Five Things to Know About Hiring Internationally, Backed By Data

Nicole Rothstein

As today’s workforce becomes more globalized—in large part due to improved access to remote work software—America’s small and medium-sized businesses (SMBs) are increasingly hiring outside of the United States. 

Gusto economists recently took a look at international hiring, including the experiences SMBs have with hiring on a global scale and the future of a globally distributed workforce. 

Here are five key takeaways from this research on hiring internationally:

Growth in international hiring is due to specific workforce factors

In conducting this research, Gusto discovered that one of the driving factors for the uptick in international hiring is an interest in managing costs. Three out of four businesses reported hiring internationally for cost purposes, especially as talent in the United States has become more expensive to hire, manage, and retain. 

Additionally, nearly 60% of the SMBs surveyed said that it is difficult to find talent in the United States with the skills needed to succeed in their available roles. This talent shortage is leading businesses to turn to international hiring options at an increased rate.

Businesses are also hiring abroad in order to better serve global markets. As they seek to expand their products and services into other countries, there are benefits to supplementing their existing teams with workers who live in those international areas.

Nearly two-thirds of the businesses surveyed already had a US-based remote employee prior to hiring globally. Of those businesses, 72% reported that having a remote employee residing in the United States was a positive influence on their decision to hire workers in other countries. This is largely because these businesses have previously focused their resources on remote hiring and management processes, therefore making it easier and less expensive to delve into global team building.

Businesses report universal challenges to hiring globally

While there are many benefits to employing international workers, this hiring trend has its share of challenges. Many of the SMBs surveyed reported similarities in obstacles to global hiring, such as understanding and complying with tax and labor laws, as well as knowing what type of compensation packages will be competitive.

Factors that complicate these challenges further include difficulty working with international agencies, language barriers, not knowing how to provide benefits, confusion on how payroll works or what currency to use, and misunderstanding cultural norms within other countries. 

Another significant factor that impacts the success of a business’ distributed workforce is how well they manage and coordinate work across different time zones.

“How you coordinate and how you respect people’s time, it really can pile up, especially if you’re trying to maximize flexible work hours and flexibility for your US-based employees, which we know is a really important part of retention these days, especially for people who have other life duties,” explains Principal Economist at Gusto, Liz Wilke. “So it can be a really hard equation to solve, making sure that coordination and synchronous work gets done when it needs to be done.”

Job van der Voort is Founder and CEO of Remote—a human resources platform for global teams. Acknowledging that it can be overwhelming to hire someone internationally, van der Voort also says that actually doing the work itself can be an added layer of complication.

“You’re an SMB, you just hire great people—you don’t want to be worrying about massive compliance and complex legal overhead,” van der Voort says. “When I started my first business, it was in the country where I spoke the language and I understood the rules, and it was still a lot of work. Imagine trying to do that in several other countries at the same time just to hire somebody.”

To address many of these challenges, Gusto recently teamed up with Remote to create Gusto Global. This new interface allows SMBs to hire, pay, and manage global teams all in one place. Gusto Global, powered by Remote, is not only simplifying international hiring, but improving businesses’ ability for global expansion as well.

Businesses bring on international workers as contractors before hiring them full-time

Another finding from this research shows a trend in SMBs turning international contractors into international employees.

Wilke explains that many businesses end up connecting with talent who they discover live in different countries and different time zones. They then often first bring these workers on board as contractors because it’s the fastest way to get them on the payroll. Additionally, it’s a way to test out management styles, according to Wilke, who also says that contract work makes the commitment between the two parties easier.

“It sort of cements the relationship,” she says. “It reduces some of the compliance risks and it also helps SMBs preserve the skills and know-how and intellectual property that these contractors might have access to. It helps keep all of that in-house in addition to having somebody on the ground in these other markets in case you want to expand.”

Out of the nearly 500 companies Gusto surveyed, almost half said that one of the most important reasons for making their first global hire was to convert an international contractor to a regular employee.

Best practices help to effectively employ distributed teams

In addition to the use of Gusto Global, there are best practices that businesses can implement to help hire and manage widely distributed teams effectively.

