The globally-connected nature of trade, technology, capital, and regulation will necessitate a significant swell in the movement of employees between countries, leading to increased use of short-term and ‘commuter’ international assignments, according to new research by PricewaterhouseCoopers LLP (PwC).Ã‚Â
These factors – coupled with the rise of emerging markets, increased focus on new revenue streams and changing demographic imperatives – are projected to increase the number of people working outside their home country by 50% over the next decade. Additionally, the number of countries that employers host employees in, is expected to continue to increase presenting new compliance, remuneration and communication challenges. PwC data documents the impact of globalisation showing an increase from an average of 13 locations in 1998 to 22 in 2009 and an expectation that this will rise to 33 by 2020.Ã‚Â Other key findings include:
Ã¢â‚¬Â¢ Number of people on international assignments increased by 25% in the last decade; further 50% growth predicted by 2020
Ã¢â‚¬Â¢ Global organisations placed employees in an average of 13 locations in 1998, this increased to 22 by 2009 and could reach 33 in 2020
Ã¢â‚¬Â¢ New ‘capital’ cities will emerge as business hubs according to size of local working age populations and new revenue streams
Ã¢â‚¬Â¢ Collaboration will be the watchword as companies and governments share costs and knowledge to remove barriers to mobility and manage regulation
Ã¢â‚¬Â¢ Economic and demographic imperatives could force leniency on immigration rules for specific workers, while technology will reduce tax compliance burden
The report – Talent mobility 2020: The next generation of international assignments – is based on trend data regarding international assignments for 900 companies, population data and the opinions of both CEOs and workers around the globe.
CEOs identify having the right talent in the right place as a critical factor for business growth with over half (55%) of recently surveyed CEOs planning to reconsider their approach to global mobility as a result of the downturn. It is clear that businesses recognise both the economic benefit of international assignments and the need to evolve the way they are managed and used.
Carol Stubbings, international mobility partner PricewaterhouseCoopers LLP, said:
“While we’re not consigning existing international work models to the history books, governments and companies will have to work together to manage some of the barriers to international mobility that will otherwise impede global competition and operations.
“As companies venture into underdeveloped locations, organisations and governments would benefit from sustainable co-investment in the infrastructure needed for individuals to live and do work comfortably – this might extend to schooling and training, medical facilities or entertainment.
“Ideally, the movement of employees and executives between countries will be fluid and characterised by collaboration, not by onerous and costly administration.”
Fortunately for organisations, the new generation of workers ‘the millennials’ see overseas working as an important part of their personal development. PwC research (into the expectations of 4,200 graduates) show 80% want to work abroad, with 70% expecting to use a non-native language at work and 94% expecting to work across geographic borders more than their parents.
Carol Stubbings added:
“Younger employees’ appetite for working overseas could eventually remove the need for financial enticement, but current immigration and tax systems, combined with the need for certain skills or experience levels, can make deploying staff around the world complex and costly. Articulating shared values will be increasingly important as loyalty is even harder to foster across borders.
“On the positive side, technology is evolving to ease compliance and tracking burdens. The eventual harmonisation of living standards and remuneration across some skill sets and industries will also make things easier.”
New business hubs and the impact of demographics
The growing importance of emerging markets will change mobility patterns as skilled employees from these territories operate domestically and beyond. PwC research projects that the E7 countries will overtake the G7 in terms of GDP by 2020 and that the combined E7 GDP will be around 30% higher than the G7 total by 2030. These countries (China, India, Brazil, Russia, Mexico, Indonesia and Turkey) present not only a very real source of demand and competition, but also an increasing pool of talent.
Additionally, the populations of traditional business capitals have changed and many are now dwarfed by growing locations elsewhere. Of the 30 most populated cities in 1950, 11 have slipped off the list to be replaced by new destinations. New entrants include Lahore, Shenzhen and Chennai. By 2025, London and Lima will be pushed out by emerging ones.
Ms Stubbings, also explained:
“Population trends will undoubtedly mean some organisations will enter new locations and exit some of their traditional ones bringing a host of new immigration, tax and communication requirements.”
Other key points from the report include:
- Companies now face the additional challenge of managing three or four different generations’ needs, expectations and skills;
- Advances in technology will change the way global and virtual teams are managed;
- Technology will be used to track workers’ global movements so the appropriate tax and compliance rules can be adhered to, but this sophisticated tracking also raises data privacy issues; and
- The oil and gas, mining and construction industries already rely heavily on mobile employees – other sectors can learn from the models they operate.
Carol Stubbings concluded:
“While Singapore is a well-known hub for international workers, the mining industry in Africa also operates an interesting model whereby employees’ schooling, housing, healthcare and most other needs are met by the employer and workers are, to a great extent, insulated from the outside world. More mobile communities also exist for oil, gas and construction employees in Southeast Asia and Siberia. The next step for companies operating or investigating these types of international work models will be to conduct thorough analysis of cost, risk, productivity and employee engagement measures.”
PwC’s Talent mobility 2020: The next generation of international assignments report is available to download here: www.pwc.com/managingpeople2020