Whether by choice or by chance, remote work is here to stay, with data showing by the end of 2022, 25% of all jobs will be remote. Businesses of all sizes must adapt and adjust their recruitment practices and learn how to hire remote foreign workers.
Hiring employees from different countries has many advantages and challenges that need to be considered. This guide will explore the ins and outs of recruiting a foreign employee, including legal requirements, cultural considerations, and communication barriers.
By the end of this article, you’ll know how to hire foreign workers and be ready to accelerate your journey toward building and scaling your team with international remote employees.
Can US Companies Hire Remote Workers From a Foreign Country?
The answer is yes – US companies can hire international workers legally. However, in most cases, hiring a remote team cannot be done as a direct employee unless the company has a legal entity in the worker’s country of residence. But there is another option: hiring them as contractors.
The contract arrangement still allows you to provide an employment-like experience with full-time roles and paid time off (PTO). Additionally, it's possible to offer other employee benefits such as health insurance or gym memberships through online options.
This makes it easier for employers to ensure their remote foreign employees have access to all they need for optimal job satisfaction and performance.
6 Main Benefits of Hiring International Remote Workers
Hiring international employees has several benefits. Here are some of the most relevant to employers' bottom lines.
1. More Talent to Pick From
When hiring across borders, companies benefit from having access to a much larger talent pool of qualified professionals. By tapping into global markets, organizations can find the right candidate with the specifications needed.
Furthermore, by broadening their search criteria beyond local geography and language barriers, businesses can also discover new areas of expertise that may have been previously unavailable or overlooked.
2. Branding LOVES Diverse Cultures
Having a multicultural workforce is great for branding and attracting future candidates. Working with people from different countries can create a vibrant and stimulating work environment, bringing in fresh perspectives that may not have been available before.
This type of cultural exchange helps employees understand the importance of diversity and provides new avenues for collaboration, problem-solving, and creativity.
3. You’ll Always Be on Time
Tapping into the global workforce grants you access to talented professionals in other parts of the world, and the different time zones can be a huge advantage. For instance, if you need an employee covering working hours on other continents, you may hire a remote foreign worker.
Alternatively, if you prefer someone who works closely with your own timezone, then hiring a remote foreign employee from Latin America may be ideal for your needs. Clearly, there are many reasons your company should learn how to hire remote foreign workers!
4. You’ll Pay Lower Salaries
One of the major benefits of hiring remote foreign workers is that salaries are often lower than those for domestic employees due to the cost of living. Depending on the country, the cost of living may be significantly lower than what it would be in a developed Western nation.
Companies can take advantage of these cost savings by investing in a talented foreign workforce and reallocating their resources to other areas such as marketing, product development, or customer service.
As such, foreign employees’ wages can stretch further, potentially allowing them to live comfortably while still giving you a great deal. For example, some countries like India have much lower minimum wages at only $2.16 US daily, meaning employers can pay their remote workers significantly less while still offering competitive salaries compared to local labor markets.
These economic discrepancies mean different regions worldwide have different salary expectations, so employers can often find qualified workers willing to work for less than they would demand in their home country. This could mean you get access to a lot more talent and expertise at a fraction of your budget.
Companies in the U.S. hiring qualified remote foreign workers from Latin America can save anywhere from 30 to 70 percent of what they will pay to an American employee.
5. Diverse Work Culture and New Perspectives
When hiring remote foreign employees, it is important to understand the nuances in work culture per region worldwide. Depending on your potential worker's location, their values and behaviors may differ from your company culture.
Those values, behaviors, and talents can bring a unique set of benefits to your work culture. Remote foreign employees have the potential to introduce different perspectives, skillsets, and cultural influences that may not be available from domestic staff.
This variety of influences can help you create an enriched environment where ideas are exchanged more openly and collaboratively. Additionally, since remote foreign employees don't need to relocate for their job, they often come with higher levels of expertise in their field than local hires would typically possess.
This allows them to make a greater impact on projects due to their experience and knowledge base.
Hiring a remote worker who speaks different languages or has experience in different cultures can provide your organization with invaluable insight into how operations and communication may need to be adapted for certain markets or clientele.
