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 www.watsonwyatt.com/globalmarketpressures .
Multinationals Are Turning to Offshoring to Reduce Costs During the Economic Slowdown
align="center"> % of U.S. Multinationals
align="center"> Likely to Take
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