Offshoring's Impact on Call Center Supplier Real Estate

This is a reprint of part of an article from the Outsourcing Center Journal.

"The American press has dissected how the offshoring trend is affecting US employment. A new study by Jones Lang LaSalle (JLL) shines a spotlight on how the trend is affecting US real estate absorption.

Bruce Rutherford, Managing Director and leader of the global offshoring and outsourcing practice, says real estate devoted to outsourcing activities in the US is shrinking one percent a year. "That's no growth at all," he says.

Last year outsourcing companies generated $56 million in real estate commissions for leasing US call center space, according to the JLL study. The real estate firm arrived at this figure by counting the number of call center seats, multiplying that number by the space needed per seat, then calculating how much of that space has to be leased every five years.

The changing nature of call centers is a major contributor to this trend. Rutherford says in the past, call center operators purchased or rented old K Mart, Wal-Mart, and tire stores and converted them into call center space. But now call center work is either going offshore or being done by virtual workers, leaving these stores empty. "Now there's less and less use for that space," the JLL executive says.

However, this trend is not affecting big cities because they have already converted that space to other uses. "This trend is affecting second- and third-tier cities in the South and West," he points out.

Based on rented space, Rutherford says about 70 percent of offshoring work emanates from the US. Another 20 percent moves from companies in Asia-Pacific locations to other countries in the region (i.e. Japan to China or Korea.) Europe currently makes up the remaining 10 percent."