Key Takeaways
1. All growing businesses need to ask the question: Why restrict my business to a local, rather than global, team?
2. A global team supplies overseas market knowledge and experience, provides a larger talent pool, has compliance and tax benefits, and can make human resource management more efficient and cost-effective.
3. There are a variety of mechanisms available for a business that seek to hire a global team. These include subsidiaries, branches, mergers and acquisitions and Employer of Record (EOR) solutions. The correct tool will depend on the precise needs of your business.
4. Recruiting a global team means positioning your business with the right global brand, using multiple outreach channels, coming up with ‘candidate personas’ and utilizing employee referrals.
Remote work has opened up new opportunities for businesses to hire a global team. An analysis from Upwork, found that a whopping 41.8% of the American workforce continues to work remotely.
With so many employees outside the office, this raises the question whether they even need to be based in the country. Or, as one contributor to the Harvard Business Review put it, does remote work mean “Work from Anywhere”?
Whether hiring remote workers based overseas, launching a startup, or setting up a new business location overseas, hiring an international team often makes sense from a regulatory and economic perspective: Here we set out the key benefits and challenges of hiring a global team, and the best methods for actually recruiting and hiring that team.
Hire your global team fast with Horizons EOR services.
What Are the Benefits of a Global Team?
Put simply, a global team is a workforce spread across multiple international locations and timezones. A global team can include local employees, but goes beyond that.
There are a range of benefits that apply to hiring globally, rather than simply locally. These include:
- 1. Overseas market expertise
- Where expanding your business into another market, there are various features of that local market that you will not automatically know about. This can relate to the local business environment, but also cultural differences in that location.
- Hiring employees based overseas is a good way of ensuring that you have employees with an in-depth understanding of other markets.
- 2. A larger talent pool
- In terms of sheer numbers, hiring locally restricts the human resources potential of the company, without a discernible payoff.
- Hiring a global team, means a much larger pool of potential talent to choose your next hire from.
- 3. Cost-effectiveness
- Hiring overseas means access to employees who live in a much lower cost-of-living location, and may have commensurately lower salary expectations.
- When you hire a global team, you can often reduce the overall wage and benefits bill for the organization.
- 4. Tax benefits
- Hiring a global team, depending on where staff are hired, and the corporate structuring used, can reduce the overall effective wage bill for the organization substantially.
- For example, Facebook and Google place the majority of their European staff in Ireland. Why is that? It is not because Ireland has low wages (compared to the rest of the EU, they are relatively high). It is because hiring staff through local Ireland subsidiaries reduces their corporate income tax bill considerably (Ireland has a comparatively low corporate tax rate).
- 5. Compliance benefits
- In some countries, employer compliance is significantly less onerous than in others. For example, in countries with a public healthcare system (such as the UK, Australia and New Zealand), employers do not carry the health insurance compliance burden that they do in Germany or the United States.
- 6. 24/7 Efficiency
- A global team means employees located in multiple different timezones around the world.
- This means that, instead of missing customers while you sleep, team members in a foreign location can be looking after that side of the business.
What is the Best Way of Hiring a Global Team?
When considering how to hire a global team, there are a several different ways of going about it:
- 1. Hire international contractors
- A company might consider directly hiring overseas contractors or freelancers in order to complement its team.
- While this can be a simple, and cost-effective option, it comes with a range of compliance risks.
- Contractors should not be engaged when the true nature of the relationship is one of employment. To do so is known as ‘employee misclassification‘ or ‘sham contracting’ and can result in penalties and a requirement to back-pay income and payroll taxes, and benefits, with interest.
- 2. Open an overseas branch office
- A company can open an office overseas, register as an employer in the country in question, and commence hiring staff.
- The disadvantage of this approach is that it presents tax, legal, and compliance challenges. Suppose the tax authorities consider the company a ‘permanent establishment’ in that overseas location: In that case, it means that the company (even where its head office is based overseas) has to pay corporate income tax there.
- It is also difficult for a branch office to enter into B2B contracts in a new location: Many local businesses will only trade with companies incorporated in that location (it is generally seen as more difficult to enforce contracts internationally).
- 3. Open a foreign subsidiary
- Another option is for the company to open up a subsidiary of the international enterprise overseas which can hire resident members of the global team.
- This subsidiary could be wholly-owned by the foreign company, or majority-owned.
- While this is a fully compliant option, it can also be relatively expensive and time-consuming compared to other options.
- Read more about the pros and cons of setting up a branch or a foreign subsidiary at Branch versus Subsidiary: What is the Best Option for Your Global Expansion?
