Employee Benefit, Compensation, Salary Survey June 23rd, 2017  

International Human Resources Management

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Outsourcing Your International Assignment Program

Executive Summary

- The corporate world’s continual quest to improve organizational efficiency and service quality is leading more and more companies into outsourcing their international assignment program.

- Through outsourcing, organizations can provide their international assignees with the highest levels of service, while reducing costs.

- Outsourcing the international assignment function allows human resources managers to better focus on their companies’ strategic business objectives.

Today, more and more major corporations are considering outsourcing their international assignment programs. Indeed, statistics tell the story. In 1998 and 2001 surveys conducted by the “Big 4” Accounting Firms and by other global research organizations (SHRM and NFTC) underscore this: In 1995 only 3% of companies outsourced their entire international program, but 20% are considering the option for 2002-2005.

What has happened to business since 1995 to create such interest? This quest is most certainly due to a need to enhance productivity and save expense and resources. An important change is taking place, and today’s complex organizations are requiring a new breed of Human Resources professionals. HR has become strategic partners in core activities and need not be encumbered by detailed tactical activities. This functional transition is critical in a world where capital is scarce and technology becomes fluid as it moves across international borders. The only stainable competitive advantage in the future will come from the contribution of people. Human Resources executives and line managers will have to leverage and manage that potential advantage.

Outsourcing providers have developed capabilities that will allow cost efficiencies and service enhancements. Technology is a major contributor to that improvement as it allows the standardization and manipulation of huge amounts of data for processing,

Organizations have been outsourcing non-core business activities for decades. HR Managers already outsource such tasks as tax, immigration, allowances and differentials, moving and relocation, home sale and cross-cultural preparation. In fact, most companies have outsourced some element of their international assignment program already.

Why Organizations Consider Outsourcing

Organizations are considering outsourcing their international assignment programs for a variety of reasons, including the growing demands placed on their human resources managers, the need to focus on strategic business objectives, lowering the costs of international assignment programs or making them more cost-effective, and the increasing level of sophistication of providers.

Greater Complexity

As a result of the increased responsibilities, the role of the human resource manager responsible for developing and implementing global programs is infinitely more difficult. There has been an enormous increase in the number and complexity of international assignments- by location, by volume, by emerging market destinations. These factors are further complicated by the intricacies of family issues and dual careers, by the importance of appropriate candidate selection, and by the amount of money organizations are spending and generating out of these assignments.

Advance the Organization’s Strategic Business Objectives

As restructuring continues to reduce headcount and eliminate jobs, there are simply fewer people to handle tasks. Organizations need their HR managers to focus on core competencies in strategic HR objectives rather than on administrative details. The more time spent on time consuming administrative details the less time available for satisfying the strategic imperatives of your organization’s business mission.

Increased Levels of Expertise

All of the above says nothing about the complexity human resources staffs face in staying abreast of new legislation affecting tax, social security, and labor law in an ever-increasing number of countries. Add to that the pressure they face to reduce expatriate costs in light of a weakening dollar and increased costs around the world. It then becomes easy to understand why these human resources organizations want to get as much of the administrative responsibilities as possible off their desks and turn them over to an outsource specialist.

Lower Cost

When organizations use outside resources more efficiently, they ease the burden for those already overworked managers. Organizations also realize another advantage to  outsourcing: they avoid the fixed, built-in overhead costs of in-house professionals dedicated to international assignment activities regardless of the number of assignees being relocated. Instead on a per-family basis as each one goes through the process of international assignment. That is, the cost of the outsourcing service is automatically tied to transfer volume and is, therefore self-regulating.

Cost-effectiveness

Equally important, it is the duty of the outsourced organization to ensure that the client’s program is operating cost-effectively …without sacrificing service. This is especially critical in areas with high cost-exposure, such as home sale and compensation. The administration of expense processing is also more efficient because the outsourcing firm focuses specifically on systems to process assignment costs- a process that requires the attention of a number of company staff in many functions. These factors allow the client greater flexibility in managing the program, quicker response time to resolve issues, and higher standards of performance than generally placed internally.

Growing Trust in Outsourcing Providers

Outsourcing becomes attainable for an organization when the processes related to those functions to be outsourced are considered “routine”. An organization must be convinced that a set of functions has reached the point where it can easily be systemized and implemented with minimal risk. In addition, the new outsourced process must be evaluated and controlled through rapid feedback to correct deficiencies.

Under these circumstances, organizations are immediately in a position to outsource areas that previously were considered too complex or risky to outsource. The most surprising example is payroll. When one considers the risks and importance of this function, one would have never believed that this area was suitable for outsourcing. Yet, over time, this has become not only possible, but organizations often have to justify their not outsourcing the payroll function.

Certainly, many of the benefits and advantages achieved by outsourcing can be accomplished by intelligent reexamination if an internal program. Indeed, most organizations already outsource some of their other functions. But outsourcing an inefficient process will only add cost and confusion. Intelligent outsourcing allows for a comprehensive reexamination of all associated processes.

The effort does not end there. Like any new system, it needs a lot of attention. There will undoubtedly be a need for mid-course corrections, and there is no substitute for a strong, committed partnership between the organization and the outsource provider.

What Can Be Outsourced?

ERL has prepared a process map of the elements of international assignments and a listing of what discreet tasks can be outsourced. The latter includes mostly tactical and administrative activities. Please contact ERL to receive electronic copies of these two documents.

Rationale For Outsourcing

There are several advantages to outsourcing.

Improved overall performance. Service to the transferring families is better; there is greater efficiency in the transition and in the expatriate’s speed of adjustment, and cost efficiency.

Greater depth of subject expertise. When this is the only job that people are involved in, they bring detailed knowledge and experience in the process.

Reduced staff/enhanced service. Precisely because there are fewer people within the organization responsible for managing the international assignment process, there is less confusion and overlap, resulting in a positive impact on the expatriate employees.

Wiping the slate clean. Outsourcing allows managers to start fresh and design a program based upon today’s global strategic business environment rather than be tied to one that may have been adapted from another time.

Focus on business objectives. Outsourcing allows human resources managers to manage, strategize and improve the program. More time will be available to ensure that the process supports business mission.

Key Features for Success

Here are a few important considerations to help ensure an excellent outsourced program:

Dedicated service team. This team ensures that programs and services are delivered in a way that is consistent with the corporate philosophy and culture, and with the spirit of interpretation that the company uses to achieve its objectives.

Programs designed to fit corporate culture. Programs cannot be designed around the capabilities of the service provider. Service providers have to take their competencies and build them around the organization they serve. For example, tax preparation does not drive the international assignment process. It is important to find a provider that understands corporate culture, and that would not be discernable from the organization served.

Partnership between the organization and the outsourcing provider. The spirit of partnership and trust is very important because of the depth of the relationship. The service provider cannot be perceived as simply a “vendor”. In order to obtain the desired results from the provider, the organization- empowered and entrusted to assist in the deployment of some of the organizations most valued assets. This all the more critical when considering the stress levels that these corporate assets are exposed to during the period they work with the provider.

Using a single outside provider. When an organization can trigger the whole process with one call rather than by purchasing individual service components, it gets even greater added value. When it coordinates with one provider firm, that firm begins to understand the organization’s culture and how it wants things done. The provider firm can then continue in the style of the client.

Quality and technical competence. Dedication to quality, technical competence and systems capability: these attributes are essential before embarking on a preliminary discussion with an outsourcing firm. A basic requirement is that the firm must be able to provide topnotch, quality service personnel, who are technically proficient.

Contact us today at rnewton@erlimited.com


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