In today’s highly competitive market, businesses turn to cross-border hiring to expand into new regions and build stronger teams. While cross-border hiring benefits employers, it also presents new challenges. Companies must consider country-specific legal requirements, standards, and processes to ensure compliance and attract top talent when hiring across borders.
This guide shares seven steps global employers should take to ensure a smooth cross-border hiring process.
What is cross-border hiring?
Cross-border hiring refers to employing talent from other parts of the world. For instance, a digital marketing agency in the U.S. may decide to hire technical SEO specialists in India to support client needs. The combination of a globalized workforce and highly competitive talent markets has increased the prevalence and importance of cross-border hiring.
Fortunately, technological advancements, global hiring partners, and the rise of remote work arrangements have made international talent more accessible to employers.
Why businesses opt for cross-border hiring
Businesses choose to hire talent from other countries for several reasons. HR teams must consider competition for quality candidates, cost-efficiency, market expansion, and innovation.
Additionally, a business may face skills shortages. The Mercer Global Talent Trends 2024 Report found that “48% of HR leaders see skills shortages as a top threat to their business.”
Business owners and recruiting teams may think about cross-border hiring for the following reasons:
Access to global talent
One of the primary reasons businesses look to cross-border hiring is to access a wider talent pool. By broadening the candidate pool, teams can find the best fit for specific roles. Finding the right candidates domestically can be challenging, particularly in highly specialized fields. Hiring teams may encounter a scarcity of the talent they need and look beyond local borders.
Cross-border hiring can exponentially increase an organization’s access to talented professionals. A flexible global recruitment model allows businesses to tap into other markets to source the experts they need.
Cost-efficiency
Organizations hiring outside their home country may experience cost benefits due to varying living standards and wages in different countries. Cross-border hiring allows businesses to stretch their hiring budgets further while adding top talent to their organization.
For example, a business owner in North America, where living expenses are higher, may employ talent in lower-cost areas and reinvest the cost savings into another area of the business.
Market expansion
Cross-border hiring offers significant advantages for organizations looking to expand into new markets. Local talent can help organizations navigate new regions effectively and integrate seamlessly.
Additionally, team members working in different time zones—and potentially working around the clock—can positively impact customer satisfaction and productivity.
Diversity and innovation
Hiring international talent encourages diverse perspectives and fresh ideas that fuel innovation and help accomplish business objectives.
Research shows that diverse teams consistently outperform their peers, as the breadth of experiences and ideas contributes to a team’s overall success.
The cross-border hiring process: 7 steps
Companies worldwide are making the most of cross-border hiring. Understanding the cross-border hiring process expedites finding and onboarding new talent. Read on for the seven steps to follow.
Step 1: Define hiring goals
Companies must first identify the role to be filled, outline its required skills and qualifications, and determine how cross-border hiring aligns with business objectives.
For instance, a business may want to hire customer service representatives to support its expansion into a new market. The business determines that hiring professionals in Asia will help the team communicate with customers in this region. Hiring multilingual professionals ensures the company can successfully and promptly serve its customers in the new market. Native speakers of the target market’s language can also provide insights into cultural nuances and behaviors.
Step 2: Research target markets
Teams should research target markets after defining hiring goals and identifying necessary qualifications. They should evaluate countries based on talent availability, cost, and language compatibility. When assessing the most relevant markets, they should consider the primary driver for cross-border hiring.
HR teams should thoroughly research potential target markets to understand the value they provide. Specific regions allow global businesses to maximize their budgets and secure skilled experts.
Businesses must also research regional employment laws and tax structures to identify areas that align with their hiring goals. Each region and country has unique employment laws and tax structures that impact cross-border hiring. For many businesses, complying with regional employment laws can be the most challenging part of cross-border hiring.
Step 3: Choose a hiring model
Direct employment via entity establishment
Entity establishment is the traditional method of cross-border hiring. However, establishing a legal entity in a new market can be expensive and tedious. Businesses can hire and pay local employees directly if they choose the entity establishment route. Corporations with large budgets and sizable hiring needs may consider direct employment and entity establishment. However, for most businesses, creating an entity isn’t worth the high cost and lengthy establishment process.
Engaging contractors
Hiring contractors is another popular option for businesses looking to hire abroad. Some businesses engage self-employed contractors with specialized skills instead of hiring full-time employees. Companies can use contractors to test foreign markets before establishing a legal entity in the region. Engaging contractors sometimes brings cost savings but also raises the risk of misclassification.
Partnering with an EOR
Another solution to the challenges of direct employment and engaging contractors is partnering with an employer of record (EOR). An EOR streamlines cross-border hiring by acting as the legal employer of a business’s international workforce, enabling companies to hire and pay employees without setting up an entity. The EOR manages hiring, onboarding, compliance, payroll, benefits administration, and more, reducing the company’s HR responsibilities and ensuring compliance when working with global employees.
