unparalleled talent-cost proposition.

India and the Philippines

India continues to be the preferred location, followed by the Philippines – both countries collectively accounting for 90% of the market. We expect most global players to increasingly leverage and set up operations in tier-2/3 APAC cities to ease talent pressures in tier-1 cities.

Europe

The European services market witnessed healthy traction in the last few years, driven by niche and digital talent availability, proximity to customers in Western Europe, increased regulatory oversight, and demand for multi-lingual support.

Poland, Portugal, and Spain

While Poland continues to hold its top-tier position in the European market, Portugal and Spain are witnessing increased traction as companies angle for stable environments amid the Ukraine-Russia geopolitical conflict. Organizations will need to closely evaluate the impact of high inflation, tightening monetary markets, and evolving geopolitical equations on their European location’s strategy.

America, Latin America, the Caribbean, and Canada

Moving westwards, the global services market in the Americas continues to experience moderate post-pandemic rebound growth. Markets in Latin America and the Caribbean are attracting investors driven by increased enterprise preference for nearshoring and bilingual talent availability, partially offset by geopolitical and macroeconomic uncertainty. Canada continues the high growth momentum driven by focused government investment and niche skill talent availability.

The Middle East and Africa (MEA)

Traditionally leveraged for business process services delivery, companies are now pivoting towards delivering technology services from the Middle East and Africa (MEA) region because of the large talent base, time-zone proximity to Europe, and increasingly attractive government support. We expect organizations to increase their MEA footprint driven by considerable untapped regional demand potential, the need for diversification, and a strong government push (especially in the Middle East).

Get forward-looking locations insights for your future strategy

Having a balanced and well-diversified location strategy has never been more important. The uncertain geopolitical climate in Europe, talent markets with high inflation in Asia-Pacific and North America, increasing macroeconomic risks in Latin America and MEA, and rising customer expectations globally are leaving most C-suite executives at a standstill.

With a strong team of 40+ dedicated analysts and regional and on-the-ground SMEs across the globe, Everest Group supports leading enterprises and service providers in readjusting their global location strategies and raising their odds of success.

The Let's Talk Locations Series

In this LinkedIn Live series, our locations experts do a deep dive into a variety of locations around the world and explore the opportunities and challenges of services delivery.

Case study: Top-five Global Financial Services Company Creates Future-looking Location Strategy

Client:

A UK-headquartered top-5 global financial services company with 50,000+ FTEs supporting the back and middle office operations globally.

Challenge:

The client wanted to consolidate its operations in light of margin and cost pressures and headcount reduction from automation and other optimization technologies. It also aimed to save money by co-locating processes. Additionally, the client wanted to charter 10-year cross-shore global location strategies to meet its current and future demand.

Solution:

Given the client had a highly diversified presence globally, we deployed a cross-geo team across India, the US, and the UK. We conducted peer-based evaluations and interviews with market players such as investment agencies and recruiters and layered on a highly granular view of each process. We also carried out multiple rounds of interviews with the client to understand its experience with the current location portfolio and likely shifts in talent demand over the next

Result:

We designed a 10-year locations roadmap for the client, including the opening of new centers, exiting existing centers, and portfolio rebalancing. We also modeled financial business scenarios to guide the client toward multi-million dollar cost savings.

Location Strategy: Consider Climate Change

Most companies are still more focused on the short-term, like building climate-resilient buildings and reinforcing existing infrastructure to make it more resilient to the impacts of climate change.

Location strategy is a long-term decision with significant investment and sunk costs. Once a company decides to start delivery operations from a particular location, it is an irreversible long-term decision due to the high capital and labor investment.

Companies will have to consider the impact of climate change on future location strategy decision making, which traditionally includes talent, cost arbitrage, and conventional operating and business environment parameters.

Climate change impacts different regions, locations, and geographies differently. Although two locations might be neighboring coastal cities, the impact of climate change could differ depending on the landscape. It is paramount for companies to understand the effects of climate change on the particular location they are accessing and the degree of its impact.

The long-term assessment should consider historical and predicted climate patterns, government mitigation measures and their effectiveness, and geographic factors to effectively formulate a comprehensive location strategy.

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Our locations offerings

Advanced locations analysis

Service delivery leaders need to select locations, balance portfolios, proactively monitor location developments, and determine optimal work geographies.

Our Advanced Locations Tool tracks locations trends and offers data and insights needed to make work placement decisions.

Location optimization

Locations is no longer just about where; it's also about who and how.

Our unparalleled location datasets and expertise help you with virtually any service delivery location issues – selection, sustainability, portfolio balancing, and more. 

Talent Genius™

Access on-demand location and talent insights with Everest Group’s AI-powered location and talent insights platform.

Discover how Talent Genius can help you optimize your location portfolio across costs, risks, and talent pipeline sustainability

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