RSS icon

Top Stories

Relocation Providers Big Is Out, ‘Boutique’ In

When it came to being a relocation services provider, it wasn't so long ago that bigger was better.

July 23, 2009
Related Topics: Career Development, Relocation Services, Employee Career Development, Workforce Planning, HR & Business Administration
Reprints
When it came to being a relocation services provider, it wasn’t so long ago that bigger was better.

Vendors with the size and financial wherewithal to provide all-in-one services, including buying homes from their clients’ employees as part of a complete relocation offering, were positioned to take over the industry.

Then the bottom fell out of the real estate market, credit dried up and companies operating under recession-era budgets put domestic and international relocation spending on a diet.

Suddenly, big didn’t look so good. Major vendors with extensive real estate holdings “have this albatross around their neck that is now hemorrhaging money,” says Timothy Dwyer, a longtime relocation industry executive and current client services director at Expaticore, a New York City international payroll outsourcer and relocation advisor.

One of the first relocation outsourcers to feel the effects was Sirva Inc., the Westmont, Illinois, moving and relocation services enterprise formerly known as Allied Worldwide. After getting hammered by the housing crisis during 2008, Sirva was forced into a prepackaged bankruptcy in February. The reorganized company emerged from bankruptcy protection as a private concern in May.

In November, GMAC Financial Services closed the sale of its global relocation division and other real estate interests to Toronto-based Brookfield Asset Management Inc., which merged the businesses with its own real estate holdings, including Royal LePage, a relocation services provider in Canada. Rick Schwartz, former head of GMAC’s relocation outfit, is running the renamed Brookfield Global Relocation Services business. Because of the merger, it doubled in size to 900 employees and $100 million in annual revenue, according to Scott Sullivan, the company’s senior vice president.

Another affected major player in the U.S. and global relocation business is Cartus Corp., an arm of privately held Realogy Corp. In September and January layoff rounds, it let go a total of 124 employees, including some who worked at the company’s Danbury, Connecticut, headquarters, according to company reports.

As bigger vendors continue to grapple with recession fallout, their clients are eyeing deals with smaller specialists. “Boutique” firms focus on areas such as payroll, taxes, legal issues, household moves, cultural training and compiling statistics that companies use to set the cost-of-living per diems they pay expats.

And as the world becomes more Web savvy, HR relocation program managers are more interested in outsourcers who’ve got their Internet act together. Easy-to-use Web portals are high on some companies’ wish lists.

While she’s not unhappy with her current relocation partner, Primacy Relocation, Consolidated Container Co.’s Julie Loubaton is considering putting a contract out to bid when her current one with Primacy expires.

“I don’t have employees calling me with complaints, but I don’t like Primacy’s Web interface” and have seen others that look better, says Loubaton, director of recruiting and talent management at the Atlanta plastic bottle manufacturer.

Still, technology isn’t everything, says Expaticore’s Dwyer, who has worked on the client and vendor sides of the relocation business at Goldman Sachs and KPMG, respectively.

It’s easy to be dazzled by technology’s promise, then end up with more bells and whistles than you’ll use, Dwyer says. Only the largest multinationals that move thousands in their global workforce every year need the most sophisticated programs. Otherwise, it’s like owning a Lexus to drive across Manhattan “when a Hyundai will get you there just as well,” he says.

Workforce Management, July 20, 2009, p. 25 -- Subscribe Now!

Recent Articles by Michelle Rafter

Comments powered by Disqus

Hr Jobs

Loading
View All Job Listings