Committed to Sending Employees Abroad, Companies Keep Close Eye on Assignment Program Costs, Says KPMG

NEW YORK, Nov. 30, 2010 /PRNewswire/ -- While organizations worldwide continue to send employees across borders to capitalize on business growth opportunities, they remain focused on finding new ways to better manage costs associated with their international assignment programs, according to results of the 2010 Global Assignment Policies and Practices survey, conducted by KPMG LLP, the U.S. audit, tax and advisory firm.  

"The current economic environment is prompting organizations of all sizes to look abroad for growth, while increased competition is forcing companies to drive down costs in all areas of their businesses," said Achim Mossmann, managing director of Global Mobility Advisory Services in KPMG LLP's International Executive Services (IES) practice.  

"Our KPMG survey results and experience with clients reveal that companies have identified a number of cost-saving opportunities related to their international assignment programs," added Mossmann.  "Some organizations, for example, are 'localizing' employees in their host countries, while others are implementing policy changes and also utilizing alternative international assignment types."

According to the more than 500 human resources (HR) executives surveyed by KPMG, 81 percent of organizations "localize" some of their international assignees. In this scenario, expatriate employees are transitioned from an expatriate package to a local compensation and benefits package, and are then compensated by the host country, eliminating the more costly expatriate benefits and allowances.  

Organizations also are implementing a variety of options to potentially save costs associated with long-term or standard assignments.  Some of these options include short-term assignments (STAs), currently being used by 80 percent of organizations, and permanent transfers, used by 47 percent of organizations.

The KPMG survey also revealed that companies made changes to various policy provisions to save costs.  For example, to help determine the cost of living adjustment (COLA) calculation on their assignee packages, 31 percent of organizations surveyed are using an "efficient purchaser index" -- a sliding scale measurement of the ratio of the cost-of-living between the home and host locations, which assumes that an experienced assignee is a "smart shopper" and is able to purchase goods and services more economically than the average (newly arrived) assignee.

Program Administration Becoming More Challenging

"For most organizations, the pressure to effectively compete has led to an increase in the size and scope of their global workforce, placing greater demands on international human resources teams," said Ben Garfunkel, national partner in charge of KPMG LLP's IES practice.  "Matters such as compensation, tax requirements and mobility can become even more costly, complex and time-consuming when managed on an international scale."

Forty-nine percent of respondents to the KPMG survey report that assignees take too much time to administer.  Perhaps in response to this view, almost half (45 percent) of respondents currently outsource parts of their international assignment programs to gain access to a service provider's global resources and knowledge.

"HR professionals are strapped for resources and time, and outsourcing certain elements of their program can free them up to focus on their most strategic priorities and projects," said Garfunkel.

About KPMG's International Executive Services practice

KPMG's International Executive Services practice provides wide-ranging advisory, compliance, and administration services, including international assignment program operation, tax and Social Security compliance, and tax outsourcing.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International").  KPMG International's member firms have 140,000 professionals, including more than 7,900 partners, in 146 countries.

SOURCE KPMG LLP