Right-shoring location strategies for Support Centers

Although the vast majority of multinational companies already has some sort of support model in place, the global Support Services market is still expected to mature and grow further with 4 billion USD until 2027. Companies are now focusing on process efficiency, added value, digitalization and innovation. Also, many companies are using their best service delivery models to also target emerging markets. What key trends are taking place in the Support Center market and what does this mean for the global right-shoring location strategies for Support Centers?

Top 5 industry trends for Support Services

BCI Global identifies 5 key trends for the Global Support Services industry:

Source: BCI Global, 2021

The first trend, the evolution of services implies moving from largely centralized to largely distributed and decentral ways of working, more integrated support services covering all customers’ needs and a focus on customer, experience and value. The second trend involves the move from single function services to Global Business Services, also known as GBS. Automation includes developments such as robotic process automation (RPA), digitalization and self-services, in which Covid-19 acts as an accelerator for many companies. Then, there is also an increased focus on the access to talent. Not only because many mature and key support center markets all over the globe are dealing with labor shortages, but also as companies are more and more looking for talent with a technology and service focus. Last but not least, the working from home (WFH) trend as kickstarted by the global Covid-19 pandemic also has a significant impact on Support Centers.

Location strategies

These selected 5 key trends for Support Centers all have a clear impact on the location strategies of companies. In the below overview per trend the projected impact and the effects on the location strategy are presented:

Source: BCI Global, 2021

In summary, there is an increasing focus on bringing services closer to home in on-shore/re-shore and near shore solutions. Let us further look into the different ‘right-shoring’ strategies that are being used for Support Centers.  

Right-shoring location strategies change over time

BCI Global, is active in footprint and location strategies for support centers for decades already and has witnessed first-hand that location strategies for support activities go in cycles or waves. We have identified the following ‘right-shoring’ location strategies over time:

• Where the support industry started with (mostly regional) consolidated centers ‘onshore’ in large tier 1 cities, they soon followed a more cost driven strategy with offshore solutions in tier 1 and tier 2 cities.
• Now we see a focus on technology & services which results in ‘re-shoring’ and ‘near shoring’ solutions mainly in tier 2 and tier 3 cities.
• Some skeptics claim that automation will replace labor in total, which could be called ‘tech shoring‘ and for which smart or well-connected digital cities are required.
• Then there is the current Covid-19 related wave that will lead to more working from home – also in the future. This could be called ‘home shoring’ as people will be located at their homes in this strategy.
• However, it is also expected that - especially for low(er) margin - businesses continue to seek the lowest cost locations with deep labor markets, let’s call this ‘bottom shoring’.

Source: BCI Global, 2021

Overall, companies are re-evaluating their location strategies, where right-shoring seems different for different players and growth is expected across most geographies.

Key global location trends for Support Centers

If you are interested in the most important locations trends per geographical region for Support Centers including India, the USA, LATAM, Euope, Africa, APAC and China you can download these here.

How to develop your own tailor-made future proof footprint and location strategy?

Based on the global trends and right-shoring strategies for Shared Services, also the future of Working from Home plays a strategic part in determining your own tailor-made footprint and location strategy for your support services. In order to assist companies to develop their own tailor-made future proof footprint and location strategies, BCI global developed clear frameworks, roadmaps, a step-by-step approach and proven methodologies. Interested to know more?