By Sheri Gaster, VP of Technology at Equus.
With short-term business travel on the rise, this series features insights from experts around the world on how to best manage your business traveler population.
Last week we sat down with Lorraine Cohen, US Business Travel Analytics Leader and Partner at Deloitte to discuss her views on the latest trends and challenges companies face when managing business travelers.
What are the 3 biggest trends in business travel today?
LORRAINE: In the travel area itself, we’re seeing a reduction in actual expatriate assignments. There is a trend towards companies trying to find and develop local talent, and sending people on shorter trips to meet with global teams instead of sending them on a traditional assignment. So that would be the first trend I think we are seeing, a reduction in traditional assignments and an increase in business travel.
Additionally, we are seeing more globalization of businesses. As a result, there’s increased business travel related to actual global work and integration of their workforce.
And the third thing is the younger workforce – the millennials – those who are just coming, or are about to come, into the workforce. These employees really want to see the world and are asking for global opportunities, etc.
How do you predict the state of STBT in 2025?
LORRAINE: One area where I think we’ll see change is compliance. While a number of companies are focused on this, there are many companies that are not doing the required reporting and withholding when their business travelers are triggering tax obligations.
There has been a trend over the last 3-5 years in many jurisdictions whereby taxing authorities are increasing their capabilities around detection. I see that trend continuing and by 2025 I think there will be clear and unique requirements across the world, and if you’re not meeting those requirements, there will be more repercussions as a result.
In a recent Washington Post article, one company was embedding a chip in their employees to bypass RFID technology to unlock doors, operate printers, and even buy stuff at the company cafeteria – all without a badge. While many people may think this is crazy, a lot can happen between now and 2025 and using technology to know exactly where your employees are, is probably pretty realistic. After all, knowing where people are is really the biggest challenge to managing risk associated with business travel. Whether it’s a need to know where people are in response to natural disasters, political insurgencies, or for the more mundane activities like tax compliance in order to perform your corporate obligations.
The other prediction for 2025 that I think could be really interesting is around workforce planning. There are currently some workforce planning tools that are out on the market, but I think we are on the cusp of some much more sophisticated tools where you can access more detailed information about your people, your global skills gap, as well as the associated costs and immigration rules to deploy quickly. By 2025 I think there will be some very sophisticated technologies to help get the right people to the right opportunities with all kinds of factors being considered from cost, ease, speed, skills, and more. And I think that will happen by 2025, if not sooner.
What’s the biggest problem companies struggle with related to this population today?
LORRAINE: The biggest challenge is the right people in the company don’t have the information they need in order to execute their corporate responsibilities. They don’t know with respect to immigration or payroll reporting where people are, how long they’ve been there, where all have they been, etc. So I think the biggest challenge right now is knowing where the people are and having a process in place to capture the right information to execute a program with confidence and with automation.
What is one, easy thing companies can do to improve their immigration/tax compliance?
LORRAINE: Companies should focus on using real data to understand and assess their current business traveler situation so they can prioritize and make the most impact in managing their risk.
Deloitte, for example, usually takes between 12-18 months of data from a company and quantifies what their risk is in all the locations they have business travelers. This is done both under the letter of the law and also with specified thresholds for administration (e.g. a 15, 30, 45, and/or 60 day threshold) to help companies assess what amount of risk would they be operating under. So we can help with the real data and telling them where their highest exposure is and what might happen based on certain decisions.
As governments’ tracking technologies improve, how will this affect companies and their STBT?
LORRAINE: Currently there are a number of countries that are already providing the passport scans from immigration directly to tax authorities. This is only going to increase – as will the additional ways to easily get that information. So right now they have the ability to get the data the next step will be have an efficient way to analyze that and make some projections and estimates and go after people/companies more efficiently.
How do you see the employee experience changing as it relates to how companies manage STBT?
LORRAINE: One of the things we are definitely hearing is companies don’t want the employee to be bothered with this, which is why we really like to use company data and not bother the employee. We have a GPS enabled calendar that can tell us where the employee is but the EE still has to interact with it and say whether they are working or not. EE experience is a really big focus so we try to do everything we can with information that is available and doesn’t involve the EE in order to manage the risk and follow the laws that do exist.
Any additional comments or observations?
LORRAINE: I think what’s interesting in this space is that it’s really changing. Especially in the compliance area. The laws have been in place for a long time but the enforcement of those laws hasn’t. So it’s going to be really interesting to see what happens in the next 3-5 years. Should be a pretty exciting time.
Lorraine Cohen is a partner in the Global Employer Services practice for Deloitte Tax LLP. She has over 25 years of experience providing services to global companies, including expatriate tax program management consulting and compliance, tax planning, and human resource policy consulting.