Do overseas-students deserve higher salaries?

The topic of appropriate salary for overseas-educated students (or overseas-students) is a concern for industry especially in emerging markets such as Vietnam. On the one hand, companies struggle to find qualified talent to fill vacant positions. Yet, companies are faced with new-graduates expecting higher salaries.

The population I am referring to are those Vietnamese students who go abroad for their university education. These are not the overseas-Vietnamese, born or immigrated overseas but, those who were born in Vietnam and studying abroad. The overseas-students apply through scholarship programs or self-fund the overseas education through financial support from parents or other means. Many graduates are choosing to return home to Vietnam after completing their degree program.

Graduates returning home have an expectation of higher starting salaries. On average, overseas-students expect 67% more then their local counter-parts. These students tend to feel they deserve more for having studied abroad, whether it is from USA, UK or Australia. They believe that employers should value the overseas experience. Others feel that their internships or other extra-curricular activities have a certain value compared to locally educated students who do not have the same exposure.

This expectation is a dilemma for industry. A colleague and I recently conducted a simple survey in an attempt to understand company practices versus student expectations. We sent a survey consisting of 10 questions to HR professional and spoke to company HR staff directly. In addition, we searched online forums for a glimpse into public discussion. The results are a mixed.

We did not find any consistent practice when it comes to compensation policies for overseas-students. Companies who do not differentiate between overseas and local-educated have hiring policies based on demonstrated performance, regardless of where one was educated. They pay the same salary for overseas and local students.

Firms who specifically recruit for overseas-students tend to hire for specific skills not easily found in Vietnam. Examples include finance analyst and SAP skills. Moreover, the financial market is red hot right. Banks and investment capital outfit pay more then double the going market rate at $600-$800.

However, when we asked if overseas-students demonstrated better work performance it was a different story. Survey response show this cohort do not out-perform their counterparts. Local students’ performance is about the same. This is consistent with my own observations with interns and fresh-graduate student hiring. Perhaps, the only difference is command of the English language.

Companies doing business in Vietnam face real issues dealing with wage-spiral, re-training and retention issues. More and more companies entering the Vietnam market only exasperates the demand for talent and thus, leading to rising salaries. Companies and industry as an aggregate must continue to manage cost to maintain the bottom-line. Firms should consider the following when hiring overseas-students:

  • What is your company’s philosophy towards overseas-students?
    • Do you value their overseas education sufficiently to provide a premium?
    • Or, is it a skills-based differentiator?
  • What are the skills and competencies required by your company, which is a gap for local students?
    • Are the skills gaps, if any, trainable to narrow differences?
  • What are the longer-term implications of higher salary rates?
    • Fixed compensation costs and equity issues with staff who are experienced-hires.
  • How do you sell the company’s total-compensation including, training and other development opportunities?
    • Many new graduates (including overseas) do not understand value of longer-term career planning.

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