What is a virtual assignment and how is it different from a traditional assignment?
Virtual assignments are not new, but they’re seeing increased interest amid the COVID-19 pandemic. Vice President of Consulting Services Chris Pardo looks at how they work in this Remote Relo Tip Tuesday.
Complete transcript: “Happy Tuesday, everyone. Welcome to this remote edition of Relo Tip Tuesday. My name is Chris Pardo, and I’m coming to you from my home office here in Minneapolis as we continue working from home and doing our best to practice good social distancing. So my question today is, ‘What is a virtual assignment, and how is it different from a traditional expat assignment?’
You might have heard that real estate joke that the three keys to buying a home are ‘location, location, location.’ And that’s exactly what makes a virtual assignment different from a traditional expat assignment. A virtual assignment is when the employee remains in their home country location while performing their job and being responsible for operations in the host country location by doing that work remotely, of course. So while an individual might travel one to two weeks for business trips to that host location when possible, unlike a traditional short- or long-term assignment, they don’t have to live in the country. And because of that, there a number of benefits, a lot of policy options, that no longer have to be provided. Things like host country housing costs and transportation allowances can be reduced or eliminated. Cost of living allowances, global insurance plans, dependent schooling costs and immigration costs are all things that can be reduced if not completely eliminated.
With fewer expats to evacuate when a crisis arises, like say a global pandemic, virtual assignments may minimize risk for companies, allow for better duty of care and actually provide improved business continuity. Second, dual-career and family issues get in the way of traditional assignments, but with a virtual assignment, partners can maintain their careers and school arrangements can be kept in place for children. And then third, immigration issues like work permit restrictions, quotas and other legal limitations can be reduced if not completely eliminated. Here in the U.S. with the recent executive order aimed to freeze the hiring of foreign workers with H1-B visas, virtual assignments are getting a lot of attention and consideration currently.
So what are the downsides you ask? Well, the challenges of a virtual assignment center around how to best structure that arrangement to minimize tax costs and tax compliancy issues, particularly something like permanent establishment issues. Additionally, the role itself has to actually be able to be done remotely for the most part.
Although virtual assignments are not a new idea, according to a pretty recent AIRINC survey, only 3 percent of companies actually have a formal policy in place, although 40 percent of companies are considering adding it to their mobility toolkit. And then as we look out to the future, approximately 58 percent of companies anticipate that virtual assignments will increase over the next year.
Amid the COVID-19 pandemic, we’ve seen assignees that have been evacuated or forced to work from home. In this new environment, while no one is suggesting that traditional expat assignments are going to be eliminated, virtual assignment might find a more prominent role in mobility programs. Whether that’s a temporary or permanent trend remains to be seen, but regardless, there is increasing interest in virtual assignments. Stay safe, be healthy, and thanks for listening today.”