GaWC Research Bulletin 139

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This Research Bulletin has been published in J.R. Bryson and P.W. Daniels (eds) (2007) The Handbook of Service Industries, Cheltenham, UK, Edward Elgar, pp. 409-432.

Please refer to the published version when quoting the paper.


Transnational Work: Global Professional Labour Markets in Professional Service Accounting Firms

J.V. Beaverstock


In 2001 at Doha, the World Trade Organization's (WTO) General Agreement on Trade in Services (GATS) highlighted the need for the liberalisation of trade involving the temporary movement of people to supply services across national borders (termed GATS Mode 4),1

"GATS Mode 4 only covers movement of people supplying services; there are no parallel WTO rules covering movement of people in other areas such as agriculture or manufacturing. And while in theory Mode 4 covers service suppliers at all skill levels, in practice WTO members' commitments are limited to the higher skilled, usually managers, executives and specialists . There are at present no reliable global figures for the size of Mode 4 trade . Nonetheless, the very rough estimates we do have suggest that Mode 4, valued at USD 30 billion in 1997, is the smallest of the services supply defined by GATS' (O.E.C.D., 2003, 2)

For developing countries, when it comes to international trade in services, the liberalisation of labour mobility is pressing in areas such as nursing or information technology, as 'sending people abroad to work temporarily is seen as virtually their only export interest in services (OECD, 2003, 1). In developed countries the liberalisation of trade 'via presence of natural persons (GATS Mode 4)' (OECD, 2003, 2) is also vitally important in services, as economic and technological change continues to increase labour market demand for the highly-skilled in different temporal and spatial contexts. As GATS Mode 4 is the key to liberalising WTO member state immigration legislation regarding the temporary movement of the highly-skilled, for transnational corporations who service markets almost entirely via the export or import of highly-skilled staff, GATS Mode 4 provides the meta-framework for understanding the production of global professional labour markets in contemporary economy. As we shall now see, in advanced producer or professional services, liberalisation of GATS Mode 4 is crucial to economic development and successful global penetration of markets because transnational corporations (TNCs) depend increasingly upon exporting or importing highly-skilled labour into the international market to meet the requirements of their knowledge-hungry clientele.

Professional services, like architecture, accounting, consultancy and law for example, depend almost entirely upon the embodied knowledge of professional staff to create value, and therefore secure both market share and profitability in the firm (see Greenwood and Lachman, 1996). As Greenwood et. al. (1999, 268) suggests,

"The core competence of the professional service firm (PSF) is the expertise and experience of its workforce. The asset base is knowledge and the competitive advantage of the firm is its reputation . The importance of reputation is heightened by the inability of existing and potential clients to assess services in advance of consumption. Decisions on which firm to hire are thus made partly on the basis of perceived reputation, and partly on the personal rapport established between client and . [firm] ... Knowledge-based organisations are thus deeply reliant upon highly mobile professional workers (Greenwood et. al., 1999, 268).

In most, if not all professional service firms (PSFs), the client is 'King' (Maister, 2003). Clients purchase idiosyncratic knowledge, expertise and skills from the firm, where the ability to deliver 'customised' complex business solutions are tightly-bound to the professionalism, experience, performance and reputation of the individual (Greenwood et. al., 1999; Hanlon, 1994; Lowendahl et. al., 2001; Morris and Empson, 1998; Thrift, 2000). Those PSFs which are TNCs seek a foreign presence in an international market to service existing clients and seek new ones (processes which have been discussed in the producer service discourse, see Aharoni and Nachum, 2000; Ascher, 1993; Bagchi-Sen and Sen, 1997; Beaverstock et. al., 1999; Daniels, 1993; Warf, 2001). In PSFs, international offices are repositories for professional staff of all nationalities, including local hires, who physically travel to service clients on-site, and simultaneously work with colleagues in back-client office activities (Jones, 2002; 2003). In short, transnational PSFs have globalised their human resources to manage cross-border client relationships (Bartlett and Ghoshal, 1998) as they deliver their services cross-border through professional labour mobility because such knowledge are not easily tradable in virtual form. Labour mobility is an efficient mechanism to deliver sophisticated and customised solutions to clients, whilst enriching the local office network where tacit knowledge can be transferred (become explicit) through local socialisation (Nonaka and Takeuchi, 1995).

The main argument presented in this chapter is that professional labour markets exist on a global scale in professional services because the physical movement of people intra-firm and between firm and client are key processes which account for the development, management and diffusion of knowledge in cross-border firm-client connections and relationships. The rest of this chapter is divided into four major sections. Section two accounts for the existence of global professional labour markets in professional services. It is posited that global professional labour markets are produced by the planned physical movement of professional staff between international offices and clients, alongside the employment of local hires, business travel and virtual communication systems (e.g. video conferencing). International mobility is accordingly a key globalisation process of PSFs as they service clients in close proximity with their knowledge- and professional-rich human resources. Section three, focuses on the globalisation of professional service accounting firms and explains how they create the conditions for the production of global professional labour markets. Section four analyses research findings that illustrates global professional labour markets in four of the Big-Six accounting firms. Finally, in section five, the accounting study is discussed in relation to the principal conceptual ideas explaining the production of global professional labour markets and several conclusions are reached on the role of international mobility in transnational knowledge management.


Bartlett and Ghoshal (1998) notes that one of the key characteristics of worldwide multi-locational firms is the efficient 'diffusion of knowledge' between subsidiaries (whether wholly-owned, partnerships or franchises). They suggest that in the 'Transnational' firm knowledge is 'developed and jointly shared on a worldwide basis' (Table 1). The key attribute of knowledge development and diffusion in transnational firms is that it is circulated both vertically (up and down from headquarters) and horizontally (laterally between subsidiaries) between all units of the firm. Transnational firms are integrated networks spanning cross-border activities which are sustained by communication and mobility between different subsidiaries and head office (Dicken, 2002; Morgan, 2001). Nohria and Ghoshal (1997) refer to the transnational firm as being a 'differential network' because the organisation is composed of many inter-related linkages and relationships which can be both 'local' (within each national subsidiary) and global (between headquarters and subsidiaries, and subsidiaries themselves).

