News Details

CHALLENGES
* Competitiveness of expat packages and tax differentials

* Spouse disatisfaction

* Many companies opt for the short-term ... transition to local staff

GURGAON, INDIA (27 Aug 08) - The rapid global expansion of India-based multinationals and the resulting increase in employee mobility are forcing companies to address policy issues on international assignments, according to a study by Mercer.



Mercer’s report, “Expatriate Management Survey – India”, is based upon contributions from 40 of the largest corporations in India and addresses India-specific nuances and practices as these companies send employees on international assignments.



Mercer’s report, believed to be one of the first to survey companies of Indian origin that are experiencing significant global expansion, identifies the latest international assignment policies for managing a globally mobile group of employees. The report describes expatriate compensation approaches, trends in expatriate allowances and support, and the use of varying assignments (including short term, long term and commuter assignments).



“Organisations are cognisant that international assignments – and, in particular, those which include family relocation – call for significant investments,” says Gangapriya Chakraverti, Business Leader, Information Product Solutions for Mercer India. “They would like to ensure that their investments deliver an acceptable return by carefully choosing only the best people for the assignments and making efforts to retain them during and after the assignments overseas.”



“Interestingly, companies are also looking for ways to reduce costs where possible by hiring local staff instead of making an expatriate assignment, by reducing or eliminating benefits and allowances associated with international transfer, or by looking for alternative ways to address pressing business needs. Thus, companies have been increasingly relying on short-term assignments as an alternative to long-term assignments in light of the complexities entailed in the latter. They have made efforts to streamline policies and minimise exceptions,” Gangapriya added.



“Many employers have been co-sourcing or outsourcing some elements of international assignment administration, to allow them to focus on other strategic imperatives. In order to address ever-evolving business and employee needs, companies are now structuring their international assignment policies based on the nature of the assignment and the importance of the role within the organizational framework,” said Rupam Mishra, who leads Mercer’s global mobility practice in India.



“Some of the most common challenges faced by employers of international assignees are those regarding the competitiveness of expatriate packages, issues with different tax structures and of overall cost containment. This is especially true of companies of Indian origin who find themselves challenged by significant costs, borne to offset international compensation inequity.



While international assignment policies typically contain localisation terms and conditions, companies often deal with localisation on a case by case basis so as not to de-motivate employees. Although acknowledged universally and addressed increasingly, ’softer’ issues such as spouse support measures and repatriation planning still often take second place to daily operational aspects of international assignment management,” Mr. Mishra added.



Excerpts from the “Mercer Expatriate Management Survey – India” report:


* 44% of companies in Mercer’s survey compensate their international assignees for tax differentials.


* Despite spouse dissatisfaction as one of the major factors for failure of international assignments, only 20% of companies surveyed have policies providing spouse support for international assignees.


* 44% of companies surveyed by Mercer in India use the home country balance sheet approach* to determine expatriate compensation.


* All top executives are eligible for a car allowance as compared with fewer than half of international assignees at middle and junior management levels, the survey revealed.


* As a group, only top management assignees are guaranteed education allowances, according to the Mercer survey.



*The Balance Sheet approach is based on the philosophy of maintaining parity in the standard of living of the international assignee across his ‘home’ and ‘host’ country