Hiring International Employees: Best Practices for HR

Benefits of recruiting globally

Despite large upfront costs and compliance risks associated with international expansion, companies can reap enormous benefits from hiring a global talent base. For example, you can increase productivity and reduce costs by hiring international workers in countries where labor is cheaper.

In addition, global talent brings unique perspectives to a company by virtue of their different lived experiences, cultures, and traditions. As a result, companies can garner unique solutions to problems and spark company innovation.

Ultimately, companies must compare the risks and rewards of hiring internationally before expanding globally, as a faulty global recruitment strategy could do more harm than good to the company’s brand.

Challenges of hiring employees internationally

In addition to competing labor laws, cultures, customs, and taxation regulations, companies will likely encounter numerous additional challenges that make hiring in another country difficult, including:

• Reconciling costs for setting up foreign entities or subsidiaries or working with a PEO or EOR.
• Budgeting effectively for international recruitment, including international job board postings, purchasing recruiting software or upgrading existing HR tech, and hiring more recruiters.
• Crafting equitable, competitive, and culturally appropriate global compensation and benefits strategies.
• Ensuring correct currency conversion rates and pay scales per country.
• Communicating with international teams across time zones.
• Understanding employee classification laws and other labor regulations that vary by country.
• Competing for talent at the local level and from other global companies.

6 Steps to hire internationally

Hiring an international employee requires an understanding of your goals, the hiring environment, your budget, and your structural options. Then, you must select candidates, evaluate them, narrow them down to your new-hire picks, and onboard them. And, the whole process must be legally and culturally appropriate to the new hire’s country. Here is a six-step guide to this process. 

1. Understand your goals 

When evaluating your international hiring goals, consider not only your business’s wants and needs, but the requirements surrounding international hiring. For example, determine if you need to build an entity within the hiring country. 

In addition, consider the candidates you wish to attract to your position. For example, would you rather hire full-time employees or contractors? What skills, qualifications and experience do you need in the candidate? 

Once you’ve decided how you want to go about hiring internationally and the types of candidates you need, create key performance indicators (KPIs) around your international hiring. One way to do so is defining goals that are measurable, attainable, relevant, and time-bound (SMART). 

Many HR software offer tools to define and track such goals. For example, Rippling offers a SMART goal template. It then allows you to input your KPIs into the software and gather data to determine your success. You can even connect the goals to new-hire performance and 360-degree reviews to create definitive insights into the program’s success.

2. Research country hiring requirements

Once you have your goals defined, decide what steps are required to reach them and research how to go about completing those steps. For example, If you want to hire full-time international employees, determine the country in which you’ll hire and research the requirements for doing so.

Also research:

• Are you required to have an entity within the country before hiring?
• Does the country have requirements for base salaries, employee classification, benefits, holidays, severance pay, or employment practices (such as termination notice periods)?

To help you complete this research, many HR software offer tools and complementary services that complete this complex research for you. Some even automate their implementation. For example, Remote’s payroll services ensure local compliance across the globe. Others, like Rippling, auto-calculate and remit payroll taxes based on the global location of the employee or contractor.

3. Define your costs 

Understanding the costs associated with hiring a foreign employee can help you determine when and at what speed you can expand hiring in your chosen hiring countries. Typically, hiring internationally costs thousands of dollars extra in up-front costs. However, hiring an international employee to work for your company abroad will typically have a different cost than sponsoring an employee to work in the U.S. For example, Remote reports that if you hire a software engineer in Argentia with a USD salary of $60,000, you may pay up to an additional $15,731.76 in other mandatory employer costs such as employee pensions and Argentina’s social welfare fund. 

Here are some basic costs to consider when hiring remotely: 

• Talent acquisition: This includes what you may pay an employer of record (EOR) to help you find and evaluate candidates for hire. Or, you may need to upgrade your current recruitment and HR software to meet international hiring demands.
• Foreign entity: If you don’t plan to hire an EOR or similar service provider, consider the cost of setting up a foreign entity in your chosen country or countries, including architectural services and planning, work equipment, building materials, legal services, electricity and internet costs, property taxes, work permits, building labor and local-managerial labor, among other case-specific costs.
• Employee relocation: If you plan on relocating your new hire to the U.S., research the costs associated with doing so, For example, Visa applications and legal fees can add up to thousands of dollars. For example, New York based immigration law firm XU Law Group estimates these costs to be between $3,000 and $5,000 on average per new hire.
• Taxes: Countries have different payroll tax laws and payment requirements. In addition, many countries charge a permanent establishment tax for the privilege of having an ongoing business presence in the country.
• Employee benefits: Countries have varying expectations and laws regarding benefits packages. For example, some countries require a certain number of months for paid parental leave.
• Employee training programs: Consider investing in a cultural-awareness, diversity and/or language program to ensure your new hires are set up to be productive in their new roles and are comfortable enough to build relationships with existing employees.
• Security measures: If you plan for your international hires to work from their home countries remotely, consider the software, equipment and technology you must set up to ensure they can be productive while also securing your company’s data.