Global professional labour markets are produced within the transnational firm as an organisational strategy to deliver transnational knowledge management. Firms manage the complexities of knowledge diffusion cross-border in many different ways. One way is increasingly through virtual transfer - e-learning, e-mail communication, informational computer technologies (ICT) or another is via residential training, seminars and outsourcing (Thrift, 1997). Firms, however, still engage in moving people around international offices in order to develop and diffuse knowledge, and best practice, between both business units and clients (Gupta and Govindarajin 2000; Morgan et. al., 2001; O'Donnell, 2000). In order to unpack the production of global professional labour markets in transnational PSFs, two particular discourses will be examined. First, from PSFs, the role of professional labour in producing and diffusing knowledge; and, second, drawing from International Human Resource Management (IHRM), an analysis of why firms use international assignees (which are still referred to as 'expatriates'; see Schell and Solomon, 1997) in contemporary globalisation.

Global Professional Labour Markets in Professional Service Firms

'In recent years there has been an increased emphasis within the management literature on the role of organisational knowledge as a means of gaining and sustaining competitive advantage in the 'post-industrial' economy . which sees employees as embodying the strategic capabilities of the firm, in terms of the knowledge that they possess' (Morris and Empson, 1998, 609).

In PSFs, the strategic resource of the firm is knowledge, embodied in the individual (Maister, 2003; Pritchard et. al., 2000; Skyrme, 1999). Firms create wealth and add-value in capital accumulation through the successful deployment of professional staff who can meet the intrinsic and idiosyncratic business requirements of the client in co-location (Aharoni, 1993; Beaverstock, 2004; Human Relations, 2001). Morris and Empson (1998, 610) use the term PSF in the context of accounting and consultancy to refer to, 'an organisation that trades mainly on the knowledge of its human capital, that is its employees and the producer-owners, to develop and deliver intangible solutions to client problems.' Lowendahl et. al., (2001, 912) agrees with this interpretation of PSFs in the world economy, but goes further and suggests that they, 'represent a growing part of both employment and value creation in western economies' (also see Lowendahl, 1997).

Lowendahl (1997, 20) suggests that PSFs have seven major organisational characteristics, all of which depend upon the knowledge, performance, creativity and reputation of its knowledge-rich work force. First, PSFs employ very high proportions of highly-educated people, who keep abreast with new ideas and innovation through contact with industry-specific research institutes, seminars and scientific meetings. Second, PSFs deliver services which are formulated on professional advice, assessment and diagnosis. Third, PSFs offer clients very high degrees of personalised judgements and in some sectors, professional staff maybe personally held liable for such advice. Fourth, PSFs 'customise' services to meet the exact requirements of clients which result in most work being non-routine or not duplicated to others. Fifth, individuals employed in PSFs are usually trained as members of professional bodies with standardised, certificated qualifications (e.g. The Law Society), but, they can be untrained and uncertified, relying upon other elements in their individual portfolio of knowledge and skills (e.g. creativity in advertising). Finally, and of significant important, 'delivery involves a high degree of interaction with the client representatives, for diagnosis as well as delivery' (page 20).

Professional-client interaction is of the utmost importance for knowledge transfer in professional services. Nonaka and Takeuchi (1995) recognise that socialisation is the vector which translates tacit knowledge into explicit through the process of codification. Without interaction, knowledge cannot be easily transferred within PSFs, and between PSFs and clients, because without socialisation, it cannot be embodied or embedded in different spatial contexts (Hedlund and Nonaka, 1993; Nonaka and Konno, 1998). In geographical circles, the process of 'face-to-face' contact is suggested by many as being a factor of production responsible for knowledge sharing (Sassen, 2001). 'Face-to-face' relationships are a key constituent of the world city financial centre (Thrift, 1999; 2000), the homeland of PSFs. Without face-to-face contact with clients, competitors or regulators, PSFs cannot function because professional staff are required to perform in the market and display their credentials over and above their professional qualifications to court clients and be successful (e.g. trustworthiness; social graces; coherence; reciprocity - see Goffman, 1967; Nohria and Eccles, 1992; Von Krooh et. al., 2000).

Transnational PSFs can only deliver intrinsic services to clients through personal interaction. In international offices, such delivery occurs through the employment of local hires and international staff, who stretch knowledge systems cross-border (Allen, 2000). It is these individuals who produce global professional labour markets in PSFs. In short, but of crucial significance in the production of global professional labour markets, 'the mobility of personnel is widely recognised as a mechanism for distributing tacit knowledge and skills, or human capital across space and time' (Madsen et. al., 2002).

International Mobility and the Firm

Professional staff have always moved within, and between, the international internal labour markets of firms, a process referred to as organisational labour migration (Salt, 1988). But, it is within the realms of management science that such mobility has been scrutinised inter- and intra-firm; synonymous with 'expatriation' (Tung, 1988). Research on expatriation has mushroomed in management science over recent years. American researchers have examined expatriation and international occupational mobility within U.S. firms since the 1960s (1961 saw the publication of the U.S. John Wiley & Co. journal 'Human Resource Management'). Since the 1970s, we have witnessed the emergence of the study of IHRM in 'western' management science, and latterly global business school environs (stimulating the birth of new journals devoted to the subject area - e.g. International Journal of Human Resource Management was established in 1989; Human Resource Management Review in 1990). IHRM research is now intensively investigating all aspects of expatriation (selection, training, adjustment, strategic roles, gender relations, dual career couples, family, repatriation and career development; see Black et. al., 1992; Brewster, 1991; Selmer, 1995), but its greatest asset still remains in explaining why firms need to send professional staff abroad to international subsidiaries.

The organisational strategy to use international assignees (expatriates) rather than local professional staff has always been a great discussion point in IHRM (Schell and Solomon, 1997). Thirty-five years ago, it was Edstrom and Galbraith (1977a-b) pioneering work on expatriation that set the foundations for explaining why cross-border international transfers were prevalent within multinational corporations (MNCs). They suggested that professional and technical personnel were sent to work in MNC international locations for one or more of three main reasons. First, to fill vacancies that cannot be filled by locally qualified personnel because either they are unavailable or because they cannot easily be trained. Second, as a process for developing the international experience of management within the firm because of the necessity to expose junior and middle ranking staff to international business systems; even if locally qualified staff are in plentiful supply. Third, as a corporate policy to develop the organisation as a whole, where international assignments are used to disseminate corporate policy, decision-making and best practice. It is interesting to note, however, that despite many different analyses of expatriation with firms (e.g. Black et. al., 1992), the IHRM specialists have not made any real quantum leaps into refining the explanation for expatriation as many have retained the 'multinational' mode of knowledge development and dissemination (i.e. up and down from headquarters to subsidiaries) rather than taking on board the network relationships of the transnational corporation (Dicken, 2002; Bartlett and Ghoshal, 1998).


