Global staffing and control in emerging multinational corporations and their subsidiaries in developed countries: Indian IT EMNCs in Australia

The purpose of this paper is to examine the control mechanisms used by multinational corporations (MNCs) from emerging economies to manage their subsidiaries in developed countries and their implications for human resource management practices.

The paper draws on data collected through in-depth case studies and interviews with senior subsidiary managers of 12 major Indian information technology (IT) MNCs operating in Australia.

Indian IT MNCs rely heavily on the use of people-centric controls exerted through global staffing practices (via the transfer of parent-country nationals), which, in turn, influence their subsidiary’s discretion over their HR practices. The use of people-centric controls allows Indian IT multinationals to replicate parent-country HRM practices in their Australian subsidiaries in an ethnocentric manner and significantly leverage the people-based competitive advantages from India through short- and long-term expatriate assignments.

The study investigates control and HRM practices from a single country and a single industry perspective. It provides an insight into the normative means of control in foreign subsidiaries of MNCs and enhances our understanding by explaining the integrated relationship that control mechanisms (and their people-centric components) have with HRM practices including the global staffing approaches and expatriate management practices of emerging MNCs.

Indian MNCs are using their business model to leverage the Australian immigration and skilled visa programme to maintain cost advantages. However, the immigration legislation in developed countries needs to be capable of allowing emerging multinational corporations (EMNCs) to maintain such advantages as developed countries seek to attract foreign direct investment from emerging economies.

The results indicate that the control practices of EMNCs are similar to the controls exerted by MNCs from developed countries. They also show that EMNCs do not adopt a portfolio approach to global staffing, and that the people-centric components of their control have a clear impact on their subsidiaries’ HRM practices.