Start-up founders and CEOs are under constant pressure to do more with less. So it’s no surprise that when the topic of international hiring comes up, it’s often framed as a cost-saving move.
In a previous edition of this newsletter, we explored why restricting yourself to domestic hiring markets could actually be more costly than going global.
But don’t misunderstand us: hiring globally isn’t going to magically improve your bottom line overnight.
If you don’t have the right infrastructure, strategy or understanding of local markets, that ROI will never materialise.
We interviewed Harriet Simmons, one of Omnipresent’s in-house recruiters and a leading expert on global talent strategies to find out more.
How to build a global talent strategy that increases ROI for your business
James: Harriet, in your experience, what's the biggest misconception startup founders have when they first start thinking about hiring internationally?
Harriet: I think one of the biggest misconceptions is that hiring internationally is simply a cost cutting exercise.
Many founders think they can just pay less for the same quality of talent. But they overlook things like compliance complexities, cultural differences, local labor laws, things that affect both productivity and retention.
Successful international hiring isn't just about cost cutting, it's about finding the right talent at the right price, whilst ensuring long term sustainability. Without the right infrastructure in place, companies can face legal risks, inefficient team collaboration, higher turnover rates, which ultimately negate any cost savings that you'll make anyway.
James: You talked about finding the right talent at the right price, but then you used the phrase "ensuring long term sustainability." What does long term sustainability look like to you?
Harriet: Given that I've done a lot of work with startups, I think it's really important when you're bringing those initial hires in and you've got a growing organisation that you're scaling maybe quite rapidly.
You're bringing people in that are learning and they've got all of that internal knowledge and they're growing with the company. You don't want to lose them a year down the line, 18 months down the line. You want somebody to stay with that company long term. You want them to keep growing that knowledge base and you want them to then impart that knowledge into other people as well as your growing teams.
So it's about getting the right person in post initially, and then allowing that person to grow with the business whilst retaining all of that skillset as they grow.
James: What hidden factors should companies consider when they're comparing the true cost of hiring locally versus internationally?
Harriet: Beyond salary, companies have to take into consideration things like employer contributions, so taxes, social security, mandatory benefits, benefits like paid leave, healthcare, pension contributions - they can all vary quite significantly. Also things like legal and compliance expenses.
Misclassification risks, such as hiring contractors when they should be employees, can lead to penalties. Failing to meet local regulations can result in fines. Time zone and operational efficiencies are a big one - productivity can suffer if teams struggle with collaboration across time zones.
Retention and hiring cycles are important too. Some markets have higher turnover, leading to higher long term hiring costs. Onboarding and training costs also have to be factored in. New hires from different regions may require additional onboarding to align with company culture and processes. It might not be the same across all locations.
James: You've talked there about regional variation. Can you share an example of a role or a function that you've encountered where the talent to cost ratio is dramatically better in an unexpected market?
Harriet: This is something we're looking at all the time, and we do a lot of work in the people team on this. South Africa is a good example that we're looking at at the moment. It's a great destination for customer service roles.
They've got a strong English speaking workforce and cultural alignment with Western markets. It offers talent at a much lower cost than the US or UK, and the time zones are better aligned for companies that operate within Europe. Eastern Europe is also a good one for software engineering.
Countries like Poland and Romania have top tier engineering talent at far lower rates than Western Europe or the US. So they're good places to look for talent.
James: That's interesting because there are lots of different markets that people might target for different reasons, but they all have their own markets with laws of supply and demand. How do supply and demand dynamics in these different hiring markets affect talent quality and cost? Are there any particular regions where you're seeing unique opportunities at the moment?
Harriet: Obviously, the more demand there is for a skill in a particular region, the higher the salaries and competition. Places like India and the Philippines are cost effective for software development and customer support, but the salaries are rising due to demand. We're seeing a similar thing across Latin America at the moment as well.
Countries like Argentina and Colombia are growing hotspots for tech talent, particularly for U.S. companies due to the time zone alignment. Currency fluctuation can impact hiring costs as well. For example, Argentina has become a hotspot for remote hiring because of favorable exchange rates. Regions with strong education, but lower demand offer great value. Egypt is a good example of this. It's got the largest and youngest multilingual talent pool in the Middle East, and lots of their skilled workers are in STEM fields.