Post-Enron and Worldcom, international accounting is dominated by the organisational activities of the 'Big Four': PricewaterhouseCoopers; Deloitte Touche Tohmatsu; KPMG International; and Ernst and Young. By the end of 2002, combined, these firms accumulated a worldwide fee income of $56,261m (more than three times higher than the aggregated income of the next 16 firms) and operated through extensive office networks, each in over 130+ countries worldwide (Table 2; see Figure 1). PricewaterhouseCoopers is the largest accountancy network in the world. At financial year end June 2001, it had a staggering worldwide fee-income of $22,300m, almost double that of its nearest rival Deloitte Touche Tohmatsu ($12,400m), a network of 814 offices in 150 countries and employed 9,200 partners and another 135,300 professional staff (excluding administrative employees) (Table 2). Since the pioneering work of Daniels, Leyshon and Thrift in the late 1980s (e.g. Daniels et. al., 1988; Daniels et. al.,1989), it is still the case that investigating the global organisational strategies of accounting firms is the most fertile approach for explaining the globalisation of accountancy worldwide (see Greenwood et. al., 1999); and therefore the production of global accounting professional labour markets (see Beaverstock, 1991; Hanlon, 1999).

Dunning's (1988; 1993) 'eclectic' ownership-location-internationalisation' (OLI) paradigm is one explanatory framework which can be used to understand why business service firms engage in international production. Dunning (1993) notes that such firms go abroad to service the interests of their clients who have already entered foreign markets (client following) and to service new foreign and domestic customers (market seeking) (Erramilli and Rao, 1990). The crux of Dunning's (1993) argument is that the firm will only engage in international production if it has a competitive advantage with respect to ownership, location and internalisation in that particular market (Table 3). With respect to the globalisation strategies of international accounting firms, Dunning (1993) observes that they will only engage in international activities cross-border if they have specific advantages regarding: ownership (e.g. access to transnational clients); location (e.g. on-the-spot contact with clients); and internalisation (e.g. limited interfirm linkages). Of great significance in Dunning's (1993, 272) use of the OLI paradigm is the form of entry into the market for accounting which is as a partnership or wholly owned subsidiary operating through the office network (see The United Nations Center for Transnational Corporations, 1988).

The principal organisational mode for globalisation in professional service accounting firms is though a wholly-owned presence represented by the international office (Bagchi-Sen and Sen, 1997; Radebaugh and Gray, 1993). Those accounting firms that have gone global over the last 30 years have done so through combinations of organic start-ups (i.e. opening new offices in international markets) and/or aggressive merger and acquisition activity (i.e. buying other firms) (Beaverstock, 1991; Daniels et. al., 1989; Rajan and Fryatt, 1988). In both instances, the major organisational outcome of the globalisation of accounting has been concentration in the international market. A small group of firms (the 'Big-Six') oligopolies fee income generated from extensive office networks worldwide because clients expect to be serviced in proximity by professional, highly-qualified personal either within the confines of the firm, or within their own company infrastructure (normally undertaken by staff on secondment) (Beaverstock, 1996; Hanlon, 1994).

Chartered accountancy is very much a client-focused industry (Hanlon, 1994) as, '.the work is knowledge intensive and requires employment of highly-trained professionals .[and] . requires that the knowledge professional be located near the client and that he or she practise marketing and service delivery at one and the same time' (Greenwood et. al., 1999, 269). Accordingly, transnational accounting firms sell intricate expertise and professionalism in auditing, taxation, financial services, corporate finance and recovery, e-commerce solutions and forensic litigation to other transnational, national and local clients on a global stage (Table 4). Each firm's international office acts as a global knowledge resource of professional staff who have the capacity to provide global business solutions to clients at global, national, regional or local scales. For accountancy, the principal factor responsible for its globalisation is the requirement to have professional staff engaging in 'face-to-face' contact with clients or being able to provide generic and intrinsic expertise in non-client facing projects in the office, but in physical proximity to the client when called upon (Beaverstock, 1996; Grey, 1998). As Greenwood et. al. (1999, 269) comments, 'these professionals represent the asset stock of the firm. The firm is dependent upon these workers.' Like with other PSFs (for example law, see Warf, 2001), accountants need to be in close proximity to the client, supplier or support services (e.g. legal firms), accessible and purvey an aura of trust, credibility and sheer competence at all times in all markets. Partners are responsible for managing teams of professional staff (seniors, post-qualified and qualifying), generating fee income and bringing into the firm new clientele - a process which often requires significant networking activities and often cross-border travel (Beaverstock, 1996; 2002; Hanlon, 1994; 1999). Seniors, post-qualified and qualifying staff can be both at the client interface or working in project teams away from the direct gaze of the client, but in either case, it is the combined knowledge, expertise, professionalism and competences of the accounting firm's professional staff which builds the reputation of the firm, and ultimately determines its growth, profitability and survival in the international market (Morris and Empson, 1998). Once the illegal accounting procedures of Arthur Andersen & Co.'s professional staff in Texas made the global news stands in 2002, the magic qualities of trust, credibility, competence and confidence were instantaneously destroyed, and in a real-time domino effect collapsed worldwide. As Greenwood et. al. (1999, 269) laments, 'knowledge workers are mobile assets, and could easily damage the reputation of a firm either by defection of by engaging in inappropriate behaviours (e.g. low quality service) while with the firm.'

The existence of global professional labour markets within large accounting firms (partners and other professional staff - seniors, post-qualified and qualifying, excluding technical support) is, therefore, an essential organisational strategy in their existence as PSFs. Those accounting firms with 'world firm' status in terms of office numbers and geographical representation, and transnational clients (institutions, firms and nation-states), operate organisational structures in partnerships or wholly own subsidiaries which are characterised by homogeneity with respect to business practice, standards and culture across all international boundaries (Hanlon, 1999). An important mechanism with which large accounting firms produce and disseminate knowledge, expertise and competences within their global organisational structure is through the employment of large-scale global professional labour markets, operating out of extensive international office networks (Beaverstock, 1996).

