Exodus: Movement of rich people - a life at home abroad
- 5 December 2011
- From the section Business
An Italian professor of maths moves from Rome to New York State, a lawyer moves from Sydney to Hong Kong after a spell in the Cayman Islands in between, a Portuguese executive moves from Mexico City to Bogota, a violinist leaves Serbia for the UK.
The movement of professional people on this scale was unimaginable 10 years ago.
The cross-border migration of highly-educated people from upper-middle income countries rose by 44% between 2000 and 2006, according to a recently published study by the Organisation for Economic Cooperation and Development (OECD). In low income countries the cross-border movements also jumped significantly, by 28%.
Intra-company transfers in developed countries rose 39% between 2005 and 2008, and this does not include intra-company transfers within the European Economic Area, says OECD policy analyst Jonathan Chaloff, even though the scale of those "can be considerable".
"What is clear is a trend towards an increase, albeit interrupted by the economic crisis," says Mr Chaloff.
Multi-national companies and government organisations confirm that view.
Brookfield Global Relocation Services is one of the major facilitators in the movement of professional people.
Others include talent assessors SHL, recruitment specialists Hays, and ECA (Employment Conditions Abroad).
Brookfield conducts annual surveys among its 250 corporate and business clients, helping them to relocate 50,000 people a year around 110 countries.
Its latest survey concluded that 61% of them expected to transfer more employees in 2011 than last year. ECA's own survey has produced similar figures, suggesting that companies will grow their expat workforce 67% over the next two years.
The globalisation of business is not just reflected in the geographical reach of companies. According to ECA nearly 60% of the firms it surveys employ expatriates from six or more different nationalities.
What is driving these people, many of whom have a perfectly good life in their own countries?
For starters, there is plenty of demand for their services.
Hays' research into the area, in conjunction with Oxford Economic Forecasting, indicates that "all businesses face the same fundamental challenge - a shortage of the right people and skills in the right parts of the world," and that "in a world with seven billion inhabitants and with many countries already at record unemployment levels".
Hays places 50,000 people a year - and 100,000s more in temporary and contract works - and itself employs 7,000 globally.
Hays' director Charles Logan says the company's cross-border placements are growing in number, and range: "Three to four years ago the primary movements were between the UK and Australasia, but with more organisations moving people, we are ourselves expanding, and now operate in 31 countries."
"Our own business certainly reflects this. We have recently moved a German director to Chile, a French one to Mexico City and an Irish one to Toronto."
Demand for jobs
Certain industries have always had to draw on foreign professionals; oil and gas exploration and extraction for example, typically found in non-developed parts of the world where there is unlikely to be much local expertise.
The search for energy and rising regulation in the industry means that even as local skills improve, there is still high demand for the "talent" of non-national employees.
Demand is also fuelled by demographics. Brookfield's executive vice president Scott Sullivan says that the skills gap is growing: "That comes after the retiring baby-boomers, because for a number of years talent was unwilling to risk investing their career efforts in an industry that was seen as unpredictable.
"Mining is another industry that is similarly challenged... not only for specific technical skills but also for management and leadership skills and experience that have not had a chance to develop to the level and quantity required by these fast-growing economies."
Climate change provides more opportunities for people in the developing discipline of green energy expertise.
Hays points out that emerging economies may also look to developed economies to meet skills shortages in areas like infrastructure, construction and engineering and mechanical goods production.
But what are the favourite destinations?
Brookfield's latest relocation survey puts three of the "Bric" nations - China Brazil and India - at the top of its list of countries likely to employ foreign professionals.
Financial services firms in developed countries are also sucking in talent from abroad - to work in places like the UK, the US and Australia.
Like other global businesses, Hays is expanding fast in developing markets. Five years ago it had no presence in South America; now there are eight offices - five in Brazil alone - and there are big plans for more.
Hays' Charles Logan says as regulation is introduced in developing countries, new skills are needed: "There is quite a demand for UK-trained lawyers in former Commonwealth territories, as well as in countries where there is pressure to increase regulatory standards in legal and accounting - for example, South Africa, Nigeria and even Singapore and Hong Kong."
That explains the reason for the opportunities. But why would anybody go through the upheaval of moving job and house - not within a country but to another continent?
Many move for a better life and more money, although firms - and relocatees - report relocation packages are less generous than they typically were five years ago. This partly reflects that these days it's not just the most senior executives that are moving. Amongst the number of middle-ranking professionals seeking a new life abroad is rising, but they are cheaper and may not be expected to stay as long.
Brookfield's Scott Sullivan says there is a move to more flexibility: "Companies are attempting to leverage flexibility by offering what is really needed for an individual assignee... as opposed to a blanket policy with full entitlement to all provisions."
Relocation itself is big business. Brookfield says relocation expenses for its business total $3.6bn a year.
Hays' fee income has risen 42% since 2005 to £672m.
The experience these companies are putting to work is not just in the employee's field of expertise - previous overseas postings can help an application.
Brookfield found that 12% of people in its relocation survey had previously been posted abroad.
Some get a strong taste for the life, but for others it is fraught with pitfalls both practical and emotional; there is homesickness, or relationship breakup.
SHL's chief science officer, Eugene Burke, says the wrong move incurs a heavy financial impact too: "The financial costs for a company putting the wrong person into a post can quickly run into the hundreds of thousands of dollars once relocation costs are added to repatriation expenses, project failure and, most gravely, healthcare costs if the individual suffers mental health problems as a result of a failed move. "
He says between one in 12 to one in five expat assignments fail.
"There is a debate over how you define a failed assignment, but the actual recall rate is around 10% in the US, with some statistics suggesting that it is even higher."
Eugene Burke says recall rates are hard to get hold. Companies are unwilling to disclose failures.
His company, he says, is "capturing intelligence on people every second of every day" and delivers 25 million assessments a year to almost 40 countries in 50 languages.
One of the key mistakes companies make, he says, is to assume that someone who has successfully completed a project in one country will be able to do the same elsewhere: "Most people say you have to be resilient - I think its more than resilience.
"We would argue very strongly that having intelligence on this person, knowing how they tick would help immensely. Some of it is about what you know but that's only part of it, its about your approach to it as well.
"You may think 'this guy has done a good job delivering in this country - lets get him to do the same in India - he'll be good at that' - well, will he?"
But as globalisation and economic growth - where ever it may be found - continues, the experience of moving countries and continents is becoming better understood.