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A few years ago, having international employees was not on the radar of a lot of companies, especially small- and medium-sized enterprises. However, the rapid uptake of remote working seen during the pandemic open many businesses eyes up to the opportunities and benefits of hiring global talent.
Remote work has been made easier by technological advances, such as platforms that facilitate communication and collaboration, and more accessible by the emergence of recruiting arrangements that make it possible hire global talent without setting up an entity. That has seen a growing number of companies of all sizes, including startups, take an interest in hiring internationally.
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Hiring global talent not only offers companies more diverse teams and perspectives, but also helps them to learn about other markets while contracting qualified and experienced professionals at highly competitive rates.
When it comes to hiring global talent without having to invest time and money in opening a foreign entity, strong available options include recruiting them via an employer of record (EOR) or hiring them as international independent contractors.
Below, more insight is provided into the benefits and processes involved in each of those two options. If you are interested in hiring global talent without setting up a foreign entity, contact us.
Benefits of hiring global talent
Hiring global talent offers many benefits to companies, such as the ease of expanding a business into territories with potential, such as growing economies.
Also, by having employees in other geographic areas where a product or service is targeted, these workers help increase market knowledge, from demographic characteristics to consumer habits.
When a company decides to hire global talent, it enriches the diversity of its teams, with members who bring everything from crucial knowledge about their territory to innovative ideas that add value to the business.
Depending on the location of these workers, hiring them can be more profitable, as many live in regions where labor can be more affordable without compromising the quality of their work.
In addition, when you have a distributed workforce, with members in remote and nearby locations, you have greater time zone coverage. So, while one employee in Mexico sleeps, another in China reviews work and responds to a client.
As a result, by recruiting global talent and embracing remote work, companies increase their productivity, serve customers in different parts of the world, and create a presence internationally.
Option 1 for hiring global talent without a local entity: via an EOR
The easiest way to recruit global talent without establishing an entity is an employer of record (EOR). In general, these companies recruit, hire and manage overseas staff on behalf of their clients in exchange for a percentage of payroll.
Learn what characterizes these organizations, the benefits of hiring global talent through them, and how you can access the best professionals wherever they are located:
Characteristics and conditions of an EOR
An EOR is a third party that finds, hires, and manages another company’s employees, following the local regulations where it offers its services and based on the needs and budget of its expanding clients.
As a legal employer, the EOR has established entities. Thus, its clients do not need to open subsidiaries or any representative offices to recruit global talent, which can be time-consuming and costly.
In addition, an EOR has extensive local market knowledge and robust recruiting networks, so it can hire global talent in a matter of weeks and onboard them into its clients’ organizations smoothly.
Besides handling the paperwork required to hire global talent, an employer of record administers payroll, taxes, and employee benefits and addresses the eventual departure of staff. The employees, on the other hand, report to the expanding company rather than to the EOR.
As experts in local regulations, these third parties help minimize any unexpected legal issues related to labor or tax non-compliance, which can result in possible financial penalties and even termination of operations.
Companies working with an EOR to hire global talent should understand that this kind of provider may also be known as a professional employer organization (PEO or international PEO) due to their co-employment services.
Benefits of hiring global talent via an EOR
Hiring global talent through an EOR has several benefits: the most important is that organizations do not need to establish an entity in the target market, as these employers offer that service wherever they operate.
The legal employer assumes responsibility for hiring and onboarding employees according to local regulations through their entities. Thus, expanding companies do not have to comply with a minimum number of employees, licenses, bank accounts, and the diverse requirements of operating from another country.
By not worrying about opening an entity, subsidiary, or representative office abroad, companies that need to hire global talent through an EOR save on resources, from the time it would take to find an office and the expenses it represents to the fulfillment of bureaucratic procedures.
Another advantage of hiring global talent with the help of an EOR is that these third parties streamline the onboarding of employees through their recruiting networks of qualified professionals, their knowledge of the labor market, and their broad understanding of regional culture.
As the human resources manager for its clients, the EOR ensures local regulatory compliance, as it is an expert in the labor and tax laws where it has a presence, minimizing any risk while hiring global talent.
In exchange for the benefits it offers for hiring global talent, a registered employer will charge a fee that it will agree with its client when signing a contract, which is only a percentage of the payroll of each employee hired and managed.
How hiring global talent through an EOR works
When a company decides to hire global talent through an EOR, it must first look for a reliable provider with a good track record and an understanding of its expansion project, besides being in line with the budget assigned for the acquisition and management of personnel abroad.
After finding its trusted recruiter, the organization will work with the EOR to define the vacancies it needs to fill, the profile of the candidates it is looking to add to its global talent pool, and the requirements they need to meet, such as knowledge, skills, and experience.