Within large accounting firms there has been continual growth in the professional labour market. In 1983 the top ten leading global firms employed 191,328 total professional staff worldwide and by 1988 this figure had increased by 17 per cent to 224,461 in 4,099 offices (International Accounting Bulletin, 1983; 1988; see Figure 2). Remarkably, five years on, the top ten leading firms employed a staggering 331,286 total professional staff in 5,446 offices (75% more than in 1983 and 48% more than in 1988, respectively). But, between 1993 and 2002, the market stablised and the number of total professional staff employed by the top ten world firms increased by 16 per cent, from 331,286 to 383,712 (International Accounting Bulletin, 1993; Accountancy, 2002). During the same ten year period, the firms' international office networks increased by only one per cent, from 5,446 to 5,513 (see figure 2). It must be noted, however, that the 2002 data excludes Arthur Andersen & Co. for both total professional staff and office networks.

Both Beaverstock (1996) and Hanlon (1994; 1999) agree that the expansion in the total global professional labour markets for large accounting firms was the key to their success in globalisation during the latter quarter of the Twentieth Century. As firms established new organic starts or acquired offices through merger and acquisition activity, the domination of the global six firms, and more latterly the Big-Four, provided the imputes for professional labour markets in accountancy to begin to operate on a global scale through the organisational strategy of international assignments, secondments or transfers within and between the international office networks of the large world firms. Beaverstock (1991; 1996) noted that all the Big Six regularly moved partners, seniors, post-qualified and qualifying staff cross-border for more than one year: to check skill shortages in newly opened or extremely busy offices; to manage departments and or offices; as part of structured career development programmes; to fire-fight and trouble shoot; and, as a training device for international staff to circulate between branch offices and the firms HQ (in London, Amsterdam, New York or Chicago). Hanlon (1999) also noted that during the late 1980s and throughout the 1990s, the Big Six used international migration of professional staff between offices to recruit graduates into the firm and retain post-qualified staff under extremely tight labour market conditions. But, more importantly, Hanlon (1999, 206) suggested that all the Big Six used the international migration of professional staff as a mean of, 'selling themselves as 'world firms' to clients.'

Clearly, accountancy as a professional service is dependent upon the professional labour market to produce, disseminate and reproduce generic and specific knowledge, expertise and competences within, and between, international office networks. Of course, such labour market characteristics can be fulfilled by the employment of national domiciles who have the appropriate professionalisation, expertise and competences, at all professional and managerial scales (managing partner, partner, senior, post-qualified, qualified, qualifying), but to have the professionalism, expertise and skills to work for one of the Big Six is another matter (Coffey, 1994; Grey, 1998). In the United Kingdom in 2002 there was an estimated qualified labour supply of 236,000 individuals certified by the professional bodies (International Financial Services London, 2003). What is of great interest in the analysis of qualified membership data for accounting was that 26 per cent of the total qualified members (83,381) worked outside of the United Kingdom in 2002 (Table 5). Increasing, the largest ten accounting firms have significant percentages of their qualified staff working outside of their country of permanent residence, whose transnational working practices represent an important strategic organisational device to ensure the firms' continued world status, transnational knowledge management and dissemination and career development (Hanlon, 1999). Accordingly, what is not in dispute is that global professional labour markets within accounting PSFs are reproduced through international migration. But, what is of significant importance is to unpack the firm processes which have created the existence of global professional labour markets in accounting PSFs which are now increasingly being characterised by mobility rather than migration, frequent cross-border business travel and transnational embodied and virtual working practices, aided by fast-jet travel, information technology and the internet age.


Case study research has always been a chief methodology to understand the organisational strategies of service firms in the world economy (Daniels, 1993). But, before the interview survey is reported, the role of global professional labour markets in creating value for networked firm-client relationships are discussed within PricewaterhouseCoopers (PwC).


On the front cover of PwCs (2003) 2003 Global Annual Review the strap-line is 'Connected Thinking.' Samuel A. DiPiazza Jr., the Chief Executive Officer of PwC International Ltd, in his opening address 'Staying Connected' makes the observation that,

'having highly skilled people . is crucial to providing high-quality service. We remain committed to our people and our values: excellence, teamwork and leadership. Our global connectivity enables our people to consult with one another and to search for better answers across national borders. This is our style, and its an effective one . We believe the term 'Connected Thinking' most clearly describes our unique global network of people, values, services and purposes.' (page 3).

The key message from DiPazza's statement is that PwCs ability to create trust, value, quality and integrity for clients is built very much around the knowledge and expertise of its global professional staff. It is recognised as a, 'truly global organisation with member firm offices in 768 cities in 139 countries' (page 6) because it is able to offer clients, where ever in the world, 'industry knowledge and professional expertise to identify, report, protect, realise and create value' (page 8). At the fulcrum of this mission statement is the ability to deliver breath and depth in business solutions to client relationships through the expertise of its global professional workforce (7,879 partners; 87,727 client service staff; and 27,214 practice support staff in 2003).

PwC adopts a 'Global Deployment Programme' (GDP) to ensure that the worldwide network of firms 'Stay connected', with respect to both corporate philosophy and client expectations. As the PwC is composed of legally separated and locally owned and managed firms around the globe, the GDP 'creates the organisational glue at every level, from individual client teams to global lines of service and industry groupings' (page 24-25). In essence, all of PwCs professional staff remain connected to the ethos of the international firm network through the GDP which connects individuals and teams virtually through e-learning, industry-specific residential conferences and travel, but more importantly, through the physical mobility of professional staff between international offices (and firms) in the worldwide network.

PwC uses the international mobility of professional staff to, 'build understanding of each others' cultures and working environments and sustain the formal and informal networks that connect the . [PwC] . community worldwide' (page 25). The worldwide firm supports three types of international deployment streams:

  1. Long-term assignments of more than one year that are strategic importance to the worldwide firm;
  2. Short-term tactical or strategic assignments; and,
  3. Tactical deployment for purpose of individual professional development.