- 4. Mergers or Acquisitions
- Rather than setting up a subsidiary from scratch, a related option is to acquire, or merge with an existing business. This means that an international company can harness its international team via existing employees in a target location.
- This option relies on there being a business in the target country which is suitable for merger or acquisition (and appropriately priced).
- 5. Global Employer of Record
- With an Employer of Record solution, a third-party company hires and onboards overseas staff who then work under the direction of the client company. The EOR then takes cares of payroll, tax withholding and compliance for the entire global team based overseas.
What Is the Best Way of Recruiting a Global Team?
When recruiting an international team, a business needs to consider the ideal methods and strategies for attracting the best employees. It is recommended that a business consider the following:
- 1. Forge a global employer brand
- Employees and contractors are generally attracted to brands that they have heard of. They also want to work for companies which already have. a positive online footprint (e.g., great employee reviews on glassdoor).
- 2. Use multiple outreach channels
- As well as the standard job sites and Linkedin, consider any job boards that are specific to the industry or profession that you wish to hire for.
- It is also worth considering the engagement of a firm with local recruitment expertise in all the countries in which you wish to hire.
- 3. Create a candidate persona
- A ‘candidate persona’ represents the ideal potential workers for your organization: It will include the educational background, the qualifications, the work experience, the intelligence quotient (IQ), and (perhaps) the location of that individual.
- The candidate persona is then used to inform a job descriptions (in a structured and organized way). It is also useful from an HR analytics perspective (for example, it allows the company to more appropriately benchmark salary and compensation packages within the organization).
- 4. Utilize employee referral
- Existing employees of the company can be an excellent untapped resource for any organization when looking to hire in hard-to-fill roles.
- An explicit company policy for referrals can help encourage employees to link to open positions on social media, for example.
What Are the Challenges of Hiring Global Teams?
Whichever option you choose to hire a global team containing foreign employees, there are a range of challenges when hiring globally. Challenges include:
- 1. Compliance
- Hiring globally means needing to comply with employment and tax laws in whichever location you hire in.
- The increasing complexity of employment and tax compliance means that some companies choose to engage a third party to take care of tax and compliance.
- 2. Control and coordination
- A global team need to be cohesively managed across all locations to ensure that the team is working towards a common goal.
- This can be harder to achieve internationally (but is by no means impossible, given the ‘new normal’ of remote work).
- 3. Payroll
- Hiring a global team means managing an international payroll. Often, this will mean paying staff in multiple locations and in multiple currencies.
- This poses a financial risk (due to fluctuating currencies), a compliance risk (due to different payroll policies in different countries), and means that payroll takes much longer to process than it otherwise would.
- It becomes even more complicated where an individual based overseas still wishes to be paid their salary in their home country via a ‘shadow payroll‘ mechanism.
- 4. Time zones
- A global team means a team based across multiple time zones. This makes it more difficult for team members to communicate with each other in real time. This challenge can be mitigated by companies that consciously adopt an asynchronous work culture.
- 5. Multiple cultures and languages
- A global team will operate in different work cultures and with different everyday languages. This can easily lead to miscommunication and misunderstandings between different team members.
Some business find that these challenges are best managed by using an international hiring and recruitment partner, such as an EOR company, to administer international operations.
Hire Global Teams through Horizons
Horizons can hire your global team for you, anywhere in the world. Whether you are hiring remote customer support, IT staff, or sales, we have you covered.
Horizons takes the pain out of international hire by onboarding your new team, and by managing payroll, taxes and employment contracts on your behalf.
With Horizons, you can hire your global team at speed, and at a fraction of the usual cost of hiring overseas.
Jump on a no-obligation call with one of our specialists to find out how it works.
Frequently asked questions
There are many different options for hiring globally including:
- 1. Setting up a subsidiary/legal entity
- 2. Setting up a branch office
- 3. Mergers and acquisitions
- 4. Hiring international contractors/freelancers
- 5. Engaging an EOR solution.
A global team is the situation where a workforce is located over multiple international locations (and usually in multiple time zones).
They are usually employees of a broader corporate group. However, they may also include contractors/freelancers or employees of subsidiaries or affiliates.
A global team poses special challenges for a company that needs to ensure everyone is on the same page. The best tools for training an international team include:
- 1. Using the appropriate remote work/collaboration tools;
- 2. Ensuring that junior staff have the relevant mentorship;
- 3. Using local partners to ensure that employees receive the necessary training for the location where they are based in.
