When you hire globally, you expand your team by hiring employees or independent contractors abroad. But what drives an organization to start hiring globally instead of domestically?
Organizations worldwide are building more resilient teams by saying goodbye to the traditional 30-mile hiring radius and embracing global hiring. As a result, they’re tapping into unlimited talent pools, building more culturally diverse teams, and giving their talent the freedom they desire to choose where they work.
But is global hiring right for your team? This article will explore the main factors driving organizations to hire globally, prominent challenges and benefits, and what every organization should do before diving into the international talent pool.
When you hire globally, you expand your team by hiring employees or independent contractors abroad. But what drives an organization to start hiring globally instead of domestically? Here are four of the most common motivators we hear from our clients at Deel:
The pandemic sped up the adoption of remote work and hybrid work. It’s now normal to have remote or distributed teams—and it’s what workers want, too. Research from Buffer shows that 97.6% of workers want to work remotely, at least some of the time, for the rest of their careers.
Companies in competitive markets across the world are facing talent shortages, especially in places like San Francisco and New York. In response, their hiring teams are tapping into other, less competitive talent pools to fill roles.
When an organization has a business or products that span several geographical locations and use cases, having a global team is more relevant than ever. It enables them to hire employees in targeted locations, gain first-hand market insights, and leverage employees’ local connections.
Let’s take a look at an organization that was considering global hiring, how they made their decision, and the impact it had on their growth.
This early-stage company was based in San Francisco, raised its seed round, and had a rough product in flight. They needed to scale their product and go-to-market (GTM) strategy to keep up with demand. After considering their budget, they determined they needed to hire two front-end engineers, two back-end engineers, one product designer, and one marketing manager.
In a competitive market like San Francisco, they couldn’t hire what they needed while sticking to their budget—it would have cost them over $56,000 per month.
The co-founders had experience living and working abroad and were familiar with navigating multiple time zones and languages. So, they considered hiring globally. By hiring outside of the US, they could save hiring costs by not hiring in a competitive market, cover more time zones to increase their ability to address urgent client requests, and have employees in several potential markets.
But there were challenges. They’d have to integrate new cultures into their small team, comply with several countries’ labor laws, and manage global payroll. But if executed properly, they could save significantly on these key hires, have client coverage around the clock, and provide immediate support in multiple new markets.
Ultimately, they hired their key roles from Israel, Ukraine, the UK, and Serbia, instantly making them a global company. By embracing international hiring, the company scaled its operations to 150+ countries and grew from $1-100M ARR in less than 20 months. (If you haven’t already guessed, the company in this example was Deel!)
Global hiring can be a great success for companies of all sizes, so long as their teams are prepared. Let’s take a closer look at the common challenges and benefits that organizations can experience.
Hiring and compensation
Talent normalization is one of the most common challenges of global hiring. What’s considered a Senior Engineer in one country could be equal to a college grad in another. As an organization, you’ll need to find ways to combine varying experiences under your company org chart in a way that makes sense.
When it comes to compensation, the offers you make must meet the standard of the candidate’s home country. You’ll need to negotiate with the candidate’s home currency and statutory benefits in mind.
Employee experience
Consider how you want your team to operate with global members. For example, varying time zones can make it hard to set office hours, so you may want to implement a flexible work schedule to accommodate international team members.
Working on a distributed team can feel isolating for workers, which is why it’s good practice to almost over-communicate with remote, distributed team members to ensure they’re integrated into the company workflow. Provide them with an exceptional onboarding experience, set clear KPIs, and treat them with the same care as domestic workers. You should also hold weekly check-ins and maintain consistent lines of communication with all team members.
Cultural differences
As a global organization, you communicate across international audiences and have to tailor your communication styles to different product markets. If your product or company isn’t as relevant in the country you’re hiring from, the new hire will experience a steep learning curve.
To build a positive multicultural work environment, you’ll need to prioritize spending time together by investing in all-hands meetings and company off-sites. At Deel, we hold weekly live all-hands meetings to discuss company and product updates.
If you go global, encourage your people to meet as frequently as possible. Consider providing employees with passes to coworking spaces such as WeWork so they can collaborate in person.
Staying compliant
When hiring globally, you’ll encounter varying international regulations. You’ll have to ensure compliance with local labor laws in each country and keep hiring documentation in order. Global teams need to be well documented and compliant, as compliant hiring is top of mind for investors as you look to raise new rounds.
A larger talent pool
Have you ever had the perfect candidate for a role, only to reach out and learn they’ve moved abroad? Global hiring removes geographical barriers, enabling you to hire those within your network regardless of their respective locations.
If you can’t find the quality of talent you want within your budget and your region, it’s no longer an issue. Your team can find talented workers across the world without worrying about geographical borders.
Cost optimization
Global hiring allows companies to make more competitive and strategic hiring offers. You can allocate more spending for key roles and then hire for additional positions in international regions with more affordable market rates.
Access to new markets
If you want to expand into a new market, there’s no better way than to hire local talent in that region. Global teams typically speak more languages than domestic teams and can easily obtain cultural specializations, market insights, and connections in various markets worldwide.
24/7 team coverage
The more dispersed your global team is, the more time zones you’ll cover and the more efficient you can be. The workday may end in one time zone, but in another it’s just beginning, creating an uninterrupted workflow and ensuring your clients have around-the-clock support access.
Follow these steps before bringing on your first global team member:
Before expanding, consider the culture you want to build at your company. Determine the perks you want to offer your team members, what time zones you want to cover, and whether you want team members to meet with each other in person. If so, consider clustering employees together in specific regions.
You’ll also want to identify your company’s current stage. Moving forward with global hiring is wise when you can clearly articulate your product/business to an international audience. You should also be prepared to adapt to the cultural differences and language barriers that come with hiring globally.
Next, identify the key hires you want to make and set your budget for each position. Who you choose to hire abroad will depend on your team’s budget, location, and the roles you need to fill. While some companies use global hiring to save money on key roles, others keep key roles domestic and save global hiring for direct reports and independent contractors.
Consider each location’s quality of talent, time zone, language, cost of hiring, and the cultural differences and similarities between the people there and the people on your team.
You can adopt a different global team model for different purposes, like we’ve done at Deel. For example, our engineers and product teams are based predominantly in European countries, which allows them to work together in the same time zones. Our GTM teams are based closest to the sales teams they support, and our support team spans the globe, so we can service 7,000+ clients across 150 countries, 24/7.
Most global organizations base their pay on the employee’s experience or location. The goal is to keep your people happy and motivated by their salary. You can’t apply the same compensation approach to every role on a globally dispersed team, though, as there will be various cultural and cost of living factors to consider. Instead, you can set salaries for a global team using the Salary Insights Tool or use the Employment Cost Calculator to calculate what it will cost you to hire in different countries.
There are several ways you can go about hiring globally. You can work with an agency or set up a legal entity in every country you hire in, both of which are time intensive and costly. You could also hire independent contractors on your own, though this approach opens up compliance risks. You have to ensure you’re compliant with local labor laws and regulations for each new hire and not misclassifying workers. Misclassification can lead to fines, legal penalties, and a damaged reputation.
Or, you can hire an employer of record (EOR). With Deel as your EOR, you pay a cost per employee per month, and we handle the entire employment process for you, including legal compliance, global payroll, and HR admin. Connect with Deel to learn more!
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