How dependent are companies on their headquarters locations?

//How dependent are companies on their headquarters locations?

How dependent are companies on their headquarters locations?

Cristina Nicoleta Apetrei, ABSL Vice President & Chief of staff CEO Office SG EBS & Chief of staff Retail Banking and Financial Services India and Romania

The consequences of the COVID-19 pandemic will determine a major change for the service center operating model as well. What’s next for this industry for which location has been one of the key elements in developing the business model? Will Romania remain attractive in the current context, in which employees can work from anywhere?

The pandemic tested the resilience of service center activities, and companies realized that location dependence was no longer a key factor in their entire strategy or digitalization. From previous surveys we could see that location has always been one of the most important factors in developing the business model for this industry, but during the pandemic this factor became the most important test that companies had to pass.

Globally, 40% of companies believe that the location will not have an impact on the services provided, considering the growing interest in digitization. But companies need to keep in mind that in the near future they will have to deliver the same services at a much faster rate than the current one.

For many companies, the main focus will be on accelerating automation, changing the business model to reduce dependence on physical location and even people, adopting a new concept of work, perhaps even controversial in certain areas: work from home or work from any possible place.

Thus, a new question arises: how far will these companies go? Will they completely reduce the importance of the location? In these conditions, is Romania still a key area for the outsourcing industry? The answer is yes, and if we look at the ABSL survey conducted under state of emergency, over 50% of existing companies operating in the commercial services sector in Romania, mentioned that the impact of the location was minimal or did not exist, which proves that the physical office space will not become an impediment in the provision of services and will not be completely excluded in the change of the business model.

If we analyze different studies globally, we can see that the tendency is to maintain a balance, even if the share of the location will be lower than in the previous period.

In the past, when asked – What will determine the choice of a location?, the highest percentages were for cost arbitration (28%) and to carry out a regional center of expertise (16%); after this unprecedented period, we notice a slightly different approach, although costs remain one of the key factors, and cost differences between locations will continue to generate significant savings for companies’ budgets (see below).