In 1999/2000, the firm had 5000 professional staff on all three international deployments (almost 5% of its total global professional staff) (Personal Communication, 30th June 1999). The 2003 Global Annual Report noted that in total some 2,300 partners and professional staff (about 2% of the professional workforce) were involved in international assignments of the three types from six months to five years in 76 countries. Approximately 1,040 of these professional staff were involved in 'Long-term assignments' to service clients and further cultivate the strength of the PwC worldwide network of firms (see Figure 3), where almost a quarter were deployed to the USA (a pattern not out of line with other studies: Beaverstock, 1996). The remaining 2,300 were involved in much shorter time scale 'Short-term' or 'Tactical deployments'. In 2003 PwC had significantly increased the number of staff who were sent on 'Short-term' and 'Tactical' assignments to 'give more people the opportunity to build international experience' and for the Fiscal Year 2004, PwC will increase again the mobility of those working on short-term assignments (2003 Global Annual Review).


The empirical study reported in this part of the chapter was collected from secondary sources and semi-structured interviews with senior partners responsible for international human resources in three of the Big Six accounting PSFs in 1999/2000 (pre-the collapse of Arthur Andersen & Co). All firms interviewed were legally organised as international networks composed of separately owned member firms or partnerships in different countries or regions of the globe. Each international network was managed by an international board with elected partners from each member firm or partnership. All human resource partners interviewed were responsible for moving professional people into and out of their member firm or partnership, usually the UK. All firms interviewed, firm-specific official and unofficial sources are anonymised to protect confidentiality. It is the economic geography of these global professional labour markets, produced through the cross-border deployment of international human resources, that will form the basis of the proceeding discussion.

The Corporate Rational for Producing Global Professional Labour Markets

Like with PwC, an analysis of the accounting firms' Annual Reports and World Wide Web sites depict an industry which is constantly projecting the professional expertise, trust, experience and credibility of its partners and professional staff as being the prime resources of the firm in the global accounting business. Of course, this is not a surprising finding as these are knowledge intensive PSFs where value is created by the competence of the firm's human capital in client networks and trust-relationships (Hanlon, 2003). At interview with all firms (A1, A2, A3) the key message was that they all still required professional labour to be assigned to international offices for short (less than one year) or longer term (greater than one year) periods, despite the increasing use of business travel, video-conferencing, e-learning and other ICT. As one partner (Firm A2) commented,

'It seems like a paradox in a way because you would think that we've got telecoms, we've got video conferencing facilities, etc., and why do you need to send someone abroad . in order to actually make it happen . to set it up and do it. The firms wants to globalise and increase its links around the world and you want people to gain international experience.'

The firm transfers knowledge, skills and competences embodied in individuals to either its own international offices or to those of other member firms, or to specific clients. Simultaneously, the worldwide firm facilitates international mobility of its professional workforce between member firm offices in order to instil a global cohesion for the execution of corporate policy on the global stage. International mobility is an organisational strategy which promotes the worldwide firm's global reach which cannot be underestimated in projecting the global corporate image of the firm. As Firm A3 noted,

'It is very much seen as an international firm now. They are encouraging global movements, encouraging that we all work together as one big firm, because inevitability as we work together we are going to be a global unit for all our clients. We will have skills and experiences from all over the world that we can offer them.'

Within these three Big Six firms, global professional labour markets are produced and reproduced through four major organisational strategies:

1. Strategic, business-led mobility - Firms post professional accounting staff cross-border within and between member firms of the network in order to bring new or duplicated knowledge, expertise and competences to a particular time-space point of demand. International assignees work for a range of different clients in their specialist area. Partners are usually sent on an international assignment to head-up newly established offices or departments in established offices, or to manage project teams in long-term client based relationships. For example, all of A2's new office start-ups and growth through mergers and acquisitions in eastern Europe, post-Soviet states, Africa and Latin America, have been managed by partners from its United States of America (USA) major offices. In contrast, post-qualified accountants, seniors or managers are sent to international offices within or outside of the member firm not to manage or create the office practice, but bring specific specialist expertise to client-facing and back-client project teams as required. For all firms, this was the major rationale for posting professional staff to international offices. Just as partners are sent to start-up new office or departments, post-qualified staff are sent to the same destination to work alongside locally qualified staff. Equally, post-qualified staff are sent to work in teams managed by host qualified partners. Sending professional staff to international offices within or between member firms is required because all the firms, 'need to have people who are mobile, people with the right skills . its enhancing the skills and abilities of our people to meet client needs.' (Firm A1). For example, each firm assigned audit and taxation post-qualified staff to meet the labour market demand for these skills in international offices as local regulatory frameworks dictated different accounting 'seasons' for client end of financial year reporting - a process which accounts for substantial flows of accounting staff in all firms to Australia, New Zealand and North America. As Firm A2 comments, 'we do a lot of moves . in the tax division, where different countries have different tax years, the busy season, you move people around the world to cover everybody's tax season.'

2. Management development programmes - Each firm executed a standard international network wide international assignment policy for both business strategy and career development. Global wide international assignment programmes were used as a mechanism to standardise mobility between member firms, regulate usually high volumes of movement and provide equalised 'expatriate packages' (e.g. adjusted salaries; tax harmonisation; subsidised accommodation) within the international network. Firm A1 for example has the International Mobility Assignment Program (IMAP) directed from its New York office. All international assignments in the firm, except business travel and business commuting, is regulated through IMAP. IMAP is divided into three programmes: international secondments (where staff remain employed by the member firm, even when working for the client); international transfers (where staff are employed by other member firm offices); and international exchanges (quid pro quo exchanges with member and non-member offices used for training and career development for qualifying staff). In a similar vein, Firm A3's 'Global Staffing Policy' is organised into the same three international programmes as Firm A1: career development (transfers within the member firm's international office network); secondments (to clients and other member firm offices); and, exchange (for training). The leading ten global firms have always sent professional staff on international assignments through the organisational lens of the management development programme (Beaverstock, 1991; 1996; Hanlon, 1999).

3. Secondments to clients - All three firms have transnational clients who expect the firm's staff to represent their interests worldwide. Firm A3 sends the majority of its assignees outside of the firm to service the cross-border requirements of its clientele, 'we have clients all over the world . and we have to send our staff to these places . to service our clients.' Firm A2 agrees and noted that,

'there will be a specific requirement for a skill set which is not available locally. It can be because the client is UK based, knows the people that have done work for them here in the UK and wants to move the same people to wherever the other location happens to be.'

