Opinions expressed by Entrepreneur contributors are their own.
Despite turbulence, there is reason to be optimistic about economic growth going forward. Most economies have traversed the global pandemic more strongly than predicted: Real GDP in the U.S. is now 2.8% higher than it was at the end of 2019.
Nevertheless, the prospect of recession, alongside global energy and cost-of-living challenges, means businesses need to be strategic in their decisions. In my view, the best way to do this is through global hiring: There is no longer any sound case for just hiring locals. Here are five reasons why global hiring is the smart option in 2022.
1. Widen the talent pool
Unemployment in the U.S. is at 3.6%, close to full and similar to pre-pandemic levels. At the same time, job openings/vacancies remain strong — 11.3 million were counted in the July Job Openings and Labor Turnover Summary (JOLTS). Notably, the highest number of vacancies were for skilled positions, jobs in the Professional and Services category.
This tight labor market means employers are finding it increasingly hard to recruit — especially for specialized roles such as software engineering and data science. Hiring globally goes a long way to solving this problem. When you hire internationally, you have access to a much larger pool of potential applicants. For example, Poland, Slovakia and are renowned for their pool of highly qualified tech professionals available to remotely for international companies.
2. Cost efficiencies
Hiring means access to employees who live somewhere with a much lower , which generally means correspondingly lower salary expectations.
Countries also vary in the requirements for compulsory employer contributions and payroll taxes that increase the cost of employment. For example, the and Germany generally require that employers deduct a certain amount of the employee’s pay for health insurance. But Australia and New Zealand, with public healthcare systems, do not require such employer insurance contributions. Overall, hiring a global team can substantially reduce the payroll burden for your company.
3. Tap into resilient international markets
Global economic challenges have not been distributed evenly across countries. Asian economies, in particular, have been more mildly affected. In China, India and the -5 (Indonesia, Malaysia, the Philippines, Singapore and Thailand), strong growth of over 5% per annum is still being forecast for the rest of the year and into 2023.
For ambitious companies, this means attractive consumer markets for overseas expansion. And the biggest factor in your overseas market success is likely to be employees familiar with that market.
When for your international business presence, the two most popular options to ensure full legal compliance are:
Setting up a local entity or subsidiary company in that location: That entity or subsidiary becomes the local employer and must abide by all employment laws there.
Using an Employer of Record (EOR) solution: The Employer of Record becomes the legal employer in that location and takes care of all payroll, HR compliance and employee tax withholding for employees based there.
4. Compliance benefits
In some countries, employer compliance is more onerous than it is in others. For example, in some countries:
Termination at will is permitted — continuing employment is entirely within the discretion of the employer. Others require termination only with due cause and/or redundancy payments.
Generous annual leave and paternity leave allowances are mandated. In other countries, there is no legal right to paid leave.
Employers are required to contribute to pension schemes and workers’ compensation funds. In others, this is voluntary.
Employers must support flexible working and have remote work policies in place. In other countries, this is entirely up to the employer.
In short, when you choose an overseas country of hire, you have more control over your compliance obligations than you do when you do all your hiring locally.
5. 24/7 customer support
Gartner reports that only 9% of customers are able to solve their business queries on their own. This means that, despite the expense, efficient customer service channels are more important than ever. Customers expect fast and capable support, no matter where they are based and increasingly, no matter when they contact the company.
It is all but impossible to meet the service expectations of your international customers with customer support based in just one time zone. As 24/7 support becomes the expectation, it is important to have staff based in multiple locations. Hiring globally means you can easily place your in-person support (whether by voice or online chat) in multiple time zones. This will enable you to provide wraparound coverage for your customers.
Being limited to your local market is a thing of the past. Hiring internationally aids talent acquisition, saves money, enables you to expand into new consumer markets and allows for 24/7 customer support. In the future, it will become increasingly difficult for businesses that stay local to retain their competitive advantage.