Global engineering firm WorleyParsons has appointed executive Andrew Wood to replace outgoing chief executive John Grill as it expands into the developing world amid high costs in Australia.

While 75 per cent of the company’s employees were based overseas, Mr Wood said fewer functions were now being performed in Australia due to higher labour costs.

“We are still utilising the capability we have here to address the local market where it can remain competitive and we are continuing to expand our business in other parts of the world,” Mr Wood told reporters on Friday.

“But that support is having to come from other centres for us to remain competitive.”

He said the company remained committed to the Australian market, but the trend to base employees overseas would continue.

“We will draw from wherever we can to make sure we’re competitive in the market we’re working in,” he said.

The company would continue with its strategy of developing skills around the globe.

Shares in the company closed 45 cents, or 1.8 per cent, lower at $24.99.

Mr Wood, who has been an employee with WorleyParsons for 18 years, will take the job as CEO from October 23, the day of the company’s annual general meeting.

He will be paid an annual cash salary of $1.6 million, plus incentives.

Mr Grill is retiring as chief executive after 40 years with WorleyParsons, but will rejoin the company’s board as non-executive chairman from February 2013.

Mr Grill said Mr Wood was well equipped to take over and the company which was well placed to pursue opportunities, including acquisitions, throughout the world.

“We’ve got a pretty good footprint in the developed world and the opportunities in the areas that we’re involved in will be in the developing world, so continuing to help with our relationships in the developing world will be important,” Mr Grill said.

Volatile commodities prices and political uncertainties throughout the world presented some of the biggest challenges, while market volatility was now greater than five years ago.

“The challenges at the moment are probably as great as they’ve been for a considerable period of time,” he said.

However, the company was responding appropriately to any cutbacks in the mining industry, Mr Wood said.

“At this stage there’s no overall theme.”

WorleyParsons employs approximately 40,000 people in 44 countries.