Numerous gains to be found in outsourcing assignment management

Can provide greater insight, transparency, accountability and ROI
By Tim McCarney
|Canadian HR Reporter|Last Updated: 09/25/2012

A robust international assignment program is critical for any company hoping to expand its global reach, develop and train future leaders, and optimize its talent retention strategy.

But international assignments also bring compliance concerns as they require specialized knowledge that often can’t be found in thinly stretched HR, payroll and tax departments.

Add to that an increased desire to meet the expectations of a new generation of employees — through alternatives to traditional expatriate assignments, such as commuter assignments, rotational assignments and extended business travel — and it’s easy to see how tricky the management of these functions has become.

Further, international assignments can be very complex — impacting everything from employee satisfaction and productivity to talent retention and overall ROI — while exposing a company to potential tax, visa or immigration compliance risks if not managed vigilantly.

As critical as it is to any company’s global expanse, assignment management does not typically impact entire employee populations. Accordingly, most companies can’t afford to exhaust a lot of in-house resources maintaining a best-in-class program.

This is perhaps why some companies are evaluating the benefits of outsourcing assignment management.

For companies that don’t know the true cost of their global mobility programs, the average cost of their expatriate assignments or the primary cost-drivers impacting their annual relocation spend, outsourcing can bring much-needed insight and transparency.

Direct and indirect cost savings

The primary benefit companies seek when outsourcing an assignment management program is cost savings through economies of scale, best practices, supplier leverage and technology efficiencies.

While the average cost of maintaining an in-house global mobility team can vary based on a company’s size, scope and assignee volume, US$8,969 is estimated as the total cost per assignee for an in-house program managed in the United States, according to a study by Joe Hadzima, senior lecturer at MIT’s Sloan School of Business Management in Cambridge, Mass.

This figure considers base salary, bonuses, employment taxes, benefits, space allocation and office equipment, but it does not include the cost of professionals in other areas supporting the effort (such as finance, payroll, accounts payable or IT), nor does it include the infrastructure for the systems or software managing the program.

In contrast, the average cost of outsourcing an assignment management program is US$5,000 to US$6,000 per assignee, depending on program size and scope, according to Weichert Relocation Resources.

This results in an average overall savings of US$3,500 to US$4,000 per assignee.

This figure does not account for the indirect cost savings companies realize when outsourcing global relocation, which include but are not limited to:

Efficiencies through transparency: Only 20 per cent of companies are confident they fully understand the costs of their assignment programs, according to Ernst & Young’s 2009 Global Mobility Effectiveness report.

But once outsourced, every financial aspect of an assignment management program becomes tracked and properly categorized with the appropriate taxable status.

In this way, outsourcing can help a company identify the true cost of its assignment management and the drivers impacting the overall expense and performance, so cost-efficiencies can be implemented and sustained.

Improved accountability: Once international assignment management is outsourced, formal accountability of the employee experience, supply chain service performance and compliance become the responsibility of the mobility management partner.

Official service delivery and resolution protocol become measurable and are continuously monitored and evaluated to ensure key service-level agreements are set for maximum program effectiveness, employee satisfaction and global risk mitigation.

Savings through supply chain leverage: One of the many reasons companies outsource is to obtain the buying power of a large professional organization with other third-party providers.

Core business focus: By shifting the focus of the global mobility function away from tactical, operational and transaction activities, the global mobility function can focus on more strategic issues such as talent management and succession planning to better support the C-suite.

Leveraging technology: Managing an international assignment program with some type of spreadsheet program can lead to duplication of effort and human errors that expose a company to compliance risks.

Outsourcing global payroll, expense, tax and compensation processing and reporting not only relieves the burden and risk but gives an employer the benefit of insight into the program through the provider’s specialized technology and reporting.

Greater return on investment: Entrusting your program to a provider that specializes in assignment management increases the chances each move will be viewed as a positive, rewarding experience by assignees. This translates to greater productivity, heightened retention and better return on investment.

Additionally, any analysis of the advantages of outsourcing for a company should consider the economic risks of not outsourcing. These can include losing an opportunity to gain a competitive advantage over the nearest competitor and the limited ability to upsize or downsize internal staff to accommodate assignee volume fluctuations.

Leveraging the resources, expertise and supply chain discounts of skilled experts will allow an organization to focus more on the core aspects of its business and receive a wide range of tangible benefits — from cost savings to improved efficiencies — without lowering the standards for its success.

Whether a company is looking to cut costs or just secure the insight and subject matter expertise of workforce mobility professionals, outsourcing assignment management is a popular practice and something to consider.

Tim McCarney is the Boston-based manager of marketing communications at Weichert Relocation Resources, a global workforce mobility management company with locations in Calgary and Toronto. He can be reached at tmccarney@wrri.com or visit www.wrri.com/blog for more information.

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