About half of the SMBs surveyed indicated that a challenge with global teams is coordinating hours and time so that work that needs to be done collectively remains on task and on schedule. Wilke explains that technical fixes can help in this area, such as adjusting the work day to set core hours in order to maximize synchronous work.

Businesses can also manage language barriers by requiring English fluency or using text-based translation services.

Additionally, many successful global companies have invested in cultural education so that managers and other employees can better understand, relate to, and work with international workers. 

Van der Voort explains that one of the most important things leaders can do is create a strong foundation within the business. He says that having clear company values helps to inform things like standards of behavior and communication at Remote.

“What we found was that if you have these clear guidelines about how you communicate, how you treat each other, then language and cultural barriers start to dissolve,” van der Voort says.

From an operational perspective, van der Voort explains that one of the worst things managers can do with a global team is to schedule frequently recurring meetings. The regularity of these meetings, he says, can lead to decreased flexibility in schedules. 

Additionally, he advises businesses to avoid creating teams that are widely distributed across several different countries and time zones, as this will make it difficult for team members to find available opportunities to meet with each other.

Another best practice involves creating opportunities for members of a global team to connect, such as coffee chats or other virtual activities.

“It doesn’t matter if it’s text or video or in person, but you want to create those moments that are non-transactional where you don’t need something from the other person, where it’s not a check-in on a project, where it’s not a team meeting,” van der Voort says. “People are naturally very social, so they will want to connect with each other—especially people working in a distributed team because their social battery doesn’t fill up as quickly as people that step into the office and are immediately faced with colleagues.”

Popularity of international hiring appears to be growing

Despite challenges related to differences in time, rules and regulations, and cultures, businesses reported overwhelmingly positive experiences with international hiring.

“We see more and more companies hiring, not just in one other country, but in 10 different countries,” van der Voort explains. “And I’m not talking about very large companies. I’m talking about SMBs that hire maybe 30 people in 10 different countries.”

The future of global hiring also looks good. Going back to Gusto’s research, 75% of the businesses surveyed said they intend to increase their international hiring over the next one to three years.

Wilke says that she thinks the conversation regarding remote work, global teams, and the idea of returning to the office (RTO) is ongoing, and that the business landscape is wide enough for individual companies to decide how they want to coordinate their work. A lot of these decisions, she says, will differ based on whether companies existed before the global pandemic or if they were born afterward—with the majority of companies in the latter, as well as small businesses, being more flexible and open to varying working options. 

“I think that given the strong signals that we have from this survey and also from Job’s own experience with Remote, I don’t see that this is a trend that is going to go away anytime soon, even as the conversation about RTO and how much work in the United States should be done in person continues to go on,” Wilke says.

Like Wilke, van der Voort also says that remote work and global teams will only continue to rise in popularity. 

“The fundamental forces that drive people to start working remotely are increasing in strength,” he explains. “There’s always a shortage of talent close to your office, which will continue to drive remote work and it will continue to drive international hiring as a whole. That is a trend that will only increase and is further amplified by the fact that since COVID, we’ve realized that if I’m a knowledge worker, if I do most, if not all my work from a computer, I don’t have to be in the office to do the work. I might like to be in the office and in that case, that’s fine. But if my life at the current moment, or because I simply don’t want to or I can’t be in an office, I don’t have to be anymore.”

The combination of those two things, van der Voort says, means that the talent pool that works remotely or prefers to work remotely will continue to grow.

A final word on hiring internationally 

The international hiring scene is no longer dominated by big businesses. As a result of improved access to remote work, the impact of the global pandemic, and the increased desire by today’s workforce for flexibility and fulfillment, SMBs are focusing on building global teams at a rapid pace. In doing so, they can better manage costs, address local talent shortages, and expand their products and services into global markets. 

Gusto, in partnership with Remote, is opening the door for SMBs to hire and manage international teams with ease and confidence. Learn more and join the waitlist to launch your business into the international workplace with Gusto Global.

Nicole Rothstein Nicole Rothstein covers a variety of topics related to finance, small business advocacy, and workforce and regional development. In addition to writing for and managing several blogs and publications, she has worked closely with federations, chambers of commerce, nonprofits, small businesses and financial institutions to create impactful content marketing strategies.
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