Now that I’ve been in this global hiring space the last few months, I noticed some common misconceptions about what it means to “hire international talent.”
Some folks have very strong opinions that “going international” means companies are taking away jobs from locals and solely outsourcing to reduce having to pay fair salaries.
While unfortunately that can and does happen, I actually noticed a few other things when reviewing our own customer data and doing some additional research.
Often, hiring internationally goes beyond simply trying to reduce costs. And, in many instances, lowering the costs associated with salary isn’t even the driving factor in the decision to expand the talent pool globally.
Below, I’ll share more about our observations and some of the main benefits to a global talent acquisition strategy.
Observations About Hiring International
It’s a given that businesses have two common goals: to keep expenses low and to improve profit margins. It’s how sustainable businesses are made.
So, naturally there can be a cost component to why a company in one country expands their talent pool to another that has a lower cost of living.
However, as we looked at hiring trends across thousands of customers we found that many companies were not hiring global talent in places with the lowest average salaries.
- Among the top ten countries where our customers hired talent, six out of ten have average yearly salaries above $40K.
- The U.S. and Canada ranked among the top three countries where customers were most actively hiring talent, both of which also boast the highest average global salaries.
Of course this is just a sample size in the thousands and we can’t speak to the millions of businesses and why they could be looking to expand outside their local market.
But to our team at RemoFirst, this signals that the other benefits of hiring international talent matter to companies — and they will pay good salaries for top talent that fill a skills gap.
Cost Savings
Before I cover the other benefits of employing global talent, I do need to touch on the costs. This can still be a major reason why companies may look beyond their local job market.
But it’s not just salaries and benefits where money can be saved.
This also includes savings on any additional costs associated with having a physical office and reducing overall employee turnover.
Offices
Unless you are opening a local entity in another country, you’ll be saving big on office costs, whether your employees have a shared co-working space or are working remotely.
Either way, you are drastically saving on rent, taxes, and utilities. These savings are critical, especially for startups and small businesses where office expenses can be burdensome.
Note: Your costs can be even lower, should you choose to work with an Employer of Record provider like RemoFirst. We handle everything for you (compliance, taxes, benefits, visas, etc.) at a fraction of the cost and time to navigate it on your own. Learn more here.
Employee Turnover
According to BuiltIn, it’s estimated that losing an employee can cost a company one half to two times the employee’s salary. For hourly workers, it costs an average of $1,500 per employee. For technical positions, the cost jumps to 100 to 150% of salary. At the high end, C-suite turnover can cost 213% of salary.
When you find talent that better matches your open roles, turnover should significantly decrease. This reduction in both the costs for replacing employees and the potential negative impact on productivity can also lead to cost savings as it filters through the business.
Alternatively, if there is employee turnover from international hires, the potential overall turnover costs to fill the open roles can often be lower.
Other Real Benefits of Employing International Employees
Okay, hopefully you are with me still. We covered a bit already from the observations of our customers to the cost savings.
And I’m not naive, as I do know a big benefit is the potential money companies can save.
But, I often think it can be ”icing on the cake” to all the other benefits that come with recruiting global talent. Here’s what hiring international employees can do for your business.
Combat Local Labor Shortages
During my recent research I found a few surprising stats around local labor shortages.
Essentially, companies are finding they can’t find the right talent for the roles they desperately need to fill. And this varies from industry, to job fields, and even which countries are impacted.
- Three-quarters (75%) of employers are struggling to fill job vacancies — that’s the second-highest figure on record since the company began conducting surveys in 2006. And the number of employers reporting labor shortages has almost doubled since 2015 (38%).
- By 2030, it’s predicted that there will be a global talent shortage of around 85 million people, resulting in revenue losses of approximately $8.5 trillion.
Instead of being tied to their local market, opening the talent pool to other locations can help companies fill these job vacancies faster — getting the company back on track and improving profitability.
Expansion into New Markets
One of the benefits of hiring globally is gaining faster adoption and acceptance into new markets.
Global employees provide your company with local insider knowledge that can help you avoid costly mistakes. Plus, you can better adjust your services or products, operations, or marketing and sales strategies to match up with cultural expectations.
And, this expansion also leads to a competitive advantage and can accelerate company valuation faster than other business initiatives.
Expanding into new markets was one primary objective for our customer, PandaDoc. The team wanted to further expand into the German market, since the country has a strong economy and a large tech scene.
More Daily Coverage
Hiring international workers in multiple time zones offers businesses the advantage of more productivity throughout the week. This is due to the fact that there is more coverage at all times of the day.
Teams spread out across different regions can work sequentially, allowing tasks to be handed off from one time zone to another — speeding up overall project completion and reducing downtime.
And, a 24/7 workforce can help insulate your company from work stoppages due to everything from national holidays to natural disasters or other disruptions. Employees that have not been impacted can help provide cover, support your customers, and maintain overall efficiency.
The cherry on top? By expanding your candidate pool, you're bringing in more diverse talent — ensuring you have more candidates that can bring diversity and innovation to your company.
The Future of Global Hiring
With flexible work on the rise and it becoming easier to employ global talent compliantly, I think more companies will be exploring global hiring in the coming years.
At RemoFirst, we are fully remote — with employees now located in over 20 countries around the world.
This has greatly impacted the level of talent we have on the team and the innovation our employees bring to the business. So, we know firsthand how valuable borderless hiring can be.
Ready to gain the full benefits of global hiring without the headache?
It might be time to partner with an Employer of Record like RemoFirst. We enable businesses to compliantly employ workers in 180+ countries and manage and pay contractors in 150+ countries.
How does it work? RemoFirst acts as the legal employer for your global staff. That means you still oversee your employees' day-to-day work, but the responsibility for compliance with international employment and tax laws falls on us, not you.
We also manage:
- Performing background checks
- Onboarding new employees, including shipping equipment
- Creating compliant contracts that protect your IP
- Handling international payroll, as well as employee benefits like healthcare
RemoFirst takes on the heavy lifting, allowing your team to focus on finding and hiring the best talent available, no matter where they live, and integrating them into your team and company culture.
Schedule a demo today and see how easy RemoFirst's all-in-one platform makes hiring and managing international employees.