Additionally, if you are looking to expand into international markets, it gives you an advantage over competitors as your team can communicate more effectively with customers in their native language.
How to Hire Remote Foreign Workers
There are two main options when it comes to sourcing remote foreign candidates: doing it yourself or using an agency recruiting service.
Do It Yourself
If you decide to source candidates on your own, there are several steps you should take to ensure you have a successful international hiring process:
- First, determine what skills and qualifications your ideal candidate should possess.
- Develop a job description that clearly outlines the position's role, responsibilities, and expectations.
- Post this job description on popular job boards in countries where potential candidates may reside – such as Indeed, LinkedIn, and Glassdoor. You may also want to consider using social media platforms, such as Facebook and Twitter, to spread the word about your job opening.
- Reach out to relevant professional groups or organizations and ask them to share your listing with their members. This will help you reach a larger audience of potential candidates who may not be familiar with traditional job boards.
- Network with other professionals in the same industry as well; they might know someone interested in working remotely for your company from abroad.
- Document your interviewing process to ensure you ask the same questions to candidates
- Make sure to have a strong onboarding process
If sourcing and screening candidates on your own seem like too much work for you or your organization, an agency recruiting service could be the answer.
3 Options for Hiring Workers From Another Country
Before you jump in and start hiring your foreign workers, it’s important to understand the three primary options for doing so: setting up a legal entity, partnering with a Global Employer of Record (GEOR), or hiring and engaging contractors.
1. Set Up a Legal Entity
Setting up a legal entity allows you to hire workers directly from another country without relying on an intermediary partner. This requires significant upfront costs and administrative effort – including registering your business in that country, obtaining necessary licenses and permits, understanding local employment laws and regulations, and setting up a payroll system.
2. Partner With a Global Employer of Record
Partnering with a global employer of record can help you simplify the process by taking care of all the paperwork on your behalf. An employer of record (EOR) is a legal entity that enables businesses to hire foreign employees without needing to set up a subsidiary or branch office in the employee's home country.
The EOR acts as an employer on behalf of the business, taking responsibility for all associated paperwork and compliance related to hiring and employing personnel abroad.
This includes things like salary payments, payroll taxes, regulatory compliance, and other tasks necessary for the employment relationship between the business and its foreign employees.
Using an EOR is generally less expensive than setting up an entity but also means that you are relying on a third party.
3. Hire and Engage Contractors
Engaging contractors is an attractive alternative for many companies looking for foreign employees because it does not require setting up a legal entity or partnering with an employer of record.
It also allows you to take advantage of local talent without establishing a long-term relationship with that person or company. However, this approach has some unique challenges related to taxation, visas, and other compliance requirements.
No matter your choice, it is important to understand the legal obligations of hiring foreign employees and ensure that your business operations remain compliant with local laws.
Use An Agency
Professional recruiters can help you find the right candidate for your remote position and streamline the hiring process. They have access to a large network of professionals who are looking for opportunities such as yours, so they’ll be able to identify and present qualified candidates quickly.
When selecting a recruitment agency, make sure that they specialize in remote foreign hires. Ask them about their experience with international clients, how they source candidates, what screening processes they use to evaluate applicants, etc.
This will help ensure that you choose the right partner to assist you in finding the best candidate for the job.
9 Common Questions About Hiring Remote Workers in Other Countries
1. Does a remote worker have to pay US taxes?
No, not necessarily. Generally, remote workers are only required to pay taxes in the country where they reside and work. However, some countries may require that you withhold taxes from a foreign employee’s paycheck or submit tax documents on their behalf.
The list of documents you may be required to submit if your worker is an employee and not a contractor are:
- A completed Form I-129, Petition for Nonimmigrant Worker, and the filing fee
- IRS 1099 Form documenting forms of payment
- Evidence of a valid employer-employee relationship(if they are not a contract worker)
- Evidence of the foreign worker’s qualifications for the position
- Proof that hiring a foreign worker will not adversely affect working conditions or wages of similarly employed U.S. workers
- Payment of fees associated with obtaining an employment visa (if applicable)
- Form W-2, which is required for ICE to review the I-9 Form (if a visa is required)
Form W-8 BEN, also known as Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting, is the exception as it is required for international contractors to fill out to prove their foreign classification with the IRS.