In all three firms, accounting staff physically worked in their clients' offices auditing their books or providing taxation or other advice (corporate, insolvency, expatriate). In addition, many consultancy based projects require specialist staff to be ensconced with the client, but in real-time communication with their home or closet international office.

4. Cross-border projects, business travel and business commuting - Increasingly the work process in accountancy is client-project based (for one, two or three or six months), involving frequent trans-border circulation of both accounting personnel and management consultants. All firms regularly engaged professional staff in very flexible and time-specific cross-border working activities. Four major types of hyper-international mobility can be identified. First, is business travel between office and client, or client and client. Typically, professional staff would engage in such cross-border activities at least once or twice a month, or for some, on a weekly basis depending on the requirements and location of the client, or strategic labour shortage in any receiving office. All firms had staff moving within Europe (e.g. London to Paris; Frankfurt to London; Amsterdam to Paris, etc., ), but also between London and North American cities and visa-versa, especially (Chicago, New York, Boston, Los Angeles). Second, is business commuting, characterised by frequent travel back 'home' during an international assignment or project. For example, Firm A3 has US professional staff in London who work in the city three weeks in four and then return 'home' for one week and then return to London for another three weeks etc. (three weeks 'on', one week, 'off'). Third, is directly client-led. These are short-term, frequent assignments to clients which could last from a few days to one week to six months, but are also characterised with business travel and commuting back to the sending office. For example, Firm A2, has a group of staff supporting clients (physically located in their offices), but returning to the sending office at least once a week or month (for a few days) to deal with the client's UK interests. Fourth, is international hot-desking in member firm offices, which occurred within specific pan-regional contexts (e.g. within Europe and between Europe and eastern Europe; between Australia and New Zealand). For example, all firms frequently moved staff between pan-regional international offices to meet very short-term skill labour market demands as they were identified in specific client relationships and projects. Here, the crucial point is that these personnel were not tied to any one specific client or project like many, but were just brought into the firm-client relationship or project when specific knowledge and expertise was required in high volume, resulting in very, very short term hyper-mobility between international locations, clients and member offices.

The Geography of Global Professional Labour Markets

All firms had cadre's of internationally mobile professional staff, representing anything between 3 and 6 per cent of the total number of professional staff in the global network (Table 6). These data are misleading however, because they exclude those personnel who move very frequently, especially management consultants, who are not 'classified' as being on an international assignment (the traditional expatriate). All of the 5,000 to 6,500 staff on international assignment in Firms A1 to A3 were fee earning staff, liasing directly with clients either in-office or within the client's premises. Given the transnational organisation of these accounting firms, where organisational strategy flowed both horizontally and vertically within the firm's internal international structure (Bartlett and Ghoshal's [1998] transnational model - see Dicken, 2002), in all instances, these staff worked alongside locally qualified professional staff and accountants of other nationalities. In all cases, the global professional labour markets of the major pan-regional offices within these firms, were characterised by managing-, senior- and junior- partners, and post-qualified staff and trainees of many nationalities. Exceptions to these office labour market dynamics was where firms had recently open new offices in eastern Europe or Asia, and then they were managed by an international assignee in the first instance, who worked alongside local hires.

Specifically, the firms' major world city and capital city offices were the major locations for professional staff numbers and, therefore, international assignees which reproduced the 'global' in this labour market group, thus corroborating previous research which indicated that world cities provided the strategic locations for global professional labour markets in PSFs (Beaverstock, 1996; 2002; Hanlon, 1999; Sassen, 2001). As all these firms had a headquarter office within the member firm, London in the case of the UK member firms, substantial flows of accounting international assignees flowed from London to the headquarters of other member firm's within the international network. Firm A3's comments summarised very succinctly the locational dynamics of this labour market,

'The US, used to be just New York but now it is all over, every office, if you are looking at consulting, they are all going to the West coast, if you are looking at financial services, the majority are going to Boston, Chicago, New York, your big financial areas, if you are looking at areas of tax, they go all over. The other big recruiter is Australia, Sydney and Melbourne both being big financial service centres, they are probably our biggest recruiter. New Zealand, Auckland, Wellington, they are quite small offices, so they have quite a big expatriate program in comparison to the size of the office. Europe, we send people to France, Germany, eastern Europe. Canada is another big recruiter. Then you have got the islands, the financial services big-time recruiters are the islands offshore, so you are looking at Bermuda, British Virgin Islands, Cayman Islands, they are financial service hubs, anybody that you speak to that works in those areas will know what they do best is insurance or banking.'

Accordingly, substantial two-way flows of personnel were identified between London and cities in: the USA (e.g. Boston, Chicago, New York); Europe (e.g. Amsterdam; Paris; Brussels; Frankfurt; Madrid; Stockholm; Copenhagen; Rome); eastern Europe and beyond (e.g. Moscow; Budapest; Prague; Warsaw); Middle East (e.g. Manama); Indian sub-continent (e.g. New Delhi; Bangalore; Mumbai); Far East (e.g. Singapore; Hong Kong; Ho Chi Min City); Australasia (e.g. Sydney; Auckland). Despite office density and proximities in western Europe, international assignments are still of importance in this region, as Firm A2 notes,

'we have seen people moving much more across western European boundaries, borders, Germany to Italy, France to Spain, Switzerland to the UK. Everybody is much more mobile, much more globally aware . Borders are not what they once were.'

In most cases, international assignees and other internationally mobile staff circulated between the member firm's largest offices (ranked by fee income and professional staff), which act as the focus point for servicing transnational and national clients in the specific county market. In these offices, international assignees were principally auditors or taxation specialists. In almost all firms, auditors and taxation specialist made up the majority of international assignments which were of an expatriate nature (i.e. for more than one year).

Two other important points can be made about the locational dynamics of these global professional labour markets. First, much of the project-based cross-border consultancy work was undertaken directly with the client, which could be in located in any city, or elsewhere. However, as many of these firms' transnational clients are also located in world cities, especially those in related financial services, e-commerce, legal for example, these locations are also the most significant destinations for those involved in frequent, very short-term international mobility. Second, given the very high volumes of cross-border business travel and commuting being undertaken between continents and within continents, all firm's stressed that their professional staff reached clients wherever their location. Consequently, many situations occurred in all firms where professionals were assigned to an office in one city, but then move in frequent cross-border business or commuting travel between both offices and clients.

