Once you have established the fundamentals of your overseas business, you will need to seek out, hire and retain qualified employees. This requires effective recruitment, as well as a positive and inclusive work culture.
Hiring employees in a new country is intimidating. The cost of turnover is remarkably high, so your company’s success depends on your ability to select strong candidates who are likely to remain with the company for a long time.
Some considerations in international hiring parallel those in your main office, but there are steps that you will need to give extra attention.
- Initiate planning for hiring quickly because applications, legalities, and recruiting
strategies can be time-consuming.
- Decide whether employees will work remotely or on-site in an international
office.
- Carefully review legal requirements for employees in the new office.
- Obtain required certifications from the department of labour.
- Explore channels for recruitment, including partners within the country.
As you determine your hiring strategy, realise that there are many possible approaches to the process with their own advantages and disadvantages.
LEGAL ENTITY
Establishing a legal entity is a common strat-egy when expanding into a different state or country. Essentially, it refers to a company’s establishment in a different country than its original location. Employees can then be hired as part of this legal entity.
While this strategy is common, it has definite limitations in that it is both time-consuming and expensive.
LOCAL SUBSIDIARY
Opening a local subsidiary means that you have established an independent business entity under the control of the holding or parent company. This takes time, but it allows for the possibility of opening a physical space and developing a strong presence in another country.
However, it is usually best to use this strategy only if you plan to expand into a single country, as you would otherwise need to create multiple local subsidiaries for all of the areas of expansion.
EMPLOYER OF RECORD
Hiring employees using an employer of record (EOR) is becoming increasingly popular around the world. You can search for talent in as many countries as you would like, and the EOR can take charge of hiring and onboarding.
While using an EOR removes some of the pressure from your own shoulders, it isn’t always the best solution. In fact, some countries place limits on how long employees can be kept on via an EOR.
And yet, EOR could be a preferred choice if you prefer not to or do not have the funds to register local entities for hiring, or you don’t have the necessary exper-
tise and are concerned about compliant contract, and want to outsource your payroll.
It is also useful as a temporary measure when you are testing a new market or in the interim, before you go through the lengthy process of establishing a legal entity or developing a carve-out deal.
FREELANCERS OR INDEPENDENT CONTRACTORS
You may also want to consider hiring employees as independent contractors or
freelancers. Because these individuals are not technically your employees, you are not required to offer benefits or deal with taxes.
If you are in need of project-based or temporary workers, independent contractors are a particularly logical choice.
As with every option described here, there are risks in working with contractors and freelancers.
The most concerning prospect is that you may misclassify workers due to a lack of understanding or awareness of local laws. Misclassifications can lead to serious financial penalties and damage to the reputation of your company.
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