HRMagazine - December 1995

Outsource Expatriate Support for
High Quality and Savings

As multinational firms expand in new and varied ways, they often find it necessary to send employees abroad to manage operations ranging from joint ventures to technology transfers to new business development. But because a worker's performance can suffer when financial, family, or legal issues arise, it is vital that a company's human resource professionals create a supportive environment for the company's expatriates.

Complexity and cost issues
In today's high-pressure environment, the demands created by an expatriate staff can easily outstrip HR departments' administrative capabilities, as well as gobble the time of staffers who might otherwise focus on strategic issues affecting these employees. HR must design compensation packages, arrange cost of living allowances, provide for tax assistance, and obtain host country work permits and visas. Arrangements must be made for predeparture evaluation, language instruction, and cultural orientation. Household goods have to be transported and real estate must be bought, sold, or rented. And policies are necessary for dealing with a spouse's career or care for elderly parents who remain at home.

As if these complexities of expatriate support weren't daunting enough, the cost of maintaining an employee is high in many locations. Companies typically spend three times an overseas employee's salary and bonus each year. A three-year assignment can run a million dollars or more. Such expenditures, coupled with the weakness of the U.S. dollar in many countries, demand evaluation of how expatriate support services can be delivered more efficiently. Corporate leaders must also question a substantial investment in expatriate support resources that are unrelated to expanding their core businesses.

But the quality of expatriate support cannot be compromised. Employees' expectations remain high, both for themselves and their families, when they accept a position in another country. Moving overseas is more than just another transfer. The expatriate employee, spouse, and children all must contend with language and cultural changes at a time when the new job may require adapting to different styles of doing business.

How support firms can help.
One answer to the twin challenges of cost control and professional staffing of expatriate support is to consider purchasing the necessary services from independent specialists in the field. An independent firm can manage the entire expatriate process from predeparture assessment of the candidate through winding up the employee's affairs at home. The support firm functions as an arm of the client's HR staff and assumes responsibility for all nonstrategic aspects of the expatriate's assignment. The arrangement also promises significant savings. Corporations that may find outsourcing an attractive option include:

• Firms contemplating entry into the international marketplace. They may have a limited number of personnel headed overseas and no HR staffers with experience in the field.

• Firms whose expatriate ranks fluctuate as overseas projects are initiated and completed. Outsourcing relieves them of the need to add and train support staff or constantly redistribute workloads.

• Firms who've lost experienced support personnel and may not wish to replace them, as the learning curve for these positions is steep.

• Firms that have received a corporate directive to reduce costs through outside purchase of services or elimination of administrative staff.

When a company opts to outsource expatriate support, it engages an experienced organization that understands the interlocking components of an assignment. The provider centralizes the delivery of all services, from language training and tax preparation to obtaining visas and enrolling the expatriate in the host country's social benefits program. The outside firm's staff performs certain tasks itself and coordinates others through alliances with providers around the world. If the client so wishes, the outside firm can serve as the expatriate's primary contact while he or she remains abroad. In every case, though, the delivery of services remains seamless from both the client's and expatriate's perspective.

Information resources are crucial to expatriate support. Independent providers with advanced software can provide the client with access to data about personnel and costs, as well as track compensation and benefits records, tax information, and visa expiration dates. Companies that engage outside providers will know just what it costs to keep expatriates at their posts. Most support firms charge fixed rates for their services. Customarily this takes the form of fees at the beginning of an assignment and upon the expatriate's return, as well as a monthly maintenance fee. A provider with advanced technology has the capability to track any other costs associated with particular assignments. Centralization of expense reporting permits access to this information at all times.

Firms that specialize in expatriate support have gathered information about best practices across a wide variety of management and staff positions, industries, and geographical locations. By serving many clients, these firms have built a knowledge base of expatriate preferences and effective policies on matters such as taxation, housing, and cost-of-living allowances. They're able to share this information with their clients on a confidential basis.

Advantages at home and abroad.

The benefits a company obtains by engaging an independent provider extend across several areas. Companies can raise their HR productivity, implement policies that best support expatriate employees, and achieve substantial savings over current expenditures. A leaner HR staff, relieved of the need to perform these administrative duties, can then tackle strategic issues such as developing and retaining talent. HR should be planning how to use the skills and expertise of returning expatriates, not just helping them unpack.

When a company outsources the expatriate support function it achieves savings by eliminating investment in staff and technology. Clients also benefit from volume discounts negotiated by firms that perform similar services for many companies. If the provider has established a global network of strategic alliances with preferred suppliers in a range of specialities, further savings will result, which can then be passed on to client companies.

The bottom line, of course, is the expatriate's productivity. Employees who are far from home but who know there are professionals standing by to assist them and their families with everyday affairs, as well as any emergency, are better equipped to concentrate on getting the job done.