Different types of cost involved in corporate relocation

cost involved in corporate relocation

cost involved in corporate relocation

Corporate relocation process involves mainly two types of costs. They are fixed cost and variable cost. You can reduce variable cost but not fixed cost. Short relocation process tends to cost less. Cost incurred at the beginning and end of corporate relocation remains same for short and long corporate relocations. Length of relocation process has high impact on cost. Main fixed costs associated with corporate relocation are

  1. Cultural Training: Company must give extensive training on culture of new country to avoid conflicts.
  2. Language Training: You cannot avoid learning new language when you relocate to new country.
  3. Accommodation: Company need to find out proper accommodation for all the transferee
  4. Transfer allowances: All corporate companies usually pay reasonable amount as transfer allowances.
  5. Spousal assistance: Company may need to assist employee’s spouse to find out a comfortable job.
  6. Travel allowance: Usually corporate companies have to provide travel allowance of transferee.
  7. Shipment of households: Company need to arrange for packing and moving of household goods.

All these cost are same for short and long relocation assessments. We cannot eliminate any of these costs. Yet we can try to reduce them. These costs will not increase for long relocations. Relocation also carries some time-sensitive expenses. They are

  1. Housing expense: Company needs to provide assistance in arranging house
  2. Salary: Salary of the transferee need not be same as previous. Cost of living in the new country decides the salary structure of the transferee.
  3. Property management at starting: It is difficult to manage transferee’s property at the beginning. Company must provide allowance for property management.
  4. Dependent Education: Corporate Company must ensure adequate education facilities for dependents of the transferee.
  5. Tax preparation: Company needs to help transferee with his tax preparations.
  6. Tax: Different types of taxes come along with relocation. Company bears all tax expenses related to relocation.
  7. Childcare: Company needs to provide assistance in childcare.

These expenses are also inevitable part of corporate relocation. Corporate companies can take some measures to reduce these expenses as much as possible. You can reduce number of supplies by giving all requirements to few suppliers. You need not go for lowest price. This may affect your quality. But you can definitely go for best overall priced provider in industry.

Corporate company can go for in-house relocation or outsource relocation. While outsourcing relocation, company will need to bear extra cost for relocation agency. Company may also need to find out a relocation specialist to ensure proper relocation.

Finance and HR team works out salary structure of the employee. It will not be very tough if the employee is performing a same function within same department. Salary calculation will be entirely different if the business unit and post of transferee is changing. Company can ensure that transferee work for same business unit to reduce some extra expenses. Employees changing their business unit need extra training. This extra training is also another expense that company need to bear on corporate relocation.

 

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