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MNCs curb expat assignments to cut cost
By siliconindia
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Friday, 21 November 2008, 22:25 IST |
3 Comments
Mumbai: Overseas employees cannot feel comfortable anymore as the worsening economic crisis causes many MNCs to think on reducing expat assignments. The companies such as P&G, Hyatt and Marriott have instructed their subsidiaries in other countries to make use of local nationals. This move is a result of rising pay and other expenses for overseas employees, reported The Economic Times.
Many major MNCs including Pepsi and Unilever have been looking at the issue closely. Similarly, Procter & Gamble (P&G) has recently decided to cut long-time assignments outside the home countries. However, the company's India operation would not get affected by the new turn as most of the employees are recruited and grown in India itself. According to company officials P&G's expat assignments have declined by 40 percent in recent years globally.
"One of the ways we have to approach is to get more from what we have. Now, the challenge for the company is to offer suitable growth opportunities roles for senior-level expats," Robert A McDonald, COO, P&G is reported to have said overseas.
The strengthening U.S. dollar and the deep recessionary trends have impacted global relocation making an expatriate lifestyle, the pay and perks hugely expensive. U.S. based companies have been more concerned over the issue since they are taxed on the basis of citizenship and not residency. Therefore, expats from U.S. end up paying taxes to U.S. and the country where they reside.
Moreover, expat assignments require huge relocation costs including housing, social perks and education. "Expat costs are three or five times the cost of hiring a local employee. This is especially true of expats sent to countries where the dollar impact is high," said a top official of a Mumbai-based multinational FMCG company.
When companies try to reduce expats, Gurmeet Singh, area director, HR, India, Maldives, Pakistan, Marriott International, opined that it would be difficult to replace the expats as most of the countries face shortage of talents in specialized areas.