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Follow the Programmers! Talent Trumps Cost in Software Site Selection

JLL analysis finds software developers are diversifying locations to fill talent gaps

CHICAGO, March, 27, 2014 - Pursuit of the world’s best and the brightest in software development can be tracked across the globe through foreign direct investment (FDI) patterns, according to new analysis from JLL. The software development industry is diversifying into new geographies such as Canada in search for top talent.

“Just a few years ago, the software development industry was focused on looking abroad for very low operating costs,” said Shannon Curley, Vice President, Brokerage, JLL. “Now companies are seeking locations with a highly skilled work force even if costs are higher. The network of locations now reflects these new priorities. Companies are identifying new talent, both in low, moderate and higher cost U.S. cities and international destinations.”

The Evolution of Site Selection Strategy
From 2003 to 2006, major recipients of FDI from the software development sector were predominately China and India (a combined 50 percent of total FDI), with the balance of investment distributed among seven other countries: Canada, Ireland, Singapore, South Korea, France, Israel and Spain.

Since 2007, the amount of investment in India and China has decreased from 50 percent to 24 percent. Meanwhile, Canada, for instance, has seen its share of FDI in software development increase from 7.7 percent in 2006 to 30.5 percent in 2012. Meanwhile India experienced the reverse effect – falling from 32.1 to 2.5 percent during the same period.

There is now more diversity in the international locations selected for development activities, with more than 50 countries receiving FDI from software development. The list now includes: China, Ireland, Singapore, Canada, India, Australia, Israel, France, Vietnam, Brazil, Germany, Russia, South Korea, the UK, Austria, Qatar and Spain. Both Vietnam and Lithuania received their first notable investment in 2010, as did Kenya in 2012.

Top 5 Countries: Share of Software Development FDI

The Software Development Industry’s Location Decision Framework
When choosing a global location to conduct operations, financial, non-financial and risk factors must be quantified, specifically:


  • Labor costs – base and additional compensation for specific job titles required in a software development operation, such as software engineers, senior software engineers and quality assurance engineers.



  • Ability to support activities – typically measured by the presence of similar operations with requirements for the comparable workforce.
  • University quality – availability of higher education institutes with an appropriate global ranking in computer science, engineering science and other technology-related programs.
  • Culture of innovation – capacity for innovation, quality of scientific research institutions, net company spending on R&D, university-industry collaboration, number of patents.



  • Intellectual property protection – extent to which intellectual property is enforced in regulation and practice.


“Based on our experiences, one single location cannot achieve all of a company’s offshoring objectives, which is why software development firms are trying to get the best of all worlds by diversifying, and thus leveraging the strengths of each geography,” said Matt Jackson, Managing Director, JLL.

Click here for a table illustrating the strengths and weaknesses associated with outsourcing to Asia Pacific and Central Europe.

About JLL
JLL (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $4 billion, JLL operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $47.6 billion of real estate assets under management. For further information, visit