QUESTION: We are relocating an employee from Bangalore, India, to Indianapolis, IN, with current annual earnings of $25,000. How can the cost of living be so much lower in Indianapolis when everyone knows that India is less expensive?
Relocation Assessor data is collected for a Westernized, mid-management, professional lifestyle in both the Base and Destination locations. This example reports an Indian national being relocated from Bangalore to Indianapolis. We are not using data from an Indian national lifestyle in the Base city; rather, the Base city data is for a Westernized expat (fairly expensive), and the Destination data is for the same lifestyle in Indianapolis.
Another way to think about this is to note that a $25,000 income for a family of 4 would not be considered a mid-management, professional salary in the United States, though in India it would. To do an apples-to-apples comparison for a valid COL differential, we must hold the lifestyle constant in both locations.
