Navigating uncertainty in overseas staff assignments amid geopolitical shifts
Staff assignments abroad have changed fundamentally and companies are adapting their global mobility strategies. Lawyer Omer Dotou from the consultancy BDAE Consult provides insights into which markets are currently on the rise, what the current difficulties are for international companies and what expats need.
With regard to the BRICS countries, i.e. the union of emerging economies Brazil, Russia, India, China and South Africa, Dotou notes that there is not necessarily an increase in expatriates being sent to these countries. Only China is still considered a relatively attractive market for German companies. Relatively, because sending employees there is very lengthy due to formal processes.
It is also not the most attractive place for expats and their families to live, and since the pandemic, German professionals have shied away from assignments in the country. Some companies are now recruiting professionals from Eastern European countries who are more willing to work in China for a longer period of time. Attempts to move supply chains from China to Europe are lengthy and despite all the challenges, China is and will remain an important sales market and thus an important posting country for German companies.
South Africa is an attractive sales market for German companies, but the processes regarding work and residence permits are also very difficult and, above all, lengthy there, and rejections are not uncommon. It is not a "no-brainer" for German and European companies to gain a foothold in Africa. In the course of geopolitical developments, the BRICS countries are striving for an alliance against the G7, but as long as this does not yet exist, they remain unattractive for investors. "From our point of view, there can be no talk of real pull factors in the BRICS countries," says Dotou.
European countries more in demand for staff deployment
Whereas two decades ago the BRICS countries were still considered emerging markets, we are currently in a phase of reorientation. Geopolitical changes are leading to uncertainties in personnel assignments abroad, which, as Dotou points out, is reflected in the increasing role of the USA and Europe in assignments. For companies investing in the BRICS countries, apart from the sales opportunities, it is important to find a good infrastructure. This includes a good housing situation for expats, schools and daycare centres for children travelling with them and good health care.
Countries like the Netherlands and France are in demand, as are Poland and Hungary. There are models in which employees occasionally travel to Germany but otherwise work in the countries like seconded employees.
New strategies for staff assignments abroad
Companies are more concerned than ever about the safety of their employees abroad. The flexibility and change of foreign assignments have increased, especially due to the pandemic and the changing geopolitical and global political circumstances. Companies are therefore developing alternative models such as hybrid assignments, where managers lead teams from Germany and undertake business trips to the country of assignment several times a year. With such concepts, the reaction time is significantly higher when expats do not have a permanent home and family abroad. Such models give expatriates the necessary security when deciding to go abroad.
In terms of the return to "normality" after the pandemic, a survey by MSH, the parent company of the BDAE, of more than 100 internationally active corporate clients found that companies are regaining confidence and expanding their international mobility measures for their employees. In terms of the duration of assignments abroad, this has remained stable overall in companies compared to 2021. More than four-fifths (88 per cent) of companies have maintained or increased the average duration of international mobility. While the economic situation has stabilised or even improved for many of the companies surveyed in 2022, this has also had a positive impact on international mobility. The share of companies that have increased their mobile workforce has risen by 25 percentage points within one year: More than one in four companies stated that they had increased the number of expatriates. In the previous year, it was only three per cent.
Basically, a change is emerging. Companies are increasingly developing new strategies in the area of international employee deployment, such as shorter but more frequent stays abroad, rotational mobility - i.e. the regular assignment of employees to a location abroad - or commuting.
Remote work already a reality for two thirds of companies
This new flexibilisation and the change in the forms of expatriation can be attributed to various trends in recent months. One was certainly the pandemic, which has strongly driven the home office. The geopolitical circumstances have changed a lot, which has led to a change in thinking and certainly pushed up costs in some areas. "We are seeing an increased demand for remote work in all its new varieties," says Dotou. Due to the numerous legal requirements and risks associated with remote work abroad, companies are initially limiting themselves to the EU. Modern remote work has little in common with the way it was practised 20 or 40 years ago. In recent years, the trend towards more workation in particular has given companies a completely new perspective. Instead of sending employees abroad, they want to go abroad on their own initiative - as an experience, to further their education, to develop themselves or because their partner wants to go abroad. However, this also entails risks for the companies.
Risks and challenges for companies
Risk and challenges for companies
Companies often expect their employees to take care of the formalities of working abroad themselves if it was initiated and requested by the employees themselves. However, Dotou points out that companies should be cautious about asking employees to take care of taxes, social security or immigration themselves, as this can lead to a compliance risk. It is important to support employees in this process and, if necessary, even offer solutions yourself.
The importance of the family in foreign assignments has also increased. In Dotou's view, it has even become the most important issue in modern expatriation. The majority of German expats are over 40 years old, have a partner and possibly also children. Today, the demands of the accompanying partner have changed. Many also want to work locally. Companies should therefore also take their needs into account.
These developments show that staff assignments abroad have fundamentally changed and companies are increasingly adopting new strategies and flexibility to meet changing geopolitical and societal challenges.