The introduction of One Day DSP programs has had a negative impact all along the supply chain and to the assignee experience. Are these programs wishful thinking, or are they a new necessity that requires a better definition that once meant for a vastly different set of circumstances?
In this series, we will explore the impact of these one-day support programs, their viability, impact and possible alternatives.
PART II: The Theory of Pricing Impact on One Day DSP Programs
The introduction of One Day DSP programs has had a negative impact all along the supply chain and to the assignee experience. Are these programs wishful thinking, or are they a new necessity that requires a better definition that once meant for a vastly different set of circumstances?
In this installment, we discuss how the traditional pricing and industry RFP’s has impacted the industry.
The emergence of standalone one-day destination support gained prominence in Asia over the past few years. While the many reasons for more economical or limited services are clear, we may never know how the current solution came about.
Historically, Destination Service Provider (DSP) pricing has been structured based on daily scales, often ranging from 1 to 6 days. This is a common way for DSPs to present their services and for clients to request pricing and contract rates. In this sense, a one-day definition has existed for years. However, the industry norm until recently has been combining days for a comprehensive service program
This method has existed since the average expat benefits package included 5 – 6 days of destination services. While the average number of days included in a package has been reduced in more recent times, the way pricing is requested has remained unchanged.
There are benefits to using this breakdown in a pricing exercise, especially when a scope of service accompanies it. Even with descriptive parameters, there is always room for variation in service delivery. Still, this practice presents a somewhat universally understood way for talent mobility teams and mobility supply chain managers to perform an apples-to-apples comparison between potential providers more easily
What is missing is a service scope and the option to price for a standalone one-program day.
Relo Network Asia has requested clarification on service scope in pricing exercises for several years. To price accordingly, we ask if the “One Day” parameters indicate one day of service delivery or the cost to deliver the service scope within one day.
Finding a home can sometimes take 2, 3, or more days, depending on the destination. As of this writing, our team recommends a minimum of 2 days for Singapore and 3-to 4 days for Jakarta. If the pricing was based upon the time it took to deliver the service scope, then a one-day fee closely resembles a two or 3- day fee for home-finding assistance.
“Every file has administrative and technology costs associated with it.”, shared Brenda Levis, president of NYC Navigator in the US, “ For a multi-day program, those costs can be spread across the total day count, but for a single day initiation, they must be included in that one day.“ To compensate for the one-day scenario, most companies participating in this paper had pricing whereby the initial day was more than 50% of the second day’s. But pricing in this manner is often refuted by the client who wants to see the price per day decrease in cases of multiple days or an equal difference in the cost of one day vs. two. Again, that pricing strategy worked when service orders were for multiple days but doesn’t pass muster in standalone one-day cases.
Alistair Murry, COO of Packimpex, Ltd., with offices across Europe, said, “The amount of time specified for certain destination services in a typical scope of work could be seen as outdated. Therefore, the way the scope is written is not fit for purpose. The time element that appears in RFPs needs to be more realistic in relationship to what is requested to be delivered, because in lots of major cities, it is increasingly difficult to see multiple properties that fit the assignee’s criteria all on the same day.” The only exception in the RFP process seems to be for departure services. These are typically priced as a package in a task-based manner. There is a list of things to be accomplished that clearly defines the service and is priced accordingly. That hasn’t transferred to other services yet in 99% of the cases.
The recent surge in requests for one-day standalone services should prompt a reevaluation of pricing mechanisms, emphasizing the need for clarity on service scope and delivery timeframes.
In Part III, we will look in-depth at one service, Home Search, and showcase the disconnect involving time, execution and expectations.
PART I: A Look Back at How We Got Here
PART II: The Theory of Pricing Impact on One Day DSP Programs
PART III: Home Search Expectations: A Challenge to the Experience
PART IV: Undefined – Dangerous Games and how They’re Navigated Now
