Remote Teams – How to Prepare for Recruiting in Foreign Markets
Hiring the best possible remote teams improves a company’s chances of initial and ongoing success. However, the complexities of recruitment, onboarding, human resources, and compliance increase with expansion.
Fortunately, tried and true strategies can reduce complications and smooth the process for hiring your remote teams. Your company can access the most experienced and suitable candidates for your business, remain compliant, and thrive in a new market when you know your options.
Which Pathway Is Right For Your Company?
Your company has several pathways available when expanding into a foreign market. The first and most well-known is to establish a legal presence through a foreign subsidiary of your brand. Your company then hires local employees for your remote team from the regional talent pool.
Business can also send existing employees on overseas reassignments once they have legal status, but this presents many more challenges and risks. For instance, the requirements for an extended business trip of a month or two varies greatly from an ‘expatriate’ assignment lasting multiple years. Immigration law, visas, residency, housing, safety, compensation, benefits, and employment laws are just a few of the many considerations when you establish remote teams.
A foreign subsidiary might be the right fit for a large company that has already done marketplace, cultural, regulatory, and financial due diligence. They’re fully committed to expansion, even though it could take up to six months to finalize the paperwork and could cost up to USD 25,000. They’re also committed to ongoing reports and ready to monitor regulatory changes to ensure they maintain their legal status.
Nonetheless, establishing a foreign subsidiary does not make sense for all companies. For instance, the economic burden and time commitment are too great for most SMEs, especially when they’re just testing a new market and only want to set up small remote teams.
Establishing a foreign subsidiary isn’t the only option and certainly not the most economical in most cases.
Recruiting internationally comes with its own set of challenges. Even if you have a great employee you want to send abroad, it doesn’t necessarily mean they will do well in a new country.
Harvard Business Review research found between 10% and 20% of all U.S. workers repatriate due to job dissatisfaction or difficulties adjusting in the new region. If they stayed, one-third did not fulfill company expectations and one-fourth left the company to work for a competitor. Expatriates also cost a company two to three times more than their equivalent position back home.
Recruiting local talent for remote teams is often a better choice as it offers many advantages. Local workers understand the culture, speak the language(s), and already have connections within the market. They may also have a culturally different perspective on your company’s marketing and communication needs.
However, trying to hire in a foreign location without expert guidance can be a very daunting task. Luckily, choosing an in-country expert with the right tools and trusted partner networks makes it easier to target the best candidates for your remote teams.
Hiring Through an EOR
Another option is to work with an Employer of Record (EOR). They become the legal employer for tax purposes and assume employee liability. Their work is determined by the specifics in your agreement with them, but a good EOR offers a comprehensive set of services, from recruitment to termination.
One of the greatest benefits of using an EOR is it allows businesses to enter new markets more quickly. You can recruit and hire your remote teams straightaway, instead of sitting around waiting for subsidiary approval.
Additionally, an EOR can help your company attract top talent in a highly-competitive global market. According to the 2020 Mercer Talent Trends study, companies need to up their game in order to compete, especially in emerging markets where competition is more cutthroat. Sitting back and hoping skilled workers will apply for a position just doesn’t cut it today.
Using an EOR can help your company access the best and the brightest, boost your brand image, and diversify your workforce. They understand local trends and norms to increase efficiency, streamline the recruitment process, and find the best candidates for your remote teams.
Hiring Overseas Independent Contractors
Seeking talent abroad from your remote teams can work well, providing it is handled properly. Many companies discover the hard way that there can be legal consequences when a business strikes out on its own to create a cross-border work relationship with a contractor. Compliance violations, lawsuits, and costly fines and settlements can ensue without an understanding of regional law and customs.
The most common issue is when a country determines a foreign worker is not an independent contractor, but an employee. Regional employment laws judge this by the level of control and independence the worker has over their work. Unless a company has a well-crafted contract to ensure worker autonomy, they could end up paying additional compensation such as benefits and holiday pay, plus the penalties mentioned above.
This doesn’t mean your company should avoid independent contractors for their remote teams. They can be the best option for SMEs unable or unwilling to hire full-time employees. It is usually far less expensive and time-consuming, but you need the expertise to ensure your interests are well-protected.
An in-country expert will connect your business with a local attorney to ensure the contractor operates with autonomy and they are not deemed an employee. They’ll also fulfill compliance needs and protect your intellectual property.
Handling Payroll & Compliance
Every country, and sometimes region, has very specific compliance and labor law requirements. Your company can’t rely on the same practices you use at home. Obviously, this can be overwhelming for HR managers if they don’t have the knowledge or resources to ensure compliance.
Benefits withholdings, taxes, bonuses, severance, and other considerations such as at-will employment are either handled differently or not allowed. Some countries also have additional requirements such as social funds, 13th-month salary, and more.
Payroll can be outsourced to ensure your company remains complaint and submits necessary withholdings and reports. Your business retains control of day-to-day responsibilities and employee liabilities.
Blueback Global is your international business expansion expert. We offer HR functions including recruitment and hiring, payroll outsourcing, accounting and reporting, statutory compliance, international business advice, immigration support, and more.
With a network of global professionals each with regional knowledge and local business savvy, we simplify global expansion. We’re well-positioned, highly-experienced, and can help you overcome your multinational business challenges, including finding the ideal recruitment strategy for your company.
Contact us for a free consultation and cut through the complications of hiring for remote teams.