Offshoring Trend Alive in HR Space

October 14, 2008 ( - A large number of companies are committed to moving HR functions offshore, according to a survey of 66 large multinationals by Watson Wyatt.

A Watson Wyatt news release said, to reduce costs and manage profitability, more than four in 10 U.S. multinationals (42%) are likely to offshore more production to lower-cost regions and approximately a quarter (26%) plan to reduce HR infrastructure costs at headquarters in the next 12 months.

Many also plan to reorganize their HR functions with 24% planning to regionalize and 25% planning to globally centralize. Only 17% of surveyed multinationals are likely to reduce benefit levels in the United States, while even fewer (9%) plan to reduce benefit levels abroad, Watson Wyatt said.

“Even as the credit crisis grows, the core business strategy for multinationals remains largely intact-they are focusing on areas in which they have direct control and on actions that have immediate impact,” said Bob Wesselkamper, director of international consulting at Watson Wyatt, in the news release.

Nearly two-thirds (67%) of multinationals list pressure from global inflation as a top concern relating to people costs. Other sources of unease include a global economic slowdown (56%) and a weak U.S. dollar (48%).

The survey was conducted in July and August 2008. More information is available at .

Multinationals Are Turning to Offshoring to Reduce Costs During the Economic Slowdown

align="center"> % of U.S. Multinationals


align="center"> Likely to Take

Offshore production


Reduce HR infrastructure costs at headquarters


Globally centralize benefit staff


Regionalize benefit staff


Reduce benefit administration costs through outsourcing


Reduce benefit levels in the United States


Reduce benefit levels abroad


Expand production in the United States