THE WORLD’S RISKIEST COUNTRIES
October 14, 2012
This blog was inspired by an article published in “Business Finance”, written by Eric Krell, 3 October 2012
Corporate relocation has been transformed in recent years, giving rise to new threats and certainly new opportunities. Traditional three-year expatriate assignments are not the only options now available and desired by companies needing talent in a quick and effective manner. We are all aware of those countries where travel is prohibited by our federal government; i.e. North Korea, Iran, Cuba, etc. but there are other countries that have made the list of “highest-risk destinations. The International SOS is a global firm that provides local expertise, preventative advice and emergency assistance to clients with employees abroad. The highest-risk countries on their list include: Nigeria, Pakistan, India, Mexico and Russia. (Having been to several countries in the Middle-East, I would definitely say that any country in that region MUST be included as a very risky destination.) The nature of international business risks is changing, as is the male/female ratio of international business travelers. A recent International SOS survey indicates that European-based international travelers reported a higher occurrence of threats related to travel-related infections and road accidents during the past three years. Global business involves more germ-related illnesses and much more aggressive driving relative to conditions in the United States and Canada not to mention threats involving kidnapping and ransom.
The number of female business travelers is rising at a tremendous rate. Women now comprise forty-five (45) percent of the corporate travel market. International SOS reports a twenty (20) percent increase in the number of female travelers calling its centers for medical and travel-security advice from 2011 to 2012.
A 2012 KPMG survey of one thousand one hundred and fifty (1,150) senior leaders in mid-sized companies in the United States, Canada, Brazil and Mexico find that:
- Seventy-five (75) percent of mid-market executives believe global expansion is integral to their company’s growth strategy. That figure is up fifty-three (53) percent in 2009 and thirty-seven (37) percent in 2007 previous KPMG surveys on the topic.
- Eighty (80) percent of U.S. mid- market executives think their global expansion plans have been successful in the last two years.
- Seventy-eight (78) percent of U.S. executives say they plan to increase non-domestic revenues from foreign operations and customers. This is an increase of sixty-six percent from 2009.
The allure of global operations is boosting the frequency of international assignments. Fifty-seven (57) of the one hundred twenty-two (122) mobility managers indicate they expect to increase relocation volumes during the next two years. This fact was reported by Cartus 2012 Trends in Global Relocation. This travel generally involved three categories, as follows:
- Commuter Assignments: Travel between home and destination countries for a specified number of work days per month.
- Extended Business Travel: International travel of o ne to three weeks in duration.
- Rotational Assignments: A series of two or more assignments, which last one to three months.
It is imperative that risk management personnel develop specific strategies relative to travel by their most valuable personnel. The following list is an excellent place to begin:
- Increased awareness
- Plan with key stakeholders
- Expand policies and procedures
- Conduct due diligence
- Communicate, educate and train
- Assess risk prior to every employee trip
- Track traveling employees at all times
- Implement an employee emergency response system
- Implement additional management controls
- Ensure vendors are aligned
I think, for health reasons alone, traveling “solo” can be tremendously risky. One of the huge issues existing in today’s global travel is the inability to communicate. (How many U.S. citizens speak Mandarin or Cantonese?) At any rate, pre-planning is an absolute necessity.
OFF-SHORING
December 27, 2012
Logistics Management, April 2012 was used as one resource for this posting.
Off-shoring is a word that has recently “popped up” in literature to describe moving jobs from one country to another, generally countries with lower cost of labor. I retired from a Fortune 500 firm that mandated 33 % of all components and assemblies be purchased from LCCs; i.e. low cost countries. The meaning was obvious, LCCs operated with labor rates significantly lower than those rates found “at home” and the company wanted to capitalize upon those low rates to increase profit. The “going rate” for an engineer in India–$15,000, Mexico– $12,000, whereas in the United States—approximately $83,000. Similar situations exist with CAD operators, draftsmen, assembly workers, etc. This trend will not be reversed easily or soon. Corporations in the United States and Europe will move an additional 750,000 jobs in IT, finance, and other business related services to India and other low-cost geographies by 2016, according to new research from The Hackett Group, Inc. As noted in Supply Chain Management Review last year, researchers were trying to determine if levels of additional off-shoring in these areas would begin to decline by 2014. That group’s off-shoring research, which examined available data on 4,700 companies with annual revenue over $1 billion headquartered in the U.S. and Europe, found that by 2016, a total of 2.3 million jobs in finance, IT, procurement, and HR will have moved off-shore. This represents about one third of all jobs in these disciplines. India is by far the most popular destination, with nearly 40 percent of the jobs being off-shored headed there. The Hackett Group’s research sees additional off-shoring levels in business services, which are currently at around 150,000 new jobs each year, leveling off or declining after 2014. They also found that of the 5.1 million business services jobs remaining on-shore at U.S. and European companies in 2012, only about 1.8 million have the potential to be moved off-shore with 750,000, as mentioned above, moving by 2016. Within the next eight to ten years, the traditional model of lifting and shifting work out of Western economies into low cost countries will cease to be a major factor driving business services job losses in the U.S. and Europe. Automation and other productivity improvements will have caused the elimination of 2.2 million business services jobs at these companies between 2006 and 2016 and these factors are currently driving the elimination of round 200,000 jobs annually. Companies must improve processes and to a great degree automate those processes in order to survive. Our tax codes are not favorable to companies within the U.S. and companies must compensate for that fact. “In the U.S. and Europe, off-shoring of business services and the transformation of shared services into Global Business Services, have had a significant negative impact on the jobs outlook for nearly a decade”, said The Hackett Group Chief Research Officer—Michael Janssen. “That trend will continue to hit us hard in the short-term”.
What we are saying—don’t’ look for much relief, if any, for the next few years.
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Tagged: Business, Fortune 500, Hackett Group, India, Logistics Management, Low Cost Countries, Mexico, Off-shoring, United States