International Assignments Scaled Back

Fewer technology professionals are being sent on international
assignments these days, and those that are going are getting less generous
compensation packages.

by Dona DeZube

A recent survey of corporations employing a total of 2.2
million expatriates found technology companies are also converting expatriates who
regularly move into “local plus” employees: They’re given the same
salaries as locals, plus a small housing allowance and possibly benefits such
as education allowances for school-age children, annual trips home and career
assistance for their spouses. That compares to full relocation packages that
would often include deluxe housing, assistance preparing tax forms and paying
local and U.S.
taxes, settling-in services for the family, and a salary equal to what the
employee would earn at home.

More Competition

PassportOne factor driving the local plus trend is increasing
competition among candidates based in countries with a lower cost of living. “What
we’ve seen is a large shift over the last few years to mobility coming out of India,” says Scott
executive vice president of Brookfield
Global Relocation Services
, the Woodridge, Ill., firm that conducted the survey

multinationals in the hardware, software and services areas are doing a lot of
third-country international relocations,” Sullivan observes. “Indian
technology specialists are being relocated to Western Europe and America because
they’re highly skilled, well-educated, lower-cost employees.”

Geoff Latta,
executive vice president of ORC
, a New York City
relocation consulting firm, estimates that 60 percent of international IT firms
have cut back on the number of employees sent on overseas assignments. In part,
they’re able to draw on workers willing to accept local plus contracts, but the
recession and postponement of capital expenditures for technology have also
played a role. Cutbacks have been “in the number of assignments rather
than … the relocation package because in IT, the packages have not been overly
generous,” he says.

Overall, Latta believes technology firms have reduced the
value of international relocation packages by about 20 percent. The exceptions
include employees with in-demand skills. “If you work on a very specific
module of SAP, you’ll receive a nice package to move around,” says Alain Verstandig, president of NET EXPAT, an Atlanta relocation consulting firm.

Indeed, companies differentiate between employees whose
moves involve revenue generation and those whose moves don’t. Relocations involving
revenue-generating positions, such as technical experts who provide knowledge
to particular projects, may have actually increased in some cases. Among
non-revenue generating roles, only executives, such as chief financial officers,
are still being relocated, the survey found.

Layered Benefits

Companies are also cutting costs by fine tuning mobility
policies, adds Mary Ellen Myhr, a
senior manager at Associates for
International Research
, a Cambridge,
Mass. international human
resources advisor.

“Experienced people with lots of technical knowledge
are on home-country-based packages,” she says, “but more junior
people, or individuals for whom the job is a great career opportunity, are
either on a reduced package with lower housing allowances, less incentives and
a more conservative cost-of-living allowance, or they might be placed on a
local plus program where the starting point is the local salary.”

Shift in Focus

The purpose of international assignments is also shifting.
Three to five years ago, companies were making international transfers to areas
where they couldn’t find needed skills among the local labor pool. While that
motivation remains today – for example, managerial talent is tough to find in China – there’s
more movement motivated by other factors.

“Over the past two years, we’ve seen the use of
assignments to build management expertise,” Sullivan says. “Companies
are sending people out to develop professionally and then bring that knowledge
back to the head office or other locations. That’s been a big change in the
strategic approach companies are using for international assignments.”