While this is a lot to consider, remember that there are tools and services available to help you knowledgeably and efficiently complete these calculations. If you want to go the do-it-yourself (DIY) route, Oyster offers a free employee cost calculator that shows you the baseline salary and benefit requirements of the countries in which you are hiring, and the fee if you choose to avail of its services.

Or, you can sign up for EOR services that allow you to hire internationally without building an entity in each country. These services calculate the costs for you. In addition, they offer tools to make compliance, hiring, and foreign employee management easy and, often, automated. EORs can also manage relevant calculations, paperwork, payroll setup, benefits setup, administration, and onboarding roadmaps. 

4. Decide your hiring structure 

Now that you know the costs of both building a structure within the countries in which you’re hiring or going through an EOR, determine which option is most affordable to your company. 

In addition, consider your company’s future global expansion plans. If you plan to hire from multiple countries, it may make more sense to hire an EOR so you don’t have to build an entity in each country. If you decide to go with an EOR service, decide whether you want a partner that is an owned-entity provider or whether they are partner-reliant.

5. Select and evaluate candidates

Construct a job post that defines the open position and offers culturally appropriate information about ideal-candidate qualifications. Your job post should be detailed so no communication barriers create false assumptions. 

In the post, walk the applicant through what documents they need to submit, including what information should be included on each one. Also ensure they know information that may be culturally driven, such as your company’s values. Using a recruitment agency within the country can help make this step culturally appropriate, including selecting appropriate recruiting channels. 

Next, evaluate the candidates. Review their resumes and CVs, their applications, and answers to all screening questions. Many recruitment software, like Rippling, offer applicant tracking systems to help you select and evaluate candidates who are interview-qualified.

At this point, set up interviews with your top candidates. Remember to consider their time zones as you do. In preparation for these interviews, research and set up an itinerary to align with the interview conventions of the candidate’s country and to ensure all interview questions are culturally and legally appropriate. If you work with an EOR or a recruitment agency, they can help you craft such questions. 

6. Hire candidates

Once you’ve selected a candidate, offer them the job and begin the onboarding process. It’s important to make this process applicable to the new hire’s culture. For example, craft your offer letter to include information your new hire will need to know. If you’ve hired an EOR, lean on its local HR experts for this step. 

In addition, provide new hires legal and tax documents that are relevant to international hiring, such as Form W-8, which exempts them from U.S. taxes. Also provide company contracts, handbooks, and immigration or tax documents pertinent to their hiring arrangements, locations, and roles. 

Finally, offer an onboarding schedule and checklist for an efficient and welcoming onboarding experience. As you do, carefully adhere to the workday norms of the new hire’s country. For example, many Latin American and some European countries close businesses for a couple of hours during the hottest portions of the afternoon, then reopen to finish the workday. Be sure to know such work norms so you can provide a culturally appropriate onboarding and work experience.

Free global hiring checklist

If you’re looking to hire staff in another country, our global hiring checklist ensures your company follows every step in a successful international talent search. Open the template in your preferred file format via one of the buttons below.

Download your free global hiring checklist template:

Considerations before hiring international employees

Before hiring in other countries, consider these factors to increase your chances of hiring success.

Recruitment

When hiring outside the U.S., you will first need to decide whether to hire independent contractors or full-time, benefits-eligible employees. This decision depends on the nature of the work that you want an international employee to perform and how quickly the you want to fill roles.

Contractors are defined differently based on the country. Therefore, in order to avoid legal issues, you have to ensure that international independent contractors are not legally defined as employees under foreign labor laws.

Otherwise, recruiting full-time employees internationally can take up to six times longer than doing so domestically, so don’t expect to fill roles right away.

However, there are some things you can do to accelerate the process. Global job boards like Indeed, Monster, and ZipRecruiter help companies find great talent because they have databases of candidates looking for work at international companies.

