What the private sector and some countries know
October 14, 2009
With the rise of protectionism coming in the form of demands for increased tariffs along with immigration restrictions (think H1B visas), the results from two recently released reports, the 2009 Global Assignment Policies and Practices survey from KPMG and the World Economic Forum’s Global Competitiveness Report 2009-2010, are worth exploring. For starters, it might come as a surprise that private sector employers are still sending employees overseas on either short or long-term assignments. Why? Simply put, its to take advantage of business opportunities that continue to exist in other parts of the world according to the results of the recent KPMG survey.
However, their survey of over 470 human resources (HR) executives also revealed that 49% of respondents said it took too much time (especially given that many HR departments have already been downsized) to administer assignees abroad and hence, they were implementing a wide variety of cost saving measures to become more efficient (while continuing to send employees overseas). In fact, 47% of respondents indicated that they are outsourcing some portion of their international assignment program to a third party in order to cut costs while 79% of respondents indicated they are utilizing short-term assignments (STAs) options and 45% are utilizing permanent transfers. And interestingly enough, the results from this year’s survey largely mirror the results from the 2008 survey when 49% of respondents had indicated that administering assignees abroad took too much time while 48% were outsourcing a portion of their international assignment program to a third party.
And in the same manner that companies are striving to find ways to become more competitive to remain in business, the 2009 Global Competitiveness Report shows that some countries are doing the same. In fact, emerging market leaders such as Brazil, China and India all posted improvements in their competitive rankings while the USA fell from first to second place and the UK fell from 12th to 13th place largely due to the impact from the financial crisis. In addition, several Asian economies such as Japan, Hong Kong, South Korea and Taiwan continued to be ranked among the top 20 while the gulf states and even a number of African countries showed improvements in their rankings.
On the other hand, Russia plunged nearly 12 places with the report noting major concerns including the perceived lack of government efficiency (110th), little in the way of judicial independence (116th), a lack of property rights (119th) and general concerns about government favoritism and meddling in the private sector. Furthermore, Russia’s private institutions also received poor marks with corporate ethics being ranked particularly low (110th) while Russia’s overall decline was also attributed to the weaker condition of certain factor markets such as the country’s goods market (ranked 108th) and financial markets (ranked 119th).
Thus, the message from both reports is clear: To survive in the currently difficult and uncertain economic environment, companies and countries need to focus on becoming more efficient and competitive while continuing to seek opportunities for growth – whether at home or abroad through trade and investment. In other words, now is not the time to wall yourself off and pretend that the rest of the world doesn’t exist.
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