Will Corporate Headquarter Jobs Move Offshore?

This is a frightening question to even ask. Corporate headquarter cities in America could see some losses, according to one corporate real estate executive. Here is a summary. Go here to read more.

As more manufacturing operations move offshore, there will be a significant impact on where the headquarters for these companies are located. For many of these companies, headquarters may evolve into nothing more than a few key executives, and the legal and marketing staffs with other functions will move offshore. If the majority of manufacturing occurs offshore, the headquarters for these companies that may have traditionally been tied to plant sites will likely gravitate toward major metropolitan area business centers in the United States. Over a longer period of time, headquarters for many manufacturers area also likely to move offshore. This will occur as the huge, virtually untapped markets of China and India begin to dwarf the North American market and as management, marketing, and research and development leaders emerge from the offshore operations.

If we look at the loss in jobs estimated by A.T. Kearney and Forrester Research, they equate to approximately 54,000,000 square feet of corporate office space that will either be vacated or unneeded per year. This is roughly the equivalent of shutting down one-third of Chicago's downtown office space each year, and the loss of $1.2 billion in rent per year. Two key factors are at play here: First and foremost is the outsourcing of jobs overseas, and secondly, the increasing productivity of American workers.

There are a number of trends at play in the United States that do not bode well for the future of corporate headquarters locations here over the next 30 years. First, we have begun to outsource many of the functions that have traditionally taken place at corporate headquarters. It is specifically these types of jobs that are outsourced that have been the seeds from which many new American companies have grown and "C" level executives have been developed. Along with this trend in leadership, the world's largest emerging markets are in Asia, and these will draw manufacturing facilities, research and development, and corporate headquarters. In addition, the world's largest corporations, many of which are located in the United States, are increasingly becoming multinational in ownership and leadership and are less affected by a sense of nationalism or inertia relative to a specific country or location.

Couple the out-migration of jobs, both white- and blue-collar, with the desire for manufacturing companies to keep their headquarters close to production and R&D, and we can expect to see two trends in corporate headquarters in coming years. As more jobs are outsourced, U.S. corporate headquarters as well as R&D facilities will decrease in size. This trend has already begun. Following this trend, there will be an out-migration of corporate headquarters overseas for companies that are high-tech and heavily R&D-oriented, as the next generation of "C" level executives are likely to come from countries like India and China.