For Relocators
Understanding Relocation Costs: A Comprehensive Guide
November 28, 2024
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The Global Mobility landscape is changing, fast. This is driven by in-house Mobility leaders that have a different set of needs to the GM teams of the past. In this article, we’ll dive into how these different demands of Mobility clients are being met, whether by traditional Mobility partners trying to adjust their services, or via alternative, modern Mobility options, who prove better adapted to suit these needs.
Demand for international talent is higher than ever, driven by a major shortage in top people from domestic markets to fill roles.
Due to this increased demand, Mobility teams worldwide are expected to complete more relocations every year, for a broader range of employees and workers. Temporary assignments of senior management are no longer the dominant relocation population. Instead there are permanent transfers, remote workers, graduates, self-driven relocations, and many other assignee types to cater to.
There is a heightened emphasis on reducing costs for many businesses, and, as relocation is one of the most expensive employee benefits, Mobility teams are being pressured to achieve more with less.
People, Finance, and Mobility teams are increasingly expected to provide transparent data on the ROI of their programs, while also leveraging technology to enhance efficiency and experience.
Charles Darwin: "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."
For decades, the relocation industry’s strong support networks, global footprints and long-standing playbooks for covering the administrative tasks of relocation support used to be sufficient to satisfy Mobility needs. However, the aforementioned changes mean that the old ways of working no longer cater to the demands of their clients.
As the demand for Mobility grows yet financial pressures remain, an increasing proportion of relocators are assigned low budgets – often £20k or less.
This presents a challenge, as many traditional relocation companies offer a suite of services that can cost more than £5k, £10k or even £20k per item. Therefore £20k total budgets significantly limit their ability to serve their customers, and deliver smooth, high-quality relocations.
This has led to a variety of new solutions, with mixed success - often they are just initiating cash lump sums to these relocators, which are not always a great idea.
In a world where the leaders of Global Mobility programs are being pressured to reduce costs, many service providers are seeing their own profits drop. This is because large commissions on high-end products formed a major part of their revenues (see this article by Berkshire Hathaway.)
However, in recent years, companies that try to convince clients that the more expensive services, such as long stays in luxury accommodations, large shipping containers, or home sale services, are essential, risk losing clients who feel their interests are not being looked out for.
“When searching for a relocation partner to support Tools For Humanity’s global expansion, I considered larger, more traditional relocation management companies, but they are super slow and expensive, and there’s mistrust there, as some try to bend you over backwards and sell you things you don’t need.” - Jen Gaddini - People Operations at Tools For Humanity
In an industry that used to be run on manual email chains across providers, human-led data and fairly slow-paced processes, Modern GM leaders are now finding this way of working both disempowering and cost-inefficient, and are demanding a lot more in the way of tech from their providers.
The new demands of Mobility teams outlined above have led to a new set of operating models in the relocation industry, and a new generation of providers, with the aim of aligning more closely to customer needs.
Using a combination of technology, affordable service models and unrestricted supply chains, there is now a focus for relocation companies to deliver high quality relocations at every level of seniority, from VIP relocations to junior level transfers with much lower budgets.
This has been achieved through tech-driven efficiencies & business models that don’t rely so heavily on partner commissions. This means that packages are more flexible to relocator priorities.
An example of this in practice, Framestore needed their relocation provider to be able to create great relocation experiences both for their senior relocators on a budget of over £20k, and more junior relocators on a budget of £5k. Previously, £5k strong packages were not an option, and would have been supported by a zero-support cash-lump-sums, but modern relocation models made it happen.
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This goal of delivering great experiences regardless of budget is essential to meet the needs of the broader range of employees that Global Mobility teams are now expected to support.
Where previously, the relocation industry was heavily focused on gaining large commissions from high-end partners, there is a lot more focus from more modern relocation providers on trying to save clients money. This is often done by no longer restricting clients to a narrow, expensive supply chain, and by only offering services that are explicitly of value to each company.
The reductions can be very significant - without highly inflated partner prices, and stronger inbuilt technology and efficiencies, modern relocations can be up to 70% cheaper vs traditional models.
For traditional providers this can mean a drop in profits, but the alternative is a completely lost client.
The result is that providers are able to relieve the financial pressure that many Mobility Leaders are facing from their organisations.
Where the old relocation industry often used manual data requests and processing as a route to additional consulting fees, modern relocation providers are building new levels of free, self-service technologies to deliver a step-change in both Relocator and Mobility Team experience.
These include:
The relocation industry of old was struggling to support the modern Mobility team. A new set of needs and demands is quickly transforming the industry, with new capabilities and a new generation of modern relocation partners also emerging, who are equipping themselves to support the requirements of the Modern Mobility leaders.
As this trend continues, the industry could look very (very!) different by 2030.
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