Many companies are still looking to optimise their cost structures and, therefore, seek investment locations with very competitive cost environments.
Consequently, most investment in manufacturing activities goes to emerging markets, particularly China and India. Less than 20% of all ICT manufacturing projects are established in the developed, higher-cost countries in north America and western Europe.
‘Global resources’ is a term used by a growing number of companies to illustrate their efforts to tap into the availability of the required skills anywhere in the world, both higher cost and lower cost environments. Globalising companies are identifying pools of IT talent in locations that they previously did not consider for R&D activities.
What is interesting is that investment activity in R&D is clearly increasing, from some 30-40 projects per month, two years ago, to around 50 projects per month on a global basis. Manufacturing activity on the contrary shows a decline: from a monthly average of 50-60 projects down to around 30 projects. This decline mostly takes place in north America and western Europe.
Finally, it is also striking that most manufacturing investment is made by Asian companies, with Japan being responsible for one out of four projects (US companies one out of five), followed by Taiwan, South Korea, China and Singapore.
In R&D, the US is still the dominant investor (53% of all projects in the past two years), followed by India and Japan.
Clearly, the ICT sector is very representative for the global FDI trends of today.
Roel Spee is associate partner at IBM Business Consulting Services – Plant Location International