The EOR will post the vacancies on its recruitment networks. Once the applications start coming in, it will make a preliminary screening of profiles until it finds the professionals that best fit its clients’ international expansion needs.
Candidates who meet the established requirements will move on to the initial round of interviews. The best-evaluated prospects will be interviewed in-depth by either the EOR, the employer, or a talent acquisition manager within the organization.
The EOR will select those applicants who passed both rounds of interviews and who also demonstrated the technical knowledge and skills required for the position. However, the employer will decide who will be the next members of the organization.
Finally, the legal employer will send the job offers to the selected candidates and create contracts under local regulations, where they will agree on salaries, working hours, schedules, benefits, and more. In the meantime, the expanding company can start managing the relationship with its new employees and bring them on board.
Option 2: hiring global talent as international independent contractors
Besides hiring global talent through an EOR, companies can employ international independent contractors to access highly qualified professionals without the need to establish an entity.
Read on to learn what an independent contractor (IC) is, how to differentiate them from a full-time employee, the advantages and disadvantages of this hiring modality, and what you should do to acquire this type of professionals:
What is an IC and how it differs from a full-time employee
Professionals or groups of experts who work on their account for a given project or period are known as independent contractors (ICs). Although they may appear to be full-time employees, they work for their own company, which provides services to their clients searching to hire global talent.
An IC may work for an organization for a couple of months or even weeks but may also offer their services for a more extended period; it all depends on the duration of the project and the activities for which they were hired.
An international contractor has their own schedule and can offer their services to more than one client at a time. By contrast, a full-time employee has a set program and is hired by a single company.
In addition, the IC is not on a payroll, is paid by project or contract time, and does not have the same benefits as a full-time worker. For this reason, they may be delivered slightly more than a full-time employee for performing the same activities.
International contractors are generally experienced, often on tight deadlines, and have their own equipment. However, their work cannot be reviewed with the same regularity as with full-time employees.
Benefits and risks of hiring global talent as IC
Hiring global talent as international independent contractors has many benefits for companies, such as quick project delivery and specialized knowledge. However, it also carries some risks that are worth considering.
As mentioned, because they are not on the payroll and do not enjoy the same protections as a full-time employee, hiring global talent as an IC can save companies money, although these employees are often paid slightly more than regular employees.
Also, they are flexible, experienced workers whose skills and expertise can bring significant value to the companies that hire them. However, supervising and ensuring the work of an independent contractor is more complex than with full-time employees, as they are subject to different levels of supervision.
When hiring global talent as international independent contractors, companies must be careful how they classify these employees, as doing so incorrectly can lead to non-compliance with local regulations and the payment of fines.
While they are not part of the payroll and are not covered by the same legal protections as full-time employees, companies hiring a CI should be aware of their responsibilities towards them, but this will depend on the regulations in each region.
How to hire global talent as international independent contractors
Hiring global talent as international independent contractors can be done directly through websites where these professionals offer their services. Nevertheless, when working with an EOR, there are fewer complications, and compliance with the law is guaranteed.
An EOR can hire full-time employees and international contractors through their legal entities and recruitment networks wherever their clients need them.
The legal employer knows the regulations, how to classify an IC and a full-time employee, and the benefits they are required by law to receive, so working with an EOR will minimize all the risks involved in hiring global talent.
Whether hiring full-time, project, or term employees, the EOR will only handle the legal paperwork and employee administration, as the client company is responsible for managing the relationship with its team and assigning and overseeing tasks.
What about hiring global talent through your own entity?
If you want to stay in a particular country for an extended period and employ a significant number of people, hire global talent through your legal entity.
However, if you want to try your luck in one or more markets before investing in opening an entity, working with an employer of record (EOR) is the alternative.
Entities are usually foreign representative agencies, branches, or subsidiaries, so you must first decide which is best for your international expansion project.
While you are deciding which is the most suitable choice, an EOR can start looking for, hiring, and managing your future employees, so you will be one step ahead before operating your entity.
Even if you already have your entity, an EOR can manage your human resources. So while this third party handles payroll, taxes, and employee benefits, you can focus on growing your business.
An EOR can also offer work permits and visa services. Hence, it’s worth finding the one that best understands your global talent recruitment and international expansion needs.
Serviap Global helps companies to hire internationally
At Serviap Global, we assist companies with hiring global talent in over 100 countries worldwide. Or portfolio include EOR services, contrractor hiring, and global talent acquisition to source candidates for those looking to hire directly.
We have over 10 years of experience supporting companies with hiring solutions throughout Latin America, and in more recent years have expanded to support companies in Africa, Asia, and Europe.
Contact us to find out how we can help you.
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