Our response to the Economist article ‘Who needs expats?’ published on 18 September 2021.
With the development of new ways of remote working in response to the COVID-19 pandemic, a recent opinion piece in the Economist journal asked whether it still makes sense to send employees on international assignments ( “Who needs expats?” 18 September 2021).
The article predicts the end of a gilded age in which multinationals fill global leadership positions with high-flying expats parachuted into far-off locations − at a high cost and with limitless perks. It suggests that instead, companies are now able to find excellent local talent and that corporate expatriate programmes are doomed.
However, we argue against this view. Privileged global expat ‘nomads’ ceased to exist many years ago. A poll of our top clients shows that the reasons for sending employees on assignment abroad, and the length and nature of assignments, have changed considerably over the past 20 years.
As the Economist article recognises, global mobility programmes have also had to respond to the reality of COVID, and Deloitte’s Global Workforce department is helping companies with internationally mobile employees to adapt to the ’new normal’ in areas such as remote work and virtual assignments.
Initially, COVID did result in a significant reduction in new assignments, but the number is now getting back to pre-COVID levels. However, there have been changes, including an increase in assignments carried out from the employee’s home country (’virtual assignments’). These are substantially less expensive than traditional assignments and quicker to implement. An advantage of virtual assignments is that there is greater choice of individuals who are able to do assignment work, such as parents with young children, individuals with caring responsibilities for a friend or family member, and dual-career couples. However, in the current legal framework there are many challenges to such assignments in the areas of personal income tax, social security, immigration, labour law and corporate tax. Other non-regulatory matters affecting virtual assignments are time zone differences and the greater difficulty in building working relationships with remote team members.
Since the start of the pandemic, most companies have found that employees can work remotely without difficulty, attend virtual meetings, and adapt their work pattern to accommodate different global time zones. Reducing the number of traditional foreign assignments and business trips can therefore appear to be a way for companies to reduce costs and be more environmentally sustainable. An employee who does not fly and ship personal belongings automatically reduces the company’s carbon footprint as long as the move is not replaced by a multitude of business trips.
Even so, a case for expats can still be made, looking at market trends in global mobility. While technology and remote working can reduce the need to send employees abroad as expats, ongoing globalisation, the rapidly-changing environment, and the war for talent and highly specialised skills are all driving the need for an internationally mobile workforce.
To remain competitive, companies are still using global mobility programmes to develop strategic opportunities and to cultivate leaders with global experience and the right mind-set to help run their increasingly global operations.
The retirement of baby boomers, ageing workforces, and a declining interest in science and technology education are all contributing to a shortage of critical talent. To survive and thrive, companies need to attract the world’s top talent and be able to deploy it wherever it is needed.
So “Who needs expats?” Apparently, many companies still do, and with good reasons: to prepare for and respond to opportunities in global production; to promote research, development, and innovation; to improve customer sales and service; to develop the next generation of leaders – and to grow their business.
We think the future of global mobility is bright, offering opportunities to employees whose personal circumstances would previously have made it impossible for an assignment to work for them. Of course, organisations need to adapt and have more flexible global mobility policies that take account of the new ways of working. Deloitte’s Global Workforce team is proud to partner with organisations to help them shape their new global workforce strategies, tailored to specific business and talent objectives.
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