James: What are the most common compliance or administrative challenges that companies face when they're hiring internationally?
Harriet: Worker classification risks are a common one. Hiring someone as a contractor when they should really be an employee can lead to legal issues and fines.
Often companies think that they can just hire a contractor to save costs, but the role isn't a true contract role that can be fulfilled by a freelancer. If the role really is a permanent role and you start treating a freelancer like a permanent employee, you can find yourself in trouble.
Contractors work on a project basis, they set their own hours, they use their own equipment. If you want someone clocking the same hours each week and carrying out the exact same role as your permanent employees, using company equipment, you probably should be looking for someone on a permanent basis.
Data protection and employment laws need to be considered as well. Countries like France have strict protections and require careful compliance. Regulations like GDPR across Europe affect how employee data is stored and processed.
Also payroll complexity - managing multiple currencies, tax laws, and benefit structures can become a bit of a logistical nightmare.
Employers must comply with local tax laws, which can be complex without the right infrastructure in place. Severance and termination laws need to be taken into consideration too.
Unlike at-will employment countries, many regions require notice periods and severance pay, which ultimately impacts cost. Essentially, these compliance risks can increase costs if companies fail to plan correctly for them, and could lead to potential legal battles or financial penalties.
James: Absolutely. Since you and I both work for an employer of record organization, can we talk a little bit about how an employer of record service changes that talent versus cost equation when hiring internationally? What advantages do you think it offers compared to traditional hiring approaches?
Harriet: An employer of record helps companies hire internationally without setting up a legal entity in a foreign country. It manages things like payroll, compliance, benefits, and local employment laws.
The key advantages we see are faster hiring and onboarding because there's no need to establish a local entity. Faster market entry means that you can hire in a matter of weeks rather than months.
There are reduced legal and compliance risks because the EOR ensures all local labor laws are followed, simplified payroll and tax handling because you avoid complex multi-country payroll setups.
You get lower overheads as there's no need to set up foreign bank accounts and payroll systems or HR infrastructure. There's also flexibility in hiring as it gives you the ability to test new markets before committing to a full-scale expansion.
Access to global talent pools is another benefit because companies can focus on finding the best talent rather than worrying about local employment laws. Using an EOR service eliminates the need for companies to set up a legal entity in every country they want to hire in. Instead, the EOR becomes the legal employer and takes on all the compliance risk.
James: We started this by talking about startups specifically. For a startup that's planning their first international hires, what's your advice for creating a hiring strategy that optimizes both talent quality and cost efficiency?
Harriet: I think start with an EOR. It's the simplest way to test international hiring before committing to a full entity setup. Research the talent market thoroughly - look beyond employer cost and consider things like culture, skill set availability, employment law. Prioritise alignment over cost cutting.
Focus on hiring the right talent for long-term success, not just the cheapest option. Don't compromise on quality for cost. A slightly higher investment in the right hire will save time and money in the long run. Also align hiring strategy with the business goals. If you're scaling fast, prioritize locations with talent density and strong infrastructure.
A really important one for me is to build a remote-friendly environment for your workforce. You have to ensure teams have the right collaboration tools and processes to work effectively across time zones. If you don't have this in place, you're setting your employees up to fail. In the past, I've heard companies begrudgingly allow a handful of employees to work remotely, but haven't set them up for success.
And then they say things like "remote working just doesn't work" when they hit problems. I think we need to move away from this idea that working remotely isn't really working. Many remote workers put so many more hours in because they can work around the clock. They are often far more productive because they don't have hefty commutes and they can juggle their work-life balance better. So that's a huge one for me.
James: You mentioned the flexibility that using an employer of record gives you, but why is that preferable to using a contractor?
Harriet: I think it depends on what you're trying to achieve. You'd use an EOR if you wanted a more compliant relationship and if you wanted to scale an organisation and build it from the ground up with employees who are going to stay and grow with the company.
You ideally want to retain that internal knowledge and it makes sense that you'd want permanent employees who are going to grow with the organisation. But if you just need people to carry out short-term projects, then contractors are fine, but there's no longevity there. They may have other priorities and other clients that they're working with. I think you need to understand the difference between the two.
James: This has been so interesting Harriet, thanks for your time