The research findings highlighted an interesting dimension to the operation of these global professional labour markets. In recently opened organic offices or those created through merger and acquisition activity (e.g. new ventures in eastern Europe or east Asia), initial line-management would be delegated by an international assignee (managing partner), who hired locals and also hired international assignees (fee earning professionals) from the member firm. In established offices worldwide, the demarcation between international assignees and other professional staff were more complex and horizontal in scope. International assignees worked alongside local hires and assignees of other nationalities in departments headed by local managing partners and, or international assignees alike. Those professional staff who were seconded directly to clients in their organisations had high degrees of autonomy, but were in constant dialogue with their line-manager, the managing partner in the sending office. Those professional staff who were constantly involved in business and commuting travel entered working relationships with both clients and local hires and other international assignees. In sum, accounting global professional labour markets: function at different global-local scales; are hyper-mobile and flexible with respect to location and time-scale; are composed of combinations of local and international staff; and include the so-called frequent flyers - business travellers and business commuters, who work alongside locally contracted foreign nationals (as in the case of many European Union citizens working throughout the single market).


All of the leading accounting firms perpetuate professional labour markets at the global scale through the circulation of partners and qualified staff between international office locations, and the employment of local hires in situ. The global circulation of professional staff is a business system used to transfer knowledge, expertise and professionalism cross-border, or in the words of Bartlett and Ghoshal (1998, 75) for 'the development and diffusion of knowledge . worldwide.' Since the accountancy industry is very much a client-focused and client-led sector, where many inherent characteristics of PSFs are relevant (Greenwood, et. al., 1999; Morris and Empson, 1998; Hanlon, 1994; Lowendahl, et. al., 2001), the existence of global professional labour markets are essential to service-clients both locally and in cross-border relationships. In short, fee-income in the accountancy industry is sought, created and generated in particular through the knowledge, expertise, professional competences and skills of certified staff. Accordingly, a vital globalisation strategy of accounting firms, like other PSFs, is to reach transnational clients through professional labour markets. Evidence from the firms supports the findings of both the PSF and IHRM specialists, and provides explanations as to why accounting firms reproduce their global professional labour markets worldwide through international assignments and mobility. All firms assigned professional staff to international office networks, within and outside of the member firm, to transfer knowledge, expertise and skills to particular time-space points of demand in the business cycle. International assignments were used to manage offices or departments, add global expertise to local teams or to just simply add numbers of certified staff to meet high volume demand (e.g. taxation busy seasons). Equally, assigning staff between international member firms was used a mechanism to share best practice and perpetuate the global ethos of the international firm. Moreover, given the relatively high number of international assignees circulating between the international offices of member and non-member firms, all firms regulated these professional labour markets with international management development programmes. Although, all movements were dictated by client need, firms moved staff within the regulatory framework of the international network firm to standardise 'expatriate packages' and employment contracts. More interestingly, given that many international assignees moved within well established office networks (USA, Europe, Australasia etc.), receiving offices were cosmopolitan in both nationality and line-management. In contrast, in some emerging markets (e.g. eastern Europe), new starts reflected the traditional 'multinational' operations - offices headed by international assignees and the employment of both international assignees and local hires. In short, this group of accounting firms actively continued to use international assignees in conjunction with local staff and cross-border commuters and business travellers, to add-value by servicing clients in close physical proximity either in the office environment or directly liasing with the client. International assignments in accounting remain an organisational strategy of the firm because in many instances capital can only be accumulated through the embodied knowledge, expertise and professional competences of fee earning staff, especially where the client expects physical onsite servicing or co-location in international financial centres (Table 7).

But, perhaps one of the most significant findings from this research is the prevalence of very short-term international assignments and the nomadic modes of international mobility which also constitutes global professional labour markets. The research constantly reported on the increasing frequency of short-term assignments of one year or less which were directed specifically at alleviating time-space labour market demands (e.g. taxation, audit). Of great significance, however, was the reportage of high incidences of very frequent and very short forms of transnational mobility. Professional staff are now involved in international projects through business travel rather than the traditional assignment, or business commuting involving highly flexible cross-border working arrangements. Distance is no longer becoming a barrier for working patterns. In a globalised world, where these firms service the business needs of almost all of the Fortune 500 or FTSE 100 companies, the transnational accounting firm is expected to have a transnational, highly-mobile, highly-professional workforce which can attend cross-border client meetings or provide expertise and advice in-house or with the client to produce global business solutions. Being a professional service transnational firm in the Twenty-First Century is all about delivering best practice and offering business and diagnostic solutions at the global scale.

In conclusion, I would like to posit that global professional labour markets exist within PSFs, like accounting, to develop, manage and stretch knowledge systems and competences from the core of the firm to subsidiaries, and just as importantly, between all subsidiaries of the firm in a network symmetry. In accounting many traits of professionalism and certified knowledge are embodied and personal interaction and embedded socialisation play important functions in dissemination to clients. The existence of global professional labour markets are no organisational accident or left over from the multinational organisation of the world economy. Global professional labour markets, constituted by international staff circulating between office units and local hires dealing with national and international business, are vital actors in the process of stretching knowledge over space. International assignees, or project based cross-border travellers, or business commuters all culminate together, with local hires, to perform geographies of 'transnational knowledge management' (Bartlett and Ghoshal, 2000) in highly-spatialised environments - the world cities (Sassen, 2001). In professional services where knowledge systems cannot be easily traded because that 'face-to-face' interaction is required and expected by clients to add-value and deliver business solutions, sending staff cross-border is an essential business requirement of the firm.

As to the future, PSFs will expect their qualified staff to be not only highly-professional and knowledge rich individuals, but also hyper-mobile, globally flexible and completely client-focused. PSFs will also seek GATS Mode 4 to be executed in full and thus providing complete liberalisation of trade involving the temporary movement of high-skilled persons which will allow unrestricted access to service markets throughout WTO member states. Firms will expect their staff to be able to operate in a borderless business environment where global mobility is a given part of being a Big Four professional, but without it, professionals are cast away to find employment with the much smaller firms (Grey, 1998). Transnational firms offering global-local business solutions, whether in taxation advice, mergers and acquisitions, e-commerce or forensic litigation, will be expected by their clients to supply the most well qualified individuals to undertake such tasks irrespective of their point of demand - in cross-border, hyper-mobile and flexible relationships.