It is always best to consult with an experienced immigration attorney when filing paperwork for a foreign worker’s visa to ensure accuracy and compliance with all applicable laws and regulations.
You should also use an attorney's advice when determining if a worker is an employee or a contractor, as misclassifying your workers could lead to penalties down the road.
2. Do I need to worry about paying taxes in their home country?
Yes, when you hire a remote worker in another country, it is important to consider the taxation laws of their home country. Depending on the specific regulations in that country, you may be responsible for paying taxes on behalf of your employee. However, you can use a partner, such as a remote hiring agency, and they will take care of all of this for you. Similarly, you can hire them yourself as contractors.
3. Do I have to take care of remote workers’ benefits like health insurance?
It depends. If you are hiring remote foreign workers in an employee/employer relationship, you do need to take care of remote workers’ benefits such as health insurance. Depending on the country you are hiring in, there may be certain legal requirements that must be met to offer a fair and safe employment package to your remote worker.
However, if you plan on hiring your foreign workers as remote contractors, you are not required to pay for benefits. This is one of the reasons hiring remote workers on a contractual basis is so desirable for American companies.
4. Are remote foreign workers independent contractors?
It depends. Generally, you should treat foreign remote workers as independent contractors if they provide services independently and without direction from your business. Nevertheless, it's always best to consult with a legal expert in each country where you plan to hire remote foreign workers before making any decisions.
5. How does the contractor model work?
This model is a great way to bring on remote workers from other countries because it allows the employer to hire individuals on a freelance basis rather than having them as full-time employees. This can provide flexibility and cost savings regarding taxes and payroll administration. Additionally, it provides flexibility and often better salaries for remote contractors.
Essentially, the employer contracts with an individual or company to do specific tasks for them that could be done remotely. As part of this arrangement, the contractor would agree to certain hours per week and deliverables within those hours.
The employer pays for these services directly without worrying about setting up payroll or managing the employee's taxes, so it’s a win-win all around!
6. Does an international remote worker need a VISA?
No, they do not. Foreign remote contract workers don’t require visas because they are based and employed outside of the US. While these employees may have to come into the country occasionally to fulfill their contractual obligations, they shouldn’t have any issues entering as long as they can provide proof that their stay will be temporary.
7. Should I pay for the equipment?
This is a yes and no. If your foreign remote worker is an employee, you should pay for the necessary equipment they need to do their job. Depending on the specific role, this could include things like a computer, software licenses, or other tools.
It's important to ensure that your foreign employee has everything they need to be successful and productive working from home. However, if the employee is a contractor, you are not required to pay for their equipment.
8. Do they have good internet service?
Yes, most countries offer reliable internet service. If you’re hiring remote employees in a country with less developed infrastructure, there may be bandwidth and connection speed issues. Make sure to research the local internet access before making any remote hires. You can also assess this when you conduct virtual screening interviews.
9. How can I retain top remote international talent?
Retaining top talent is essential when hiring remote foreign employees. To ensure the best results, you should provide competitive compensation and benefits that are tailored to the particular country’s job market.
You should also stay in touch with your workers by setting up regular check-ins and providing ongoing feedback about their performance. Finally, offering career growth opportunities such as training programs or promotions can help keep your team motivated and engaged.
How to Pay Foreign Employees Who Work Remotely?
As your business expands and you look to hire remote foreign employees and foreign contractors, it's important to consider how you will pay them. Fortunately, various platforms are available, making it easy to pay foreign workers remotely.
Platforms such as Deel, Multiplier, and Provide allow employers to quickly and securely pay their international staff without requiring expensive or complicated wire transfers. When using these platforms, employers should be aware of different tax implications depending on the country where their employee is based.
Here are some details on each:
To use Deel, employers must first verify their identity through a secure authentication process. Once verified, employers can set up payment methods for their remote employees in multiple currencies, including USD and Euro.
Employers also have access to automated payrolls and reporting tools which make Deel easier to manage payments efficiently.
Multiplier is another great option for paying international staff remotely because it allows employers to quickly and securely manage all aspects of payroll, from hiring to paying out salaries.
Multiplier also offers an integrated tax calculator so that employers can ensure they pay the correct amount of taxes in each country.
