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There are myriad, creative ways to derail your budding career as a global-savvy executive. But few mistakes are more costly to you or your company than choosing the wrong destination for global services delivery.

For starters, your bosses and co-workers will castigate you for it. You — and your successor — will be miserable. And the outsourcing or captive-center initiative will die on the vine.

Given the stakes, it’s dismaying how many decisions are made based on gut instinct rather than rational decision making. Companies could save themselves and their constituents — investors, customers, employees, suppliers — much aggravation by following some basic principles. Which isn’t to say the process is simple — quite the opposite — but frameworks do exist for sourcing destinations, which if followed can pay dividends many times over.

True, destination-sourcing frameworks are the essence of formulaic. Yet, working with similar ingredients, some formulas produce fine wine while others yield vinegar. The object of these frameworks is to rank potential locations based on factors weighted in accordance with their importance to strategic objectives. The factors include macroeconomic data that cut across all industries plus microeconomic data that’s specific to an individual company.

The weightings should reflect the relative importance of each factor. For example, if low-cost labor is paramount, then this factor should be weighted accordingly. But other factors such as proximity to overseas markets or the availability of managerial skills, may be equally if not more important.

The selection process can take between three to six months, depending on how well the company has thought through its long-term strategy. The process involves weighting key variables for each location, including infrastructure, taxes, regulatory issues and presence of competitors, with the greatest weights invariably being assigned to workforce quality and availability.

Sometimes, gleaning information about available pools of talent can take considerable digging on the part of site-selection teams, including finding out what competitors are doing. “The most important data in location planning is what’s gathered through interviews with comparable employers within a given industry,” says Gene DePrez, Head, Global Location Services, IBM, which supports both IBM customers and internal IBM businesses.

Rigorous analysis of locations is needed in all cases, whether it’s establishing offshore captive facilities, outsourcing to a service provider, negotiating a build-operate-transfer agreement or establishing a joint venture.

“A company needs a process for articulating precisely what it requires from an offshore location and assessing all the locations that could meet those needs,” writes Diana Farrell, Director, McKinsey Global Institute, in an article in the June 2006 issue of the Harvard Business Review.

While different companies might use similar processes, the results will differ markedly across companies and industries. Often the results will prove surprising or counterintuitive, forcing executives to revise or reverse assumptions about a given location.

THE LOCATION SELECTION PROCESS CAN TAKE THREE TO SIX MONTHS, WITH THE BIGGEST WEIGHTS ASSIGNED TO WORKFORCE QUALITY AND AVAILABILITY.

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All sourcing decisions ultimately revolve around a company’s risk appetite, which is determined by detached, rigorous analysis, and requires a fair degree of introspection. Previous offshore decisions will undoubtedly have a strong influence, but executives should remain open to the possibility that past assumptions may no longer apply.

A U.S.-based packaged-software company had a strong bias toward locating an offshore center in India, says McKinsey’s Farrell. It had sales operations there, and many of its board members were Indian. But a rigorous analysis of potential locations showed that a service center in a city in China would carry much greater payoff than one in India. The deciding factor was that the Chinese city would afford access to the large domestic market in China.

The high cost of switching locations puts a premium on making the right decision the first time. This axiom applies whether a company is building its own facility or outsourcing. When building its own facility, a company will naturally be sensitive to economic risks tied to construction, local labor and other sunk costs. In the case of outsourcing, location might appear on the surface to be a less risky decision, but in reality the same dynamics come into play. Without a firm understanding of the locations in which a service provider operates, a company can’t determine whether that provider will meet its needs.

Unfortunately, when it comes to making location decisions, some corporate customers just go along for the ride. “There is a sense now among corporations that you have service providers that have made a commitment to open [operations] in a certain part of the world and they are looking for clients,” says Kate McEnroe, a corporate-location consultant based in Atlanta.

One global financial-services company nearly fell into that trap when it was selecting an offshore provider to manage its back-office finance and accounting processes, says Farrell. Its board of directors had shown a bias toward an Indian supplier, but it started having second thoughts when it was shown that other suppliers in India, Eastern Europe and Asia were better positioned to handle wage increases and turnover and training and development. This led the company to choose a provider that had its main operations in Eastern Europe and backup services in Asia.