This rise of remote work and a globalized workforce is reshaping how small businesses and mid-sized businesses approach hiring and operational strategies. The embrace of working remotely provides small and mid-sized businesses (SMBs) with access to a larger talent pool than ever before. This is also leading SMBs to increasingly look beyond their borders to hire the best international talent.
Historically, it’s been major corporations engaging in international hiring. This is due in large part to the fact that many already have divisions around the world, making it easy to hire local employees. However, recent trends indicate a significant shift towards SMBs exploring global expansion and talent acquisition. The normalization of remote work is helping to eliminate geographical barriers and opening up a literal world of possibilities for small businesses when it comes to hiring talent, no matter where they live.
For many small and medium-sized business owners, the experience of managing remote teams within the U.S. laid the groundwork to consider hiring internationally. In fact, a large number of SMBs already had remote policies in place domestically before their first international hire.
Global hiring deepens the talent pool
The U.S. labor market is tight. Unemployment is below 4%, and there are more job openings than available workers. This shortage is pushing many entrepreneurs and SMBs to consider global markets in their quest to find skilled employees.
Rising operational costs in the U.S. are also leading more SMBs to turn to international hiring to help manage salary and other costs effectively. A substantial 75% of SMBs.) say they plan to grow their international employee base in the next few years. This is part of a broader strategy by many to balance local and global hiring, with 54% planning to increase both their international and U.S. headcount.
Challenges for SMBs in international expansion
Beyond cost considerations, a significant number of SMBs are hiring overseas as part of an overall strategy to expand into international markets. This includes accessing untapped customer bases, diversifying revenue streams, and capitalizing on international business growth opportunities.
However, venturing into foreign markets can pose significant challenges when it comes to hiring a remote employee, especially if a company wants to hire in a country where they don’t have a physical presence. This includes navigating complex tax laws, as well as legal and regulatory frameworks surrounding immigration and employment laws. Developing compensation packages aligned with the standards of different countries are another significant hurdle for many who may not be familiar with the local market. There is also the matter of logistics, since an international employee headcount typically means managing talent across multiple time zones.
What are the legal considerations for SMBs hiring internationally?
For smaller businesses, abiding by the employment laws and regulations of any country they want to operate in is crucial. This includes understanding and adhering to visa requirements, work permits, and any restrictions or quotas on hiring foreign nationals.
Additionally, international employment often triggers complex tax implications both for the business and the employee. Adhering to employment contracts that align with local laws, covering aspects such as termination procedures, benefits, and intellectual property rights, is essential to avoid legal disputes. Partnering with legal experts or consultants knowledgeable in international labor laws can provide invaluable guidance and assistance in ensuring legal compliance throughout the hiring process.
Why SMBs should consider partnering with an employer of record
Small to mid-sized businesses should consider a partnership with an Employer of Record (EOR) before expanding into international markets. This will allow them to recruit local employees without the burden of learning about diverse international labor regulations.
An EOR alleviates the administrative burden associated with global expansion by handling complex tasks such as payroll processing, tax compliance, and employment contract management. This allows businesses to focus on their core operations without getting bogged down by unfamiliar legal and administrative procedures in foreign jurisdictions.
Partnering with an EOR ensures compliance with local employment laws and regulations, mitigating the risk of penalties or legal disputes arising from non-compliance. Additionally, utilizing the services of an EOR can provide access to a network of local experts who possess in-depth knowledge of the local market and its cultural nuances, facilitating smoother recruitment and onboarding processes. Ultimately, by leveraging the expertise and infrastructure of an EOR, small to mid-sized businesses can streamline their international expansion efforts while minimizing risks and maximizing efficiency.
Building a global team: Strategies for success
Before starting the search for talent beyond their borders, there are a few other factors that SMB business owners should consider, including:
- Equitable compensation and benefits: To attract international talent, SMBs should offer market-competitive salaries and benefits. This includes adjusting pay based on the cost of living in the employee’s location, and providing them with benefits similar to those of their other international and U.S. employees. An attractive salary and benefits package will also lead to increased retention.
- Cultural integration and management: Ensuring a smooth cultural integration is key to building successful global teams. This involves providing cultural training for managers, tailoring the onboarding process to local work cultures, and making materials available in the employees’ primary languages.
- Employee vs. contractor: Sometimes it makes more sense for a business to hire a contractor, especially for temporary, short-term projects. However, an emerging trend among SMBs is converting international contractors into full-time employees. This is largely driven by the need to retain skills, protect intellectual property, and ensure compliance with local labor laws.
Geographical trends in international hiring
Rather than casting a wide net, many SMBs are strategically choosing hiring locations based on their specific needs, such as:
- Cost management and talent quality: Europe can be more costly for medium-sized enterprises looking to expand. However, the Philippines and India are popular choices for SMBs focusing on cost management while accessing high-quality talent.
- Market expansion: Conversely, hiring employees from European countries or Canada is often motivated by the desire to expand business operations in those regions.
The future of international hiring for SMBs
The landscape of international hiring is evolving rapidly, with SMBs at the forefront of this change. As they navigate the complexities of building a global workforce, the role of technology, cultural adaptability, and strategic planning is becoming increasingly crucial. By embracing these elements, SMBs can unlock the full potential of international hiring, leveraging it not just as a solution to immediate challenges but as a long-term growth strategy.
For U.S. SMBs, the global talent market presents an unprecedented opportunity to address operational challenges, fill skill gaps, and enter new markets. While the journey involves navigating legal complexities and cultural differences, the strategic advantages are clear. As SMBs continue to adapt and evolve in this global hiring landscape, they stand to gain significantly in terms of diversity, innovation, and competitiveness. The key to success lies in understanding the nuances of international hiring, implementing effective strategies to integrate a global workforce, and partnering with an EOR to ensure compliance.
To learn more about how RemoFirst can help your company hire international employees, book a demo today.
