Situation:
A Fortune 500 client asked Metis Strategy to perform an analysis in order to help decide where to locate its new Research and Development facility. The company already had large R&D facilities in India and Brazil, and was deciding between expanding these existing off-shore facilities and opening a new R&D center in a new “SmartShore” location in the US.
The client CIO wanted to test his hypotheses that certain on-shore locations can offer cost savings while avoiding the disadvantages of off-shore operations. He also hope to identify criteria and candidates for potential low cost locations in the U.S.
Approach:
A team of Metis Strategy consultants worked with the company’s leadership team and R&D staff on a two-prong analysis: first, to assess the financial and qualitative pros and cons of off-shore vs. on-shore operations and, secondly, to devise and employ criteria to identify a prioritized list of potential locations in the U.S. The assessment of existing off-shore operations confirmed the CIO’s hypotheses that the case for low-cost on-shore locations was viable and that certain R&D tasks may be suitable to be performed in the U.S. rather than off-shore. The team used this data as a baseline for performing an extensive location search and analysis for potential U.S. “SmartShore” based upon economic factors, talent and labor availability, accessibility, and current and forecasted trends.
Result:
The team provided our clients with a ranked list of potential locations, with detailed information about each location’s advantages and disadvantages and an in-depth analysis of the business environment in the top-tier locations.
Based upon the Metis Strategy analysis, our client elected to make a broad foray into “SmartShoring” in addition to leveraging existing off-shore locations for certain tasks. The initial analysis of existing off-shore locations also identified and quantified the drivers of costs as well as “hidden costs” and thus allowed the client to pursue further efficiency gains in existing off-shore operations.
