The New Direction of Site Selection: Put Strategy First

Site selection now encompasses more than identifying the least expensive location for talent acquisition — the process is growing to encompass labor market research, geopolitical instability and advancements in AI.

This transformation is evident across multiple industries, as noted by Brett Bayduss, senior partner at Site Selection Group. Bayduss has 25 years of experience in the geolocation industry and has worked with clients including Amazon, Liberty Mutual, USAA, UPS and T-Mobile.

“I think site selection has become a little bit more of a broader term beyond just the traditional, ‘Find me the right location,” Bayduss said. “It’s becoming, ‘Help me with the right strategy of what our operations should look like,’ and then answer the question of where should we be doing that?’”

Cost and Talent Remain the Foundation

Despite increased complexity, the primary drivers of site selection remain consistent. Organizations continue to prioritize access to talent and associated labor costs.

“I still think it comes down to the basics of cost and talent, so making sure that there’s the skill set and talent availability. That’s always what we solved for — is there talent in the market and then what’s the cost for that talent?” Bayduss said.

However, the approach to evaluating these variables has shifted. Instead of focusing on marginal cost differences between markets, many organizations now establish a target wage and assess whether a location can sustain it.

“I think it’s changed in the way companies are looking at it. Historically, maybe it was more, ‘Here’s a skill set that we are looking for. What will be the cost for that talent in this market?’ Where it’s almost become more of a question of, ‘We know we’re going to generally be paying this, how will that wage do in the market?’” he explained.

This change indicates a more advanced labor strategy that emphasizes sustainability and scalability over incremental cost savings.

Operational Needs Still Dictate Geography

At a practical level, site selection continues to begin with a thorough understanding of operational requirements, including headcount, job functions and language needs.

“Really, the first questions we’re always asking are ‘How large an operation are you looking to house? How many agents do you need?” Bayduss explained.

The scale of operations is significant, a 25-person team can be accommodated in a wider range of locations compared to operations requiring several hundred employees.

Required skill sets are also a critical consideration.

“The second piece is just understanding what those skill sets are. So is it traditional customer service? Is it sales? Is it collections, is it tech support?” he said.

In international site selection, language capabilities often significantly limit the range of viable locations.

“Then we get into language … is this going to be all English-speaking agents? Is there a multilingual requirement that’s needed?” Bayduss said.

Collectively, these factors determine both the feasibility of current operations and the potential for future organizational growth.

Increasing Importance of Safety, Geopolitical Considerations

Although cost and talent remain central, safety and geopolitical risk are increasingly prominent factors in site selection decisions.

“I think what we’ve been seeing more of is understanding the safety and security … clients are asking, we look at travel advisory risk.”

These concerns are often complex, especially in emerging markets where risk levels may vary considerably within a single city. Organizations unfamiliar with a region may find it challenging to discern these differences.

“It’s hard because they’re just not used to that geography, so they don’t know it.”

Global conflicts are also affecting the pace of corporate expansion, with many projects experiencing delays rather than outright cancellation in the Middle East amid the Iran War.

“It definitely is impacting decision making and making people question, is this still the right place that we need to be?” Bayduss said. “We’ve had projects that are put on hold or delayed … they can’t physically get over there to do all the due diligence that they need to make decisions.”

Americas Remain a Focal Point

Demand for nearshore locations in the Americas remains robust, especially in established centers such as Colombia.

“I think where we’re still getting a lot of interest is … if we’re looking nearshore, it’s still Colombia. We’ve seen more interest in Peru and Chile,” Bayduss said.

Globally, traditional outsourcing destinations are evolving, and new locations are emerging as viable alternatives.

“The Philippines has always been a location people have been interested in. I think we’re seeing more activity just beyond Metro Manila and Cebu,” Bayduss said.

Emerging alternative locations are increasingly being considered in site selection discussions.

“Vietnam is starting to get more interesting on the radar … especially from a price point,” he said.

Artificial Intelligence Alters the Landscape

Artificial intelligence is increasingly influencing operational strategies, but Bayduss advises against perceiving AI as a complete substitute for human labor.

“I don’t personally believe that that’s going to happen … I don’t think it’s necessarily a replacement for human workers. I think it’s just changing it,” he said.

Instead, AI is primarily utilized to enhance operations, improve process efficiency, and inform decisions regarding headcount and outsourcing.

“We’re not looking to necessarily grow headcounts, but we’re looking to still augment with technology,” he said.

Concurrently, increased reliance on AI-generated insights is introducing new operational challenges.

“It’s very easy for people to rely on AI to help formulate what they think are correct answers … but it may not be the correct output.”

Experience Remains Critical

With the increasing availability of data, Bayduss contends that experience and local market knowledge are becoming even more valuable.

“What we rely on is our experience,” he said. “Knowing what else is going on in these markets, beyond just what the data says.

This encompasses qualitative insights that are not readily captured by datasets or algorithms.