Efficient business management is always challenging. But it’s especially difficult when trying to maintain operations and manage costs during an economic slowdown.
Economic downturns, however, don’t have to limit your business’ potential. The right approach can turn pressure on your bottom line into an opportunity for strategic cost optimization and innovation.
For example, a remote global workforce provides substantial cost benefits while maintaining talent quality. Hiring remote international workers can help businesses optimize costs during an economic downturn and even provide a competitive advantage.
Reasons for Embracing Globally Distributed Teams
The Deloitte Global Tax Remote Work Survey gathered responses from over 800 business leaders across multiple industries, including technology, financial services, and energy. Respondents differed in their reasons for embracing globally distributed teams.
Here are some key numbers:
- 69% of employers report they want to enhance employee experience by providing greater flexibility.
- 34% of employers report the ability to draw from an expanded talent pool as a key driver behind embracing global teams.
- 21% of employers say they want to employ remote international talent to help advance sustainability goals.
- 17% of employers identify potential cost savings as a reason to support remote work.
Access to a Global Talent Pool
It’s easy to see how depending on local in-house talent keeps your labor costs fixed. But it’s limiting to box your recruitment into a one-size-fits-all strategy. Business, in other words, is dynamic, and it’s essential to have a flexible business strategy.
Hiring remote labor is one way to lower costs during an economic downturn. Onboarding remote employees gives your business access to a global talent pool and, in turn, far more flexibility than limiting yourself to hiring locally.
For instance, a developer in Eastern Europe or Asia may offer the same competencies as a local hire but at a fraction of the cost due to differing living expenses and economic conditions. However, payroll isn’t the only facet of your business that a global talent pool can make more competitive.
Different regions of the world have specific strengths and specializations. For example, Eastern European countries, such as Ukraine, are known for tech talent, while Latin America has a strong base of customer service professionals.
Going global allows your business to tap into the best talent of a broader labor market when you need it. You’re not limited to staffing employees locally. This helps your company fill all roles more economically, which is essential during economic uncertainty.
Flexibility and Scalability
Remote workforces enable businesses to swiftly adapt to a changing economic landscape by scaling their teams up or down as needed. During downturns, this flexibility eliminates the logistical hurdles of traditional hiring or layoffs.
Additionally, project-based hiring of remote workers offers a cost-effective alternative to full-time positions, ensuring businesses only pay for the work required, thus optimizing expenses during uncertain times and avoiding the long-term costs associated with permanent hires.
Less Employee Stress & Better Employee Retention
The flexibility remote work offers employees can empower better work-life balance. According to Harvard Business Review, when business owners support their employees’ work-life balance, it lowers stress, increases productivity, and boosts retention.
Remote work can also increase efficiency. Embrace a distributed team, and your business can operate across multiple time zones, ensuring continuous productivity and potentially faster project turnaround times.
Reduced Overhead Costs
Remote work eliminates the need for physical office space, significantly reducing overhead costs like rent, utilities, and supplies — a benefit Global Workplace Analytics reports that 60% of employers see as a significant cost-cutting measure.
However, businesses can also leverage the cost of globally distributed teams by indexing compensation packages to local markets. For instance, your company might offer a skilled software developer in the Maldives a lower salary than one in London. This practice also makes sense in countries where the costs of living (COL) regionally vary.
For example, in the United States, you could offer a lower salary for employees based in Topeka, Kansas, than those working in Silicon Valley. This is because COL-based compensation allows employees to maintain globally equal living standards while your company reduces staffing expenditures.
Hiring Internationally with an EOR
As beneficial as going global is, 82% of companies report experiencing legal and compliance challenges that make it difficult to support remote teams. Every country has a complex web of rules and regulations that must be followed, from working hours to employer taxes to paid time off. It’s a lot to learn.
An Employer of Record (EOR) can help you clear this hurdle, ensuring your business is in full compliance with local employment laws and reducing the risk of costly legal issues. EORs streamline global hiring by serving as the legal employer of your international talent. An EOR can handle all compliance aspects, including payroll, benefits, taxes, and local labor laws, shielding your company from potential liabilities.
While EORs take on legal responsibilities, you retain complete control over your core business, day-to-day management, and team supervision. An EOR also ensures that any contractors you engage follow local employment laws, safeguarding you from the risks and penalties associated with misclassification.
RemoFirst can help you hire in over 180 countries. Book a demo to learn more.
