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The benefits for talent of companies that hire internationally are pretty clear. It diversifies job opportunities, potentially granting access to higher salaries and more varied experiences, and it assists in combining work and travel, or work and geoarbitrage.
But what are the benefits for companies? This question was recently addressed in an interview by Mark Frain, the CEO at Oyster, an Employer of Record company that helps businesses hire international talent. Let’s dive into his response and some of the risks companies face when hiring internationally that Frain doesn’t address.
Hiring Internationally vs Flexible Working
When discussing this issue, many people confuse the issues of recruiting international talent and enabling flexible working. The writer of this article, rather than Frein, does this when talking about things such as the benefits of being able to work “from anywhere” for women, who are often called on to balance more varied demands with professional obligations.
The benefits of allowing flexible working for both talent and company are clear. Having more control over how they manage their lives and professional commitments tends to manifest in a more productive and motivated workforce, and it has helped some businesses significantly reduce their overhead costs when it comes to things like office space. Offering attractive perks such as workations and the ability to travel and work remotely are also excellent incentives for attracting and retaining talent.
But in these cases, we are usually talking about companies recruiting talent within their own jurisdiction, where they are authorized to hire employees under local employment law. Therefore, US companies hiring US employees and then supporting them to travel for 12 months. This approach of offering flexibility within these contracts offers big rewards with minimal risk.
Recruiting International Talent
Recruiting international talent is a different challenge, which Frein addresses in his interview. This is the act of actively recruiting international talent to join remote teams or local outposts. There are significant benefits to this as well. When you recruit internationally, you are diversifying the talent pool. This is especially important to industries with limited and competitive talent pools. It can also reduce costs, as you can outsource certain roles and teams to talent in countries where wages are lower. But the risks in this area are also much higher.
First, there is the legality of hiring someone outside your legal jurisdiction. For example, a company registered and based in the United States can hire talent that has the right to work in the US, as a citizen or through a visa. They must submit to employment law in that country, which covers things such as pay, social security, maternity leave, redundancy, etc. It also restricts who can be hired, for example, in most cases businesses must show that there is no national talent available, for an in-person or remote role, before hiring internationally and requesting a visa for a new international hire.
This company has options when it comes to international hires. They can set up offices or outposts in other countries. This is very common with big companies, which might have offices in New York, London, Sydney, and Shanghai. They can hire talent in any of those offices under the local laws.
If the company does not want to create an outpost, they can hire the talent as an independent contractor, which provides significant flexibility but less security on both sides of the relationship.
The other option is to use services such as Employers of Record. They usually have offices and outposts in several desirable places around the world and will hire people on your behalf to work for you, though they are technically hired by the EoR company, much like a temping agency.
Risks and Rewards of International Recruitment
Whatever approach a company takes to international hiring, there are several risks associated with it, some of which are highlighted by Frein in his interview.
The first is, of course, legal compliance. You must work in accordance with employment law where you are hiring. This still affects companies that use contractors or EORs as many countries have laws about the kind of work that can be outsourced to contractors. Courts can decide that contractors are in fact employees and require retrospective benefits (Uber anyone?). Managing the complexities of employment law across borders is the biggest risk. Outsourcing to experts like Oyster is one option for managing that risk.
Next are the ethical considerations around fairness, especially when it comes to wages. Are you paying people in different countries significantly different salaries to do the same job? And could you be accused of exploitation if you outsource certain departments?
There is also the risk to company culture. While most people agree that a diverse workforce with a range of ideas and perspectives is a good thing, if teams aren’t integrated well, significant barriers can develop in teams distributed around the planet that reduce work satisfaction, productivity, and innovation.
In addition to these issues highlighted by Frein, hiring internationally also tends to come with a longer onboarding process and lower retention rates, which can push up costs. There are also logistical issues such as time zone differences making real-time communication difficult and potential language barriers between team members.
Is International Hiring Worth It?
Considering his line of business, it is no surprise that Frein acknowledges the challenges of hiring internationally but still believes that it is worthwhile. But we agree with him.
The world is changing quickly, networks are getting smaller, and more people prioritize flexibility and autonomy when it comes to what they do for a living. Depending on a company’s line of business, the rewards of recruiting diverse international talent outweigh the risks. It gives businesses access to a greater range of talent and allows them to build diverse international teams that kind solutions for diverse international challenges and markets.
As Frein says, what matters is to be “intentional and diligent” when approaching the challenge of international talent, a philosophy that should touch every aspect of a good business.
