The Market Challenge. Although different for each company and product, upcoming geographical markets are important for many companies. Today’s examples are Russia (annual growth above 4%) and Turkey which GDP growth was 8.5% last year, making this market with 80 million people and growing purchasing power an interesting target market. Its geo-economic position between Europe and the Middle East contributes to the country’s attractiveness. In the near future Africa will further develop into an economic growth area as well.
The Innovation & Technology Challenge. Innovation faces two challenges at the same time: reducing time to market while increasing the revenues of new products. For many companies open innovation is part of the response to this challenge, i.e. this includes closer co-operation with universities, technological institutes. SME’s and start-ups in order to accelerate the development of new products, technologies and processes.
The Cost Challenge. Keeping costs of products or services low is definitely one of the corporate objectives. Choosing the right geography for a specific activity has become crucial. For example: the average total annual employers cost for a call center agent speaking English and one other European language costs in London 50,000 USD, in onshore Belfast 42,000 USD, in nearshore Budapest (Hungary) 20,000 USD, and in nearshore Casablanca (Morocco) or offshore Bangalore (India) both about 10,000 USD.
The Service Challenge. Not only in customer support centers, but certainly also in organizing efficiently the supply chain (from production plant to customer) service levels of a company are determined. The locations of distribution centers contribute significantly to the quality and speed of the deliveries.
The Globalization Challenge. For many CEOs the big question is which activity of the firm to put where? Or in other words, which activity on which shore? A growing number of companies are considering re-shoring manufacturing from Asia back to Europe or the US. Reasons include: increasing transportation costs, growing labor and real estate costs in Asia, supply chain issues, too much variation in quality, lack of protection of patent rights. The same goes for back offices due to quality issues and increasing labor market competition (read: increasing costs).
The Talent Challenge. Finding the right talent is very important for all types of operations: whether it is a production plant, distribution center, marketing & sales office, R&D center or back office. Buck Consultants International distinguishes 6 talent related categories: labour costs; availability of qualified labour; labour flexibility; language skills; labour relations; quality of life.
The Risk Challenge. More and more companies become well-aware of the risks they face. These risks vary per country and have to be addressed thoroughly. The Risk Scan Buck Consultants International conducts for companies includes political risks, economic risks (a.o. inflation), financial risks (a.o. exchange rates), transparency risks (for example corruption and bureaucracy), legal risks (permits, red tape, patent infringes) and natural disaster risks.
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