In spite of the global downturn, a new survey shows that expatriate growth looks likely.

Global Relocation Trends -- 2008 Survey Report by GMAC Global Relocation Services reported that respondents once again expressed a great deal of optimism about current and future growth in the expatriate population, with 68 percent expecting an increase, only 2 percent less than last year’s record-breaking high of 69 percent.

The 2008 Global Relocation Trends Survey (GRTS) report is the 13th report issued by GMAC Global Relocation Services, LLC (GMAC GRS). Issued since 1993, these reports constitute one of the industry’s most reliable sources of global relocation data and trends.

Here are some of the main findings from the survey.

Companies optimistic about future growth of the expat population
Respondents once again expressed a great deal of optimism about current and future growth in the expatriate population, with 68 percent expecting an increase. Interestingly, 67 percent of respondents reported an increase – only 2 percent less than last year’s record-breaking high of 69 percent.

This continuing sense of optimism has remained stable despite international monetary concerns triggered by deficit spending in the United States and the rising inflation rate, the dollar’s slide with respect to competing currencies and the rising number of mortgage defaults in Britain and the United States (especially in the sub-prime market) as well as the international financial impact of these defaults.

This could be explained by the steady expansion of the European Union, which has created a large and relatively open marketplace for trade that encompasses 500 million citizens. On the other hand, the booming economy of China and widespread use of expatriates in that region yield additional expatriate population growth. Finally, there is the possibility that expatriate growth outside of the United States is an international response to the Sarbanes-Oxley Act of 2002, which increases the compliance costs of US-based companies.

The expat population
In 2007, respondents reported that 19 percent of expatriates were women, compared to 20 percent in the 2006 report. The peak figure for female participation was 23 percent in the 2005 GRTS report. The historical average is 15 percent.

Fifty percent of expatriates were 20 to 39 years old. Sixty percent of expatriates were married, less than the historical average of 66 percent. The percentage of married men (51 percent) was the lowest in the report’s history.

Before (and including) the 2002 GRTS report, respondents reported that an average of 59 percent of expatriates had children accompanying them while on assignment. After the 2002 GRTS report, however, this average dropped to 52 percent where it has remained. This development may be linked to the lower percentage of married expatriates. On the other hand, family challenges may be the source of the decline.

Finding potential assignees is a challenge
The report reveals that 21 percent of respondents identified finding suitable candidates as the most significant relocation challenge that was critical to their companies. However this should not be looked at in isolation.

In addition to finding suitable candidates, survey respondents identified career management (16 percent), retention of expatriates (12 percent), and partner dissatisfaction (10 percent) as significant relocation challenges. Furthermore, family concerns were cited as the most common reason for assignment refusal (89 percent), and this was followed by spouse career concerns (62 percent). As mentioned in the report: “If we consider each of these concerns as part of a three-fold challenge to (1) find suitable candidates, (2) help expatriates (and their families) to complete their assignments, and (3) retain these employees once an assignment is completed, we will have a better understanding of how to improve the odds for success on an international assignment.”

Family concerns are top reason for early returns
Family concerns play a key role throughout the duration of international assignments and 28 percent of respondents cited family concerns as the top reason for early returns from assignments. If conditions at the host location are at great variance with expatriate (and family) expectations, the day-to-day accumulation of dissatisfaction is bound to exert a negative effect on the assignment’s chances for success.

At the same time, high attrition rates can be the direct consequence of a poorly executed international assignment. For example, if expatriates face a series of constant, day-to-day challenges related to housing, schools, spouse/partner career, and other lifestyle issues during an assignment, when the assignment is completed, the memory of these challenges can be transformed into resentment directed at the company.

Economic conditions and alternatives to long-term assignments
Despite growth in the expatriate population at most companies, more than half (58 percent) of the respondents indicated that their companies were reducing expenses for international assignments in response to economic conditions.

Since the 2003/4 GRTS report, there has been an increase in reliance on localisation as a way to reduce expenses, and the practice of localisation has risen (in rank) from fifth position to second position. Respondents apparently do not believe that close scrutiny of an assignment’s tax ramifications will lead to the greatest reduction in expenses.

Forty-nine percent of respondents indicated that their companies were seeking alternatives to long-term assignments with a desire to be more cost-effective being cited by 75 percent of respondents as the reason for seeking these alternatives.

In 2007, 56 percent of expatriates were relocated to or from the headquarters country, which was below the historical average of 65 percent. More and more frequently, international assignments are taking place between non-headquarters locations.

Cross-cultural training remains popular
The past three reports have documented an increase in the percentage of companies offering formal cross-cultural preparation for international assignments. This year, 84 percent of companies made this preparation available.

Most challenging destinations are China, India, Russia, and the United States

To some extent, these destinations were likely to appear on a list of this sort simply because they were among the most active destinations. The United States was the top international destination, closely followed by China. Furthermore, China, India, and Russia were the top three emerging destinations.

In China, programme managers cited difficulty in finding suitable homes and schools, rising prices, immigration formalities, unhelpful government officials, tax laws and filing requirements, the remoteness of the destinations and the consequent time delays, language and cultural differences, and the salary differential experienced by employees arriving from high-cost locations.

In India, respondents cited administrative formalities during immigration, unclear tax and employment laws, a lack of acceptable services and accommodations, inadequate education facilities, security concerns, timing difficulties, and cultural challenges.

In Russia, legal and immigration complexities (including frequent changes in the law), poor-quality and uneconomical housing, the complex administration of work permits and taxes, and travel safety were cited.

In the United States, respondents cited difficulties with immigration, obtaining work permits, tax preparation, and safety concerns.

Measuring ROI
Eleven percent of respondents measured return on investment (ROI) in a formal way, compared to a historical average of 10 percent. Fifty-nine percent of respondents defined ROI as “accomplishing assignment objectives at the expected cost.” Eighty-eight percent of respondents rated their ROI as good or very good -- none rated ROI as excellent-- while 63 percent of respondents had programs to improve their ROI for expatriates.

The top initiatives to improve expatriate ROI included better candidate selection and assessment, effective communication of assignment objectives, and mandatory cross-cultural training.

Outsourcing
Respondents believed that the benefits of outsourcing mobility programs were specialized expertise (46 percent), identifying assignment costs (41 percent), consistent policy application (38 percent), better service quality (38 percent), and better reporting (29 percent). For 74 percent of respondents who outsourced all or part of their international assignment program, expectations were met or exceeded.

 January 2009

Winners of the Expatica HR 2007/2008 Top 5 Industry Survey Awards

1.    2007 Expatriate Work-life Balance Survey – ORC Worldwide
2.    Global Relocation Trends - 2008 Survey Report – GMAC Global Relocation Services
3.    Employment Outlook Survey – Manpower
4.    2008 Global Tax Policy Survey Report – ORC Worldwide
5.    2007 Survey of International Localization Policies and Practices – ORC Worldwide

 Click here for more information on the Expatica 2007/ 2008 Top 5 Industry Awards.

We'll shortly be publishing a summary of the results of the other winning surveys on the Employment channel and Expatica HR.

Further reading: Work-life challenges for expat managers