Provide is an excellent platform for paying remote employees around the world. Employers can set up payment methods with automated payrolls and access to a variety of currencies, including USD, GBP, and Euro.
The platform also offers advanced reporting tools that easily track payments and tax liabilities quickly and accurately.
No matter which platform you decide to use for paying your foreign employees remotely, remember that it’s important to research thoroughly before committing to ensure you’re getting the best solution for your business needs.
Which Roles Are Suitable for Hiring International Remote Workers?
When considering this question, think back to the times of COVID lockdowns and how many roles were handled successfully without any issues. Administrative support, customer service, finance, marketing, or software engineering are all examples of positions that can be done effectively from home.
With proper planning and organization, a great variety of roles could benefit your business through remote foreign hires.
Should You Hire Offshore or Nearshore Remote Workers?
Regarding hiring remote foreign employees, there are two main options: off-shore and nearshore.
- Offshore workers. These employees are located in a country far from your business’s home base.
- Nearshore workers. On the other hand, nearshore workers are located in geographically closer countries and are more familiar with your organization's culture.
Now let’s dive into some pluses and minuses of each type of remote worker.
Pros and Cons of Offshore vs. Nearshore Employees
There are advantages and disadvantages in hiring each employee category; let’s examine the pros and cons.
- Provide access to a larger pool of global talent
- Lower labor costs
- Bring diverse cultural backgrounds that can add unique perspectives to projects. Typically make use of cutting-edge technologies
- Possess extensive experience working on an international team
- Have less of an understanding of local culture, laws, and regulations, which can lead to communication issues or unexpected delays in completing projects
- Language barriers
- Time zone differences
- Provide access to a larger pool of global remote talent
- While salary costs are sometimes lower, wages are higher than offshore workers, and overhead expenses may be increased
- Geographically close to the employer’s home country
- Better collaboration between teams due to similar cultures and time zones
- More familiar with local customs, language, work culture, and labor policies
- Easier to integrate into existing operations
- Although time zones are similar, there are still substantial differences in scheduling to work around
As you can see, there are pluses and minuses to both types of workers, so you need to know when to hire each type of labor.
When Should You Hire Offshore and When Should You Hire Nearshore?
Offshoring can be beneficial if you’re looking for lower costs. The cultural differences may also provide valuable insights into new markets or customer preferences.
On the other hand, nearshore is great for hiring highly skilled talent that is in high demand with not enough local candidates. For instance, marketing media buyers, software engineers, machine learning engineers, and more.
Hiring nearshore is advantageous when there is an urgent need for personnel due to shorter time zones and fewer travel costs involved in training or collaboration between team members.
Why Should US Companies Hire LATAM in Particular?
US companies have much to gain by hiring remote foreign employees, and LatAm is a particularly attractive option. Latin American countries boast an educated workforce with high English fluency levels, making them ideal partners for US-based businesses. On top of this, there are many more benefits to sourcing your workers from south of the border(s).
In Latin America, salaries tend to be much lower than those in the United States. It's possible to hire someone for about half as much as the same position would cost in the U.S. The upside is the workers still make significantly more money than they would be working in their home country, so everyone benefits.
Convenient Time Zones
Latin America operates within the same time zones (give or take) as the US. This makes it easier for team members to interact, collaborate and build a better work environment for all.
Businesses are Moving Toward Diversity
By sourcing talent from different areas, businesses can quickly diversify their team in terms of culture, ethnicity, language, and experience. By bringing new perspectives to the table, and by identifying with a new client base, your LatAm workers will help you win business in new markets.
A Whole New Work Outlook
In Latin America, people tend to prioritize the team's success over individual success. This encourages employees to work hard, knowing their efforts will positively impact the whole group.
It also creates a sense of community and belonging within the company, increasing employee loyalty.
These are just a few of the many advantages you will discover when you decide to source your remote foreign employees from LatAm.
Creating a successful remote workforce requires strategic planning and thought, but the rewards are worth it. The key takeaway is that creating a global team opens up opportunities to increase productivity and innovation.
If you have any additional questions about hiring remote foreign employees or want to learn more about the process, schedule a complimentary remote recruiting consultation to get all your questions answered.