Expat Costs Spur Shorter Assignments, Outsourcing

By J.J. Smith Jan 15, 2008
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The growing cost of long-term expatriate assignments is causing firms to limit expats to shorter assignments and to outsource HR management of expats, says a survey by KPMG LLP, a global audit and tax consultant.

KPMG’s 2007 Global Assignment Policies and Practices survey says long-term expatriate programs are becoming too costly and time consuming for companies to administer, thereby forcing firms to consider alternatives. Those alternatives include limiting their expats to short-term assignments (STAs) and to outsource management of expat HR functions, such as tax compliance, the survey says.

While international assignments “are here to stay,” it is no surprise that companies are looking to trim assignment expenses, says Achim Mossmann, managing director of global mobility advisory services for KPMG’s international executive services.

When it comes to sending expats on international assignments, 80 percent of the companies surveyed said they plan on using STAs. In addition, 50 percent of companies report having an STA compliance framework in place; 28 percent report being in the process of developing an STA compliance framework; and 16 percent express a desire to develop an STA compliance framework, KPMG says.

Also, as more mid-sized companies send employees abroad—some for the first time—many are turning to outsourcing to manage their international assignment programs, the survey says. Among companies with $500 million or less in revenue, 78 percent said tax compliance is the most frequently outsourced international program; 72 percent identified “assignment orientation sessions related to tax” as second; and 67 percent listed “immigration/work permit assistance” as third.

“With increased globalization, companies need to better understand how their international assignment programs will be impacted and how these programs can be utilized to meet their changing business needs,” Mossmann said. Companies that fail to see return on investment as a key goal for their international assignment programs “may be leaving money on the table if they are slow to adopt techniques that could systematically achieve greater costs efficiencies,” he said.

J.J. Smith is manager of SHRM Online’s Global HR Focus Area.

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