MNCs restructuring international projects to cut costs: Mercer

Faced with declining profits, MNCs are restructuring their international programmes by shortening overseas assignments and hiring expatriates locally, a survey by global HR consultancy firm Mercer said.

According to Mercer's 'International Assignments Survey 2010', covering over 220 multinational companies (MNCs) across all industries, firms are forced to balance cost constraints on international assignments while retaining the competitive edge over their rivals.

The survey revealed that, "Organisations globally now have more structured international assignment programmes that put emphasis on shortened assignments, hiring locally and eliminating non-essential benefits in an effort to manage costs more effectively."

About 50 per cent of the companies surveyed reported a rise in short-term overseas assignments, which are becoming more aligned with organisations' objectives due to their quick approval process.

Around two-thirds of companies globally have developed special policies for short-term assignments, it added.

"As the global economy moves slowly into recovery mode, particularly for certain regions such as the Asia-Pacific, the focus on cost containment is still prevalent among firms, particularly when it comes to international assignment policy," Mercer Asia-Pacific Global Mobility Leader Cathy Loose said.

Moreover, MNCs are trimming costs by hiring expatriates locally in project countries instead of paying more to bring in talent from outside.

According to the survey, around 50 per cent of firms have increased or plan to increase the number of expatriates hired locally.

Given the financial and administrative costs associated with international assignments, most firms are reviewing their global expatriate policies.

Nearly nine out of 10 MNCs worldwide have been revising or are planning to revise their expatriate policy, which includes benefits and allowances, in order to reduce expenditure, the survey added.

"As a result of the economic climate, many companies have had to postpone planned foreign investments and have turned the focus to their existing overseas operations," the Mercer report stated.

MNCs are still cautious about the prevailing economic climate globally and are cutting costs to maintain the profitability of their businesses.