Businesses look to lower costs

The Jakarta Post, Jakarta

Have you ever wondered where exactly the customer service officer you are talking to in a call center is actually located?

In the same city or same country? Possibly. But it is now more than likely he will be sitting somewhere with lower real estate costs, a regional survey has reveals.

A customer in Europe, for example, might well be calling a customer service officer in India to get a gadget fixed by a European technician a few hours later.

According to the results of Jones Lang LaSalle's corporate real estate impact survey, 48 percent of companies surveyed in the Asian region try to reduce their costs by moving some of their operations to lower cost locations, be they back office, call center or manufacturing units.

The survey reveals that India remains the prime destination for manufacturing outsourcing and call centers, while China is emerging as a leader for research and development, and software centers.

Separately, two of Indonesia's biggest enterprises are also joining the move overseas.

The Sinar Mas Group opened a pulp and paper factory in Henan province, China, last year.

The 106,720 hectare plant produces 300,000 tons of pulp and 600,000 tons of paper annually.

Meanwhile, another giant Indonesian conglomerate, the Salim Group, confirmed in May 2005 a plan to set up a wholly-owned motorcycle manufacturing unit in West Bengal, India.

The plant would have a production capacity of 60,000 motorcycles annually.

Even though business conditions remains positive in most parts of Asia, global pressures are driving prices down for many products and services.

"Companies are seeking further cost reductions from their real estate portfolios ... through offshoring activities to cheaper locations and implementing alternative workplace strategies," said LaSalle Asia Pacific managing director John Forrest.

Looking ahead, the strongest demand for office space will remain focused on China, followed by cities in India, driven by these markets' continuing appeal as offshoring destinations, LaSalle stated.

Demand for space is focused on the major Chinese cities of Shanghai and Beijing, as well as Indian cities like Bangalore, Mumbai, Delhi and Hyderabad.

However, new locations are expected to emerge in Sri Lanka, Pakistan, Vietnam and the islands outside of Luzon in the Philippines.

Indonesia, unfortunately, is nowhere to be seen in this part of the report.