Examining foreign language premiums in the SSO sector

The shared services and outsourcing (SSO) sector has transformed today’s business landscape by leveraging scale, expertise and standardized processes. In turn, this has helped their organizations boost efficiency, reduce costs and maintain high service quality.

The sector combines non-core domestic or international operations (e.g., finance, HR, IT, customer services) into one unit, whether in-house (shared services) or via external provider (outsourcing). Through the strides made in this industry, this has led to streamlining of operations, reduced duplication and optimized resources and talent — making SSO an asset for businesses around the world.

SSO organizations that serve clients from diverse markets find that having employees who can effectively communicate in a client’s preferred language greatly expands business reach and enhances service quality and customer satisfaction, according to the results of the WTW 2024 Foreign Language Premium Survey Report. As such, this sector tends to offer foreign language incentives to attract and retain multilingual talent. These premiums often come in the form of increased salaries, bonuses or other perquisites, and are provided through either formal or informal incentive plans.

Formal plans comprise structured, documented and standardized incentives that typically include clear criteria for eligibility (e.g., language proficiency levels). For instance, an employee might need to demonstrate a certain level of proficiency in a language like Spanish or Mandarin to qualify for the foreign language premium.

The specific amount or percentage of additional compensation often is outlined in the company’s compensation programs and policies, which are communicated to all employees. Formal premium plans also may include regular assessments or certifications to ensure that employees maintain their language proficiency.

Meanwhile, informal foreign language premium plans have structures that may vary even within an organization. These plans are often the result of case-by-case decisions — and lead to wide variances in the criteria to receive the allowance. While this flexibility can be an advantage, it can also lead to inconsistencies and potential equity issues.

For example, the premium may vary between two employees who speak the same foreign language or among job candidates who negotiate their pay at hire. This inconsistency can contribute to perceived inequities and may work against a systematic approach to compensating employees for skills.

Though there are SSO organizations around the world, the presence of this sector is most notable in India, Malaysia, the Philippines and Poland. Here, we examine the prevalence of foreign language premiums in SSO organizations in each of these four markets, with insights based on our WTW 2024 Foreign Language Premium Survey Report.

India

With a massive workforce offering a vast pool of multilingual talent, India’s SSO sector has long been a preferred destination for businesses wanting to optimize their operations. Among Indian SSO organizations that responded to the survey, 37% offer foreign language premiums to employees. Most (57%) offer formal plans, although a significant portion (43%) provide premiums on an informal or per-case basis.

The three highest-paid languages in India are Japanese, Mandarin and French, each of which are offered by 43% of SSO companies with foreign language premiums (Figure 1).

Malaysia

Through its richly diverse cultural tapestry and strategic global position, Malaysia has emerged as a prime location for SSO operations. The value placed on multilingual talent is highlighted by the Malaysian SSO sector, with four in five organizations provide foreign language premiums. Among those organizations, 70% have formal premium plans and the balance (30%) have informal plans (Figure 2).

Philippines

Its strategic location, cost-effective labor market and strong cultural alignment with Western business practices combine to make the Philippines a top choice for SSO operations. In the Philippines, 86% of survey respondents offer foreign language premiums — the highest among the four countries discussed here. Two-thirds of these companies deliver premiums through formal plans, while only one-third do so on an informal, per-case basis (Figure 3).

Poland

Poland is an emerging powerhouse in the European SSO market, offering a combination of a competitive business environment as well as a dynamic and cost-effective talent pool. Around 70% of Polish SSO organizations offer foreign language premiums. Nearly 90% of those organizations have formal premium plans in place, and about 10% use informal plans — the highest percentage among the four international SSO hubs (Figure 4).

Breaking language barriers

With globalization continuing to drive the expansion of SSO operations, the ability to communicate effectively in multiple languages has become a crucial asset. This shift is evident across various SSO hubs around the world, where attracting and retaining multilingual talent is increasingly vital to serve a diverse client base.

However, this growing demand for multilingual talent results in a more competitive talent pool. To find and keep the best talent, SSO organizations should rethink their compensation packages to reflect how much they value these skills. This is where market-relevant data becomes indispensable.

HR leaders who leverage up-to-date and comprehensive data have an advantage; they can make informed decisions about pay, ensure that their offers are both objective and competitive, and affirm that their pay packages reflect the business’s goals and values.