Step 4: Navigate legal requirements
If choosing to establish an entity or engage contractors, HR teams must understand the legal requirements of cross-border hiring to ensure compliance. For example, businesses must obtain work permits, visas, and legal documentation to hire employees in another country.
HR teams must also understand country-specific laws, including employee classification and mandatory benefits. Employee classification and mandatory benefits differ by region, and noncompliance in these areas can result in significant fines or legal action. An EOR—equipped with international hiring expertise—ensures compliance with country-specific laws and eases that heavy administrative burden. By partnering with an EOR, businesses can confidently hire, pay, and manage international employees.
Step 5: Develop a recruitment strategy
To find talent in new markets, businesses should develop a specialized recruitment strategy aligned with global hiring goals. This strategy will likely differ from a domestic hiring strategy since employment requirements and living standards vary from country to country. One way to start sourcing international talent is to use global job boards such as Indeed Worldwide and LinkedIn.
Businesses may also consider working with recruitment agencies with international expertise. International recruitment agencies serve as a liaison when sourcing talented professionals, simplifying the hiring process for HR departments. Additionally, an EOR can aid in global talent sourcing. EORs often work with pre-vetted recruiting partners to match qualified candidates with a business’s job openings. This allows companies to tap into new talent markets and quickly find top candidates.
Step 6: Conduct interviews and assessments
Companies can use video conferencing tools and global communication apps to help with cross-border hiring. HR teams and department leaders can conduct interviews using apps like Zoom and Microsoft Teams, which allow virtual interviews and assessments to be conducted anywhere.
During the interview, hiring teams must adapt evaluation criteria to cultural differences and diverse educational backgrounds. For example, professionals in the EU may have educational differences from individuals in India. HR teams should be mindful of cultural differences, such as variances in communication styles and leadership expectations.
Step 7: Extend offers and onboard new hires
Businesses should ensure their compensation packages are tailored to each local market before extending offers to chosen candidates. This means understanding what each market requires regarding wages, benefits, and legally mandated provisions.
After a candidate accepts the offer, HR teams should start the onboarding process immediately. Onboarding is vital for new hires’ success, allowing them to become familiar with company culture, policies, and expectations. Virtual project management platforms can assist in getting new hires up to speed on work processes and projects.
When partnering with an EOR, businesses hand the HR-related onboarding and benefits administration responsibilities to the EOR. The EOR ensures local regulatory compliance with pay and benefits requirements and can assist with visa and immigration needs.
Challenges of cross-border hiring
While cross-border hiring provides many benefits to businesses, it also comes with challenges. The main challenges include:
- Legal and compliance risks. The biggest challenge for businesses engaging in global hiring or contracting is compliance with various employment laws and tax requirements. Risks of noncompliance include operational disruptions, legal disputes, fines, and more. An EOR solves this challenge for businesses by providing employment specialists with country-specific compliance expertise.
- Payroll and benefits complexity. Managing payroll and benefits compliance in different regions is also challenging without an EOR. Businesses that hire employees or use contractors must comply with local labor laws and benefits standards to avoid penalties, employee dissatisfaction, and employer reputation damage. Companies should become familiar with country-specific requirements for benefits, insurance, paid leave, etc., to provide a consistent employee experience. EORs specialize in payroll and benefits administration, empowering businesses to confidently extend their workforce beyond borders.
- Cultural and language barriers. Teams with a globally diverse workforce may experience communication challenges. Language barriers between teams must be addressed proactively to enhance collaboration and productivity. Additionally, companies should encourage cultural sensitivity to prevent workplace disturbances and foster a positive company culture.
- Time zone logistics. Businesses need to manage time zone differences in distributed teams. The logistics of effectively planning project deadlines and meeting times are undoubtedly challenging. Still, companies can proactively address these issues by speaking to employees and gathering feedback on effective collaboration in distributed teams.
The future of cross-border hiring
Cross-border hiring is gaining popularity as global work opportunities increase, and remote work is making it more accessible than ever before. Today, companies can hire international talent to drive growth abroad and support overarching business objectives.
As a leading EOR, Velocity Global helps businesses hire, pay, and manage talent in 185+ countries without setting up local entities. Our global workforce platform and services, backed by our in-country HR, legal, and finance expertise, make it easy for companies to manage every aspect of cross-border hiring while ensuring compliance with local laws.
Learn more about our EOR solution and how we help businesses of all sizes build a global workforce quickly while maintaining compliance. Contact us to consult with an expert today.
