How to save expatriation costs ?
It is a fact, expatriate employees is expensive. Large companies are constantly seeking for new ways to reduce the costs of relocation and are able to innovate even in this area. What are the new trends?
Large companies that innovate in this area are quickly copied and alternatives to expatriate contract are numerous. Obviously, hiring juniors is cheaper rather than hiring family leaders. The increasing number of IVB programs (International Volunteers in Business) is a proof because it means no transportation or accommodation packages, yet many benefits to the employee. In Europe, there are also more and more employees commuting, every day or every week, between the major capitals.
The trend is increasingly the local contracts. In order to overcome the lack of package, employees are often offered a year compensation for their accommodation. With the development of costs optimisation tools, companies often realise that local contracts are sometimes more expensive than some of expatriate contracts. This alternative should be used with caution and be guided by good indicators (inflation, cost of living…).
To save money, some companies even downsize the number of expatriates, it is mathematical. Other will prefer to relocate and create new management centres in lower-cost countries. They hire local contracts and everyone benefits from the advantages of the host country. The globalization of administration from a favourable country enables savings in terms of social security, retirement…
The latter is designated for larger groups. For medium sized structures, the most used strategy is a mix of the listed alternatives, although this diversity complicates the administration.
Source : Les Echos