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How to calculate the real-world costs of hiring international employees
Angelica Krauss
October 18, 2022

How to calculate the real-world costs of hiring international employees

When it comes to the global expansion of your business, the long-term goal is to create a thriving business empire that is lucrative to you and your employees. However, global expansion can be costly and requires one to consider all the financial aspects, including the cost of hiring internationally.

Why Consider Hiring International Employees?

Part of running a good business model is knowing your target market. It makes sense to hire local employees to work new branches when you are on the path of global expansion. After all, who knows the local target market better than the locals themselves? Additionally, it brings about the benefit of creating local connection routes that could build lucrative relationships with investors, suppliers, and more.

The Costs Involved With Hiring International Employees

Local Taxes and Government Fees

Each country has its own set of laws for employment, which can mean that employers are liable to take on certain taxation costs for their employees. Depending on the country, the employers of record are responsible for paying government-mandated fees. To stay compliant, certain charges must come into effect for person on the payroll — for example, in South Africa, employers are legally required to pay 1% of the employee's salary to the Unemployment Insurance Fund.

Benefits

While it is not a requirement in all countries, some countries make it a standard practice for employees to receive a host of benefits from their employers, such as health insurance, children's schooling benefits, etc. While there is no obligation to implement the same in your business, if you want to be a part of the competitive market it certainly makes sense to do so. Factor in the societal benefits that are widely required, like paid maternity leave, which also varies from country to country. These are all factors to consider when hiring globally.

Relative Earnings

Relative earnings are usually determined by several factors such as qualifications, experience, and age. However, relative earnings can change depending on the region where the employee is located. This could work in your favor. Depending on the country, the average salary for certain positions could be less than what you pay in your home country. However, it can also work the other way around.

Social Costs

Social costs are incurred by a social enterprise above and beyond ordinary business costs in order to fulfill its mission. These costs can be related to providing extra training and support that enables employees with barriers to become successful employees.

Opportunistic Talent Acquisition

Opportunistic talent acquisition may come at an extra cost — suppose a candidate who can potentially be a lucrative asset to your team enters the scene and you want to jump at the opportunity to snatch them up before your competitors. This comes with its own risks, as often these people receive multiple job offers from competitive companies, with attractive salaries and benefits packages that you'll need to beat. If you want the employee enough to match or exceed the expectations the competitive business gives, you'll incur the additional cost of taking on a higher payroll candidate than you were expecting.

Remote Work

With the global effects of COVID-19, most businesses began enforcing a work-from-home strategy that has taken off and remained the reality for many. Once these businesses realized the reduced costs that came with hiring remote workers, it became more feasible for companies to reduce office space and let their employees work remotely. Of course, if you are planning global expansion, you can always consider factoring remote global teams into your payroll to save even more on costs like office space and office expenses.

Conclusion

The real-world costs of hiring internationally will depend extensively on where you hire and how you hire. Remote work makes global expansion more viable with new technologies that enable distributed teams. If you are considering expanding your team globally, Remofirst hires your full-time employees and/or contractors on your behalf in 150+ countries so you don’t need to spend time and money setting up entities and studying local laws — let us do the paperwork so you can focus on managing your team. Schedule a demo with our team today, start hiring tomorrow.