This project was funded by the U.K.'s Economic and Social Research Council's Transnational Communities Programme (Award L2144252001). The research support of Dr. James T. Boardwell was very much appreciated.


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1. Mode 4 is defined as 'the supply of a service by a supplier of one WTO member, through the presence of natural persons in the territory of another member on a temporary basis . Mode 4 service suppliers generally: gain entry for a specific purpose (e.g. to fulfil a service contract); are confined to one sector; and are temporary . the time frame .on Mode 4 ranges from several weeks up to 3-5 years' (OECD, 2003, 2).

Table 1: Organizational characteristics of the transnational

Organizational Characteristics





Configuration of assets and capabilities

Decentralized and nationally self-sufficient

Centralized and globally scaled

Sources of core competences centralized, others decentralized

Dispersed, interdependent, and specialized

Role of overseas operations

Sensing and exploiting local opportunities and strategies

Implementing parent company competencies

Adapting and leveraging parent company

Differentiated contributions by national units to integrated worldwide operations

Development and diffusion of knowledge

Knowledge developed and retained within each unit

Knowledge developed and retained at the center

Knowledge developed at the center and transferred to overseas units

Knowledge developed jointly and shared worldwide

Source: Bartlett and Ghoshal (1998, 75)

Table 2: International accountancy networks, 2001/2 (ranked by fee income $m).


UK member firm

Fee income



Member firms


Prof. Staff









Deloitte Touche Tohatsu

Deloitte & Touche







KPMG International








Ernst & Young

Ernst & Young






BDO International

BDO Stoy Hayward







Grant Thornton Int'l

Grant Thornton







RSM International

RSM Rhodes Rhodes







Horwarth International

Horwarth Clark Whitehill







Moores Rowland Int'l

Moores Rowland







Baker Tilly Int'l

Baker Tilly







Nexia International

Smith & Williamson







AGN International

More than one member







HLB International








Moores Stephens Int'l

Moores Stephens







Kreston International

More than one member








More than one member







MacIntyre St. Int'l








BKR International

BKR Haynes Watts







CPA Ass., Inc

MacIntyre Hudson







PKF International















Source: Accountancy (2002)

Table 3: Ownership, location and internalisation advantages in transnational accounting/auditing corporations

Ownership (competitive advantages)

Location (configuration advantages)

Internalisation (coordinating advantages)

Organisational form

Access to transnational clients

On-the-spot contact with clients

Limited interfirm linkages

Mostly partnerships or individual proprietorships

Experience of standards required

Accounting tends to be culture-sensitive

Quality control over (international) standards

Overseas subsidiaries loosely organised, little centralized control

Brand image of leading accounting firms

Adaptation to local reporting standards and procedures

Oligopolistic interaction

Government insistence on local participation

Few joint-ventures, little inter-firm trade

Source: adapted from Dunning (1993, 272)

Table 4: Main services provided by professional service accounting firms



Mode of Delivery


The analysis of client income/expenditure balance sheets. The mainstay of fee income for accounting firms (37% in 2003)

Client or office


Firms advise clients' how they can best minimise their tax burden while complying to country tax regulations (29% of fee income in 2003)

Client or office

Corporate Finance

Firms provide advice to clients on mergers and acquisitions, corporate restructuring and debt management (8% of fee income in 2003)

Client or office


Firms advise clients, creditors on bankruptcy and business recovery services, and administer bankrupt businesses (accounted for 10% of fee income in 2003)

Client or


Consulting (I.T., e-commerce, human resource) business accounted for 9% of income in 2003



The newest service provided by the leading firms. Firms acquired legal firms in member countries to provide complete professional services and complete with London/New York firms (less than 5% of fee income in 2003)


Source: adapted from the International Financial Services London (2003)

Table 5: Qualified membership of accounting professional bodies in the United Kingdom, 2002

Professional body




Outside UK






























Institute of Chartered Accountants of England and Wales (ICAEW).
Institute of Chartered Accountants of Scotland (ICAS).
Institute of Chartered Accountants of Ireland (ICAI).
Association of Chartered Certified Accountants (ACCA).
Chartered Institute of Management Accountants (CIMA).
Chartered Institute of Public Finance and Accountancy (CIPFA).

Source: International Financial Services London (2003)

Table 6: International assignments in firm professional labour markets, 1999-20001


International assignments in

Worldwide Network

Member Firm














Data for the Member Firm are included in the firm's Worldwide Network, which will include several other Member Firms in their organizational, partnership structure. Thus Firm A3's 2000 international assignees in its Worldwide Network, is composed of 600 originating from its European Member Firm and the remaining 1200 supplied by other world regional Member Firms (e.g. Central and South American).

Source: Fieldwork

Table 7: Dimensions of transfer policies in transnational professional service firms

Reasons for transfers


Fill positions

Develop managers

Develop organisation

Relative numbers.

Specialities transferred.

Location of host.

Direction of flow.



All countries.

Between subsidiaries and between HQ and subsidiaries.



All countries.

Between subsidiaries and between HQ office and subsidiaries.



All countries.

Between subsidiaries and between HQ office and subsidiaries.

Age of assignee.


Nationality of assignee.

Personnel information system.

Throughout career.

Many moves.

All nationalities.

Extensive lists of candidates monitored by personnel in all offices.

Young to middle.

Several moves.

All nationalities.

Extensive lists of candidates monitored by personnel in all offices.

Throughout career.

Many moves.

All nationalities.

Extensive lists of candidates monitored by personnel in all offices.

Power of personnel department.

Strategic placement and distribution.







Source: adapted from Edstrom and Galbraith (1977a, 253)

Figure 1: The international office network of KPMG, 2003 

Figure 1

Source: KPMG Office Directory (available at:, accessed 03/12/03)

Figure 2: Professional labour market and office change in the world's top ten accounting firms, 1983-2002 

Figure 2

Source: Accountancy (2002); International Accounting Bulletin (1983; 1988; 1993)

Figure 3: The distribution of professional staff on long-term assignments in PwC's worldwide network or international member firms, 2003 

Figure 3

Source: PricewaterhouseCoopers (2003)

Edited and posted on the web on 16th April 2004

Note: This Research Bulletin has been published in J.R. Bryson and P.W. Daniels (eds) (2007) The Handbook of Service Industries, Cheltenham, UK, Edward Elgar, pp. 409-432.