Some pre-employment testing software solutions like Predictive Index (PI) help companies assess the skills of international job candidates. PI includes assessments in over 70 languages, preventing language or cultural barriers from getting in the way of finding talent.

Also read: 9 Employee Recruitment Strategies to Improve Your Hiring Process

Payroll

When hiring internationally, U.S.-based companies face a number of challenges around paying employees accurately, timely, and securely.

Also read: How to Pay International Employees

To ensure accuracy, you must collect the right kind of information from new employees. Solutions like Rippling have customized forms that collect the necessary data from international employees. For example, a new employee in India will enter their Universal Account Number instead of their Social Security Number.

Investing in a solution that handles international payroll means employees get paid in a timely and secure manner. Relying on bank transfers or money portals like PayPal can spell delays, processing fees, and security threats from hackers.

Benefits administration

To compete for international talent and remain compliant, a U.S.-based company will have to adjust their benefits offerings and time-off policies for employees in other countries.

Depending on the country, there might be stipulations regarding the following benefits:

• Health and medical insurance.
• Paid holidays.
• Vacation, sick leave, and parental leave.
• Pension contributions.

In Ireland, for example, most employees are entitled to four weeks of paid leave each year. Also, while paid parental leave is not required by employers in the U.S., international employees, on the other hand, may be entitled to guaranteed paid leave that U.S. employers must grant. Birthing parents in Canada, for instance, are guaranteed at least 15 weeks of paid leave.

Compliance

Countries have their own unique labor laws that govern work hours, severance payments, workplace health and safety, and other work conditions. U.S. employers have a duty to investigate and adhere to these rules even if this conflicts with the company handbook or means employees in the U.S. receive different treatment.

To navigate the legal requirements of hiring employees in other countries, you can work with a professional employer organization (PEO) or global employment organization (GEO), also known as an employer of record (EOR). These entities provide on-the-ground resources and services to ensure a U.S.-based employer remains compliant when hiring international employees.

Culture

Hiring employees in other countries requires cultural competence, as it increases the chances of filling roles from abroad and maximizing the benefits of a diverse workforce.

International hiring trends

Statistics reveal the international hiring trends of 2024, including where talent is being sourced by U.S. companies and globally, the industries most likely to source international talent, and how global talent is likely to respond to the new opportunities going forward. These statistics can help to shed light on these trends:

Where are companies hiring?

• Brazil is rapidly rising in popularity in the international hiring space. It became the 4th most popular location for global hiring in 2021 and 2022, up from the 13th most popular just two years prior (2019). 
• According to Deel, a global payroll, onboarding, tax management, invoicing, compliance and HRIS platform, U.S.-based companies are hiring the fastest in Nepal, Sri Lanka, and Jamaica. 

What industries are hiring internationally?

• 77% of businesses are reporting difficulties in filling key roles, with the biggest talent gaps existing in the healthcare, consumer goods and services and information technology spaces. As such, companies that are most experiencing these talent gaps are looking abroad to find qualified talent. 

International employees’ response to global opportunities

• Not only are employees seeking international hiring opportunities, but international workers are increasingly seeking jobs within the U.S. The share of clicks on Indeed U.S. job postings has doubled since 2018 and 2019, according to Indeed’s 2024 U.S. Jobs and Hiring Trends Report.

Where do small businesses stand in the international hiring trend?

• Small businesses are also looking abroad to find top talent. In fact, in a Gusto survey of 500 small U.S-based businesses, 75% planned to increase their international hiring. 
• SMBs have varied reasons for this shift. 86% of them reported looking abroad to manage costs and 58% said they are doing so to bypass the talent shortage currently occurring within the U.S. market.
• Hiring international contractors can benefits small businesses as 84% of these workers have a university degree, with 40% having a master’s or higher, and 40% having an undergrad degree or its equivalent.
• These same small businesses report that understanding international hiring compliance is the biggest obstacle to their international hiring plans.
• The top countries where U.S.-based SMBs are hiring include the Philippines, Canada, and India.
• Overall, small businesses wanting to hire internationally can further control costs and increase their chances of finding the talent they need by hiring an EOR. Doing so allows them to bypass the expenses of building an entity in the countries in which they’d like to hire, lean on local compliance experts to avoid hefty compliance penalties, and lean on local HR experts to source the talent they currently lack.  

Check out our top global payroll solutions for recommended software that helps you keep track of data for domestic and international employees while remaining compliant. Then, browse our recruiting software guide to get started with a global hiring platform.