3 Ways to Engage and Compensate Global Workers Internationally: Which is Right for Your Company?
Technology has made it easier for domestic companies to engage in global trade and engage talent internationally. However, onboarding, payrolling and managing foreign workers is a complex international employment challenge for many businesses.
Navigating the changing in-country laws and regulations, often in a foreign language, may be outside the skillset of your company’s HR department. Not to mention recruiting, onboarding, and compensating a global workforce in ways that are compliant with the local labor requirements.
Thankfully, there are solutions designed especially for companies like yours who want to expand abroad. The key is choosing the right one.
Things to Consider Before Choosing the Method that Fits Your Company Best
The complexities of legally engaging workforce in foreign countries pose major stumbling blocks for many companies, especially SMEs. However, the misconceptions shouldn’t hold your business back from international expansion or international hiring. In order for you to choose the method of hiring and rewarding your international workers, you need to answer the following questions:
- How are we going to do international money transfer? Is the security of our company’s funds addressed properly?
To compensate workers internationally, you cannot simply transfer money to global workers as you may be exposing yourself to compliance risks in many cases. Many companies use platforms like Upwork to hire and pay freelancers for works completed. However, that mostly works for one-time projects that are not key to your business. If you plan to engage a highly skilled foreign talent long-term for them to fulfil some key business tasks for your company, you must enter into a contract with the independent workers or with a third-party agency that would pay your global workers on your behalf. This kind of agency is usually in charge of secure money transfers from the client to their workers, regardless of where in the world they pay workers for you.
- Can I use payroll outsourcing to pay my foreign talent overseas?
Payroll outsourcing is not as simple as it may seem, since you need to have a registered entity in the host country or countries, and act as a legal employer for your global employees. That means your company carries all global employment risks. A global PEO (professional employer organization) is an alternative solution that can employ workers on your behalf, eliminating the need for you to open your own entity and therefore taking employment risks of a legal employer while providing a workable solution.
- How do I remain compliant with the local laws and regulations if I am not aware of the legislative norms?
Violating local laws and regulations when engaging and rewarding global talent can lead to fines and penalties, or even prison in some countries. Some companies may be banned from working with independent contractors and be forced to hire only full-time employees if they are found guilty of misclassifying global workers they are engaging. Choose the solutions that ensure 100% compliance to protect yourself from compliance risks
3 Main Options to Pay Workers Internationally
Even the best HR professionals often have no idea of how to hire and fire a global workforce, and it is often a learn-as-you-go proposition. Most businesses who need to hire global talent use one of three approaches:
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- Rely on independent contractors and freelancers to fulfill overseas business demands.
The remote global workforce is growing by leaps and bounds, and it is becoming increasingly easy to find experienced freelancers with the qualifications you need. However, locating, recruiting, communicating with and compensating workers internationally can be time-consuming, and it can get a bit messy if you have to keep track of multiple freelancers at once. Moreover, language barriers may make communication with global talent difficult, not to mention independent contractor/employee misclassification risks as the legal boundaries are often blurred between both.
- Directly hire international professionals on your own.
While this may seem like the most direct and least complicated option, it is not as easy as it seems. Before you hire global talent in your target market, you will need to do some market research and establish your company as a foreign entity in the country where you intend to do business. This can involve months of bureaucratic red tape. In addition, you will need to consider taxation and the overhead costs. When your overseas project comes to an end, you will need to hire lawyers to liquidate your international business entity. This way is the most expensive too.
- Hire a global PEO solution/service provider to officially employ and payroll your global workforce, regardless of where they are based.
A global PEO provider can become a company’s best international friend and business partner, helping you to overcome the challenges of international employment so you can concentrate on growing your business. A global PEO provider can help companies of all sizes get established in foreign markets in the following ways:
- Attract and acquire global talent, and officially employ them on your behalf. Partnering with a global PEO reduces the risk of your acquired talent defecting to your competition for a better offer. A global PEO lets you tap into a global talent pool to meet local talent shortages, saving you money while you build your company’s brand.
- Expand into different markets at a measured pace. You can start small and hire incrementally as your business grows, reducing your initial costs as you build larger revenues. A global PEO reduces your business setup time by eliminating the need to establish or liquidate your own local entity
- Provide local client support, helping you navigate local labor laws and regulations to smooth the way for increased revenues from your international project.
Benefits of a Global PEO
A huge plus of partnering with a global PEO is that you don’t have to invest funds in opening your own entity in multiple target markets and yet get established in the target market or markets. You can reduce the costs of market research and eliminate the need to hire a legal team to liquidate your entity, should you decide to leave a certain country. It is enough to simply terminate the employment agreement with the employee that you hired in that country. In addition, a global PEO will safeguard your company’s international flow of funds and protect your intellectual property rights.
Despite lucrative opportunities abroad, SMEs with a limited budget or small staff often think they are not ready to expand globally. For such companies, a global PEO can provide an interim solution while you test the waters of foreign markets prior to establishing a permanent foreign entity. Working with a global PEO offers a safe, affordable international solution for some SMEs that have tight budgets and seek to save the initial overhead cost while hiring international workforce to meet their global business needs. Moreover, a global PEO can stand in the gap to keep things running smoothly during any kind of restructuring, such as a merger or takeover.
As a flexible hybrid solution, a global PEO lets you tap into the global workforce pool to distribute different workloads, shift work, project work and commission-based payments. A global PEO ensures your company remains fully compliant with local laws and regulations, saving you the headache of figuring it out on your own.
Some companies that have worked with us several years so far have chosen to employ and payroll their global workforce through a global PEO solution as an alternative to a direct hire through their own entities.
Acumen International, Your Global PEO Partner
Engaging an international workforce to scale your business is a big decision, riddled with countless unknowns. Acumen international has been providing global PEO services to companies like yours for over 20 years, and we have experience and capacity to support clients in 190 countries. Our Express Global Employment solution takes the guesswork out of hiring and compensating workers internationally, both local nationals and expats including work permit and visa support. Contact Acumen today and explore your options for taking your business abroad.