What to Consider When Hiring Employees in New Overseas Markets

The rise in new technology and innovations is changing the way companies operate across borders. Many businesses no longer want to commit to the overheads of office space or business support and instead, are opting for remote local workers that operate from home offices or shared office spaces.

Employing a small team in a new country sounds simple – companies employ new staff all the time – and that’s the problem! Across all industries, we are finding many companies are going into the process unprepared.

New markets mean different legal and tax regulations that companies must comply with. On top of that, there are cultural differences and language barriers that could inhibit the recruitment process. By not investigating these potential complications prior to beginning the recruitment process, you could miss out on talented candidates and cause long delays at the point of hire.

But before I dive into some of these considerations of hiring in a new overseas market, should you hire local in-country candidates or employ those in your home market looking to relocate?

Expat vs local hire

There are pros and cons to both options. Some of the clients I work with choose to go for a local hire as the industry knowledge and insights they can bring to the company are beneficial for future growth. They also possess the language skills and cultural knowledge to work well with clients and customers alike. It also means you are not restricted to the talent in your current workforce or country who are willing to move abroad. Others opt for someone in their home market who can immerse themselves in the company culture and their existing business.  

Each situation is different, and the best solution is often dependant on the type of role, the objectives of the company and the language skills and cultural knowledge required to perform the role well.

Whether you chose to go for an expat or local worker, there are various factors throughout the different stages of the recruitment process that need to be considered at the start.

STAGE 1: Candidate search and identification

The first step during the candidate search process is to understand your industry in a new market. Competitors, skills surpluses/shortages and salary expectations (which could increase your cost of hire) will differ from what you are used to, which can have a particular impact if you chose to hire locally. There is also the potential that what you are looking to achieve in a new location isn’t feasible. The talent you need may not exist, or your company may not be well-known leading to a lack of interest to work for you.  

For example, we recently conducted a Talent Insights Feasibility Assessment for a company in the animal nutrition sector that was looking to enter the human nutrition industry by distributing vitamins in Europe. They needed someone based in Europe to head up the new project and wanted to assess the feasibility of this before entering the recruitment process. The project revealed that although there were qualified candidates in the market, they didn’t want to apply for the role as firstly the vitamin market was very saturated in the countries they were looking to target and secondly they didn’t want to work for a company that just distributed products made in China rather than creating its own. By looking at this prior to entering the recruitment process, the company was able to evaluate its initial plans and decided that entering the European market through vitamin distribution was not a beneficial strategic move.

It is also important at this stage to be really clear on the expectations of the role and the traits you are looking for in your perfect candidate. They may need to work independently without much support, which would require traits of self-motivation and independence. Those who are used to working as part of a large supportive team may struggle with being far away from the core team.

STAGE 2: Interview process

If you chose to hire someone from your own country, or if you are interviewing existing employees for a relocation, the interview process should be relatively simple… or at least as simple as it usually is! The difficulties come from interviewing candidates across borders.

Often, we find clients try to consolidate the interviews in one location, which can prove really difficult when interviewing both domestic and local market candidates. Also, having multiple interview stages to meet various stakeholders can extend the time it takes to hire someone when logistics come into play.

We recommend having as many people as possible in the first stage interviews to reduce the number of meetings that need to take place. Conducting interviews over video conferencing software can speed up the process and mean you aren’t discouraging talented people by asking them to take a day or two off work to fly to a first stage interview.

If you are looking to conduct any interviews over video conferencing software, take into consideration time differences and the potential logistical problem of getting the people you need together out of hours.  

STAGE 3: Selection and offer process  

Whether you hire locally or not, there is a multitude of legal and tax implications. In my experience, the time when a candidate is offered a job is when the gaps in the planning begin to show. Companies have gone into the process believing that their current domestic contracts are legal, and their payroll processes are suitable.  

In some countries, companies cannot hire local employees without having some sort of incorporated local presence. Contracting workers is a much simpler process in many cases than hiring permanent staff, but often this isn’t a suitable option for many roles, and it may put off talented candidates who want the security of a permanent contract.

Other issues that need to be considered include legal requirements for maternity and paternity pay, non-compete agreements that are not valid due to country laws, statutory overtime payments, pension and social security payments and probation and termination policy compliances.

STAGE 4: Onboarding and post-placement support

Onboarding an employee based overseas can be a difficult process. It is important to consider localising any training materials and work documents into the right language and making them relevant to the new role.  

You will also want all employees to feel part of one global team. Therefore, you will need to put processes in place to integrate departments operating across borders. If someone doesn’t feel supported and part of the team, you risk the chance of them considering new career opportunities!

How to prepare for hiring in a new overseas market

The considerations listed above are not designed to deter companies from hiring overseas either through a local hire or through relocating a new or existing employee. We have seen many clients do this with fantastic results for their businesses. It can be a highly successful strategy that just requires a bit of planning to avoid complications and long delays during both the recruitment process and at the point of hire.

Working with in-country HR and legal professionals is often the best way to ensure you are prepared for any contractual and tax laws you need to abide by. They can also advise on what company status you require to hire legally in a country as well as the legality of non-compete agreements and termination policies.

If you are looking to hire overseas, we can help provide the industry knowledge and support you need during the recruitment process. All our consultants operate on a global scale and as industry specialists, we have insights on areas such as skills shortages/surpluses. We can also partner with you on Talent Strategy Services to support you with everything from the feasibility of entering a new market to salary expectations to attract the best talent in a region. If you would like any assistance in this area, we would be happy to help! Click here to get advice from a consultant specialised in your sector.