Indian cities and expatriates compensation

Rise in commodity prices, which has impacted the common man in the country, has surprisingly not hit the expatriates living here and their cost of living in Indian cities has actually become cheaper, a latest survey says. Our observation is that this is because additional compensation they are getting from MNCs and Indian Inc for their specialized skills. Because most of the talent is available in India itself companies are recruiting expats only in certain sectors requiring skills not currently available with Indian and other Asian countries talent.

Seven Indian cities — Mumbai, New Delhi, Chennai, Hyderabad, Kolkata, Pune and Bangalore all witnessed a fall in their global ranks making them cheaper to live in for expatriates, according to the recent survey prepared by Hong Kong-based solution provider for international HR professionals ECA International.

Mumbai and New Delhi have fallen 15 and 18 places to 192 and 196th ranks respectively, while Hyderabad has dropped 22 positions to 211 as against the survey carried out by a firm 8 months back.

Bangalore has fallen 13 places to 218th position, while Chennai is at the 207th place as against 186th place in the previous survey, Kolkata is at 216 (193rd) followed by Pune at 217 (194th), the survey revealed.

Cities in the Korea Republic, Hong Kong and India are among the Asian locations that have fallen the most in the ranking. The weakening of these countries’ currencies between surveys explains these falls.

The major reasons of expatriates facing less of inflation pressure is due to their being on relatively higher income levels in developing countries, which means that the impact of increases on basic necessities is felt by them less than those on lower wages.

Furthermore, cost of living calculations take into account relative inflation between home and host locations. With inflation being experienced globally, increases in prices at the assignment location are often offset by the rise in prices in the home country.
The Cost of Living is topped by Japan’s Tokyo as the costliest city for expats in Asia followed by another Japanese cities Yokohama, Korea’s Seoul and Nagoya at the second, third and fourth ranks in that order.

Japan’s Kobe (5th), Korea’s Busan (6th) and Ulsan (7th), Yuzhno-Sakhalinsk in Russia (8th), Hong Kong (9th) and Beijing in China (10) are the other cities among the ten costliest places in Asia.

Among the Asian rankings, Indian cities Mumbai and Delhi occupy 33th and 34th positions while Chennai comes at 37th place followed by Hyderabad (40), Kolkata (43) and Pune (44).

Interestingly, Bangalore (45) is among the six cities with the least cost of living among Asian cities, along with the Sri Lankan capital of Colombo (46) and Pakistan’s capital Islamabad (49).

The recent major swings in exchange rates underlines the need for companies to manage expatriate pay carefully. Normally paying part of an assignee’s salary in the home location and part in the host location helps to limit the adverse affects of subsequent exchange rate fluctuations for expats which is another advantage for them.

Living costs for expatriates are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on expatriate remuneration packages.

ECA’s cost of living survey is based on comparison of a basket of 128 consumer goods and services commonly purchased by expatriates in over 370 locations worldwide.

Globally, the most expensive city for expatriates is Luanda in Angola, followed by Norwegian capital of Oslo, Stavanger (Norway) and Copenhagen (Denmark) and Moscow (Russia).

For these reasons Indian and other Asian cities are cautious in recruiting expats and take them on the Rolls only when it is essential and limiting the contract period from 3 to 5 years. The above figures enlighten our local talent and they need get disappointed on expats compensations.