Location Decision Framework to Optimizing a Global Workforce

Brief: 
  • When deciding on optimal function sites, consider both external factors that will determine the workforce you can recruit and the needs of different functions to collaborate.
  • Optimizing a global workforce requires creating a comprehensive decision framework, evaluating each potential labour market and specifying interdependencies between functions.
  • The goal was to improve productivity levels while maintaining reliability and market responsiveness.
The problem addressed by the campaign: 
  • Amidst rapid growth, INTTRA needed to be sure it was optimizing the global deployment of its workforce – that is, minimizing labour costs without jeopardizing growth or hurting productivity by locating the right jobs in the right places around the world.
  • INTTRA needed a well-researched plan to bring to its board that detailed the optimal global footprint so that it did not need to “unwind” location decisions later.
  • To maintain its lead, it needed a well-functioning team with highly sought-after e-commerce and logistics skills while managing costs aggressively, as they functioned as an intermediary in the commodity container shipping industry.
  • Today’s labour markets present more opportunities to source talent than ever before. In the past, decisions on where to locate were made based upon infrastructure, tax, regulation and real estate considerations. But today, decisions to move business locations across borders depends heavily on the availability and quality of talent, as that has become the most variable element in the investment equation.
Solution: 
  • INTTRA set out to analyse virtually all non-sales jobs. While focused on offshoring, it also considers additional functions that could be outsourced.
  • Identifying the more favourable locations was based upon a site selection analysis comparing locations in terms of labour and real estate cost, labour supply, business climate, proximity, and quality of living.
  • The assessment considers financially quantifiable costs that varied significantly by location, such as one-time costs (employee hiring and replacement, severance) and ongoing costs (labour and real estate).
  • Decision-makers first defined a reasonable set of alternative global locations where INTTRA’s business would most likely grow; then they identified the jobs/functions that were least risky candidates for global relocation. They flagged risks through either outsourcing or offshoring positions that are central to internal work processes and pose risks to coordination, information loss, delay, etc.
  • Interviews and a network analysis further identified primary points of contact within and between functions. This also served to identify core competencies for the enterprise as a whole and for each respective function. Then six core competencies were synthesized and assessed whether each could be readily acquired (i.e., are developed within INTTRA). For example, “integration capability”, “managing the consortium” and “product development” are core competencies developed from within and not easily acquired. Consequently, outsourcing or offshoring jobs requiring these core competencies may carry additional risks.
Impact: 
  • Application of the decision framework reduces risks and unforeseen consequences.
  • Operational efficiencies and expanded capacity were achieved while lowering costs. Some functions were located closer to growth markets.
Why has it worked?: 
  • Board support was gained for the moves through the thorough site selection analysis. Risks were reduced by considering all the relevant facts, which made adopting the recommendations easier.
  • An experienced outside partner skilled in labour market analysis was found.
Conclusions and Recommendations: 
  • Make your decision criteria explicit up front and weight the criteria before you begin to analyse the data.
  • Make sure all key stakeholders are represented.
  • Pay attention to the implications of a new location for the company’s internal labour market – understand how it will affect careers in the organization.
  • Perform due diligence not only for the location, but also for the organization’s ability to manage within that environment.
  • Managing risk is a corporate responsibility that cannot be delegated.
  • Control cost by considering all labour sourcing options.
  • Understand your core competencies are processes and capabilities that are essential to enterprise success. Do not jeopardize them through your location strategy.
Foundational Issues: 
Public and private constraints on mobility
Level of Collaboration: 
Level 1: Collaboration within the organization
Region: 
Global (all of the above)
Economic and political context: 

INTTRA was trying to support a rapidly growing global business close to the customer or business unit.

About the Author(s): 
  • As the largest multi-carrier e-commerce platform for the ocean shipping industry, INTTRA enables shippers, freight forwarders, third-party logistics providers, brokers and importers to electronically plan, process and manage their shipments.
  • INTTRA has 275 e-commerce professionals located in 13 countries.