Well-established businesses have weathered worldwide economic storms before, such as the 2008 financial crisis or the dot-com crash of the early 2000s. However, if you’re running a startup or smaller company, this might be your first time navigating such uncertainty.
As a result of geopolitical tensions and changing tariffs, the business climate feels a bit shaky right now. Several companies have already cut staff to save money. And yet, you may still need to expand your team to stay competitive. It puts leaders in a tricky spot. You need to grow, but you don’t want to take big risks.
One path forward is to take a more strategic approach to hiring, such as partnering with an Employer of Record (EOR), which can provide the flexibility and support necessary to grow your business in ways you might not have considered yet.
Key takeaways:
- Economic uncertainty has pushed business leaders to rethink how they want to build and grow their teams.
- Flexible workplace strategies, such as balancing contractors and full-time employees, let companies respond quickly to changing market conditions.
- Hiring global talent allows companies to access specialized expertise and remain competitive, even during unpredictable times.
Navigating Hiring Challenges in Times of Uncertainty
While we may not be in “global crisis mode,” there are certainly enough indicators to make business owners uneasy. Countries around the world have experienced significant economic fluctuations, with some even entering recessions.
Some sectors have already experienced high layoff rates. The tech industry has felt this slowdown more than most, with over 140,000 jobs cut in the U.S. in 2025 alone — and the year still isn’t over.
Companies are restructuring around AI and automation, resulting in massive layoffs from major players such as Microsoft, Google, and Meta. Meanwhile, retail and consumer products companies are struggling to regain their footing and adjust to changes in consumer spending after the COVID-19 pandemic.
On top of all that, global trade tensions and unpredictable tariffs aren’t making the decision-making process any easier. Companies have had their supply chains disrupted or are forced to change strategies because they simply cannot afford the cost of tariffs.
An increase in mergers and acquisitions is further complicating the hiring landscape, as hiring freezes or even cuts are common among leaders seeking to stabilize the newly merged company.
For HR teams, it all comes down to one major challenge: uncertainty. Inflation, recession worries, and global events are pushing companies to make tough calls on growth and staffing. In this environment, hiring full-time employees can feel especially risky.
At the same time, cutting too deeply or freezing hiring altogether can leave teams without the capacity to rebound quickly when demand returns.
The Need for Flexibility
Companies are nervous about overcommitting and maintaining a full-time team if business slows and budgets tighten. However, flexibility can help companies thrive by planning for change, rather than waiting and reacting when the uncertainty passes.
A flexible workforce strategy makes this possible. Organizations can expand cautiously while adjusting headcount up or down as market conditions change. Many companies are adopting a balanced approach, blending employees and contractors instead of depending entirely on a permanent team.
For startups and small businesses, one of the most effective ways to achieve this balance is by partnering with an EOR.
How EORs Enable Agile Hiring
An EOR offers companies greater hiring flexibility by acting as the legal employer for their global workforce. That means the EOR handles everything related to HR and employment, including contracts, payroll, benefits, taxes, and compliance with local labor laws on your behalf. Your company maintains control over day-to-day work, while the EOR manages the legal and administrative side.
To manage all this yourself, you’d have to establish legal entities in each country where you want to hire. That can be a really complex and time-consuming process — and might not be worth the effort if you’re hiring a single employee. Tax and labor laws also vary widely by country and can be really difficult to navigate without professional, local expertise.
Here’s what that looks like in practice:
- You find talent in another country.
- The EOR manages all the nitty-gritty HR details, such as creating contracts, onboarding, payroll, etc.
- You don’t have to worry about learning local labor and tax laws; the EOR handles it.
An EOR simplifies global hiring by taking care of HR tasks for employees and contractors alike. It also lets you easily switch between contract and full-time arrangements as your needs change, all within a single, streamlined system.
Instead of worrying about compliance, you can focus on finding the right people to help move your business forward.
Expanding Your Talent Pool Globally
Even amid economic uncertainty, some industries and countries are facing labor shortages. While the U.S. has high unemployment and a stalled labor market, many European and Asian countries are facing demographic shifts that are reducing their labor forces.
If companies limit their talent recruitment to a local labor market, they may not be able to find the workers they need. EOR partnerships open doors to a global talent pool. A software company in Canada can hire developers in Poland or the Philippines. A marketing agency in the U.K. can hire designers from Mexico.
Global hiring through an EOR offers several advantages:
- Companies can source niche expertise and hire workers with specialized skills
- Hiring in regions with different cost-of-living standards can be more cost-effective
- Distributed teams are a realistic long-term model with payroll and compliance infrastructure in place
Thanks to EORs, geography no longer limits the workforce. This can become a critical differentiator when you’re trying to source talent during uncertain times. Organizations can expand into new markets, acquire specialized expertise, and test new ideas without overcommitting.
Balancing Contractors and Employees
Another decision you might face is weighing whether to hire contractors or employees. The answer depends on your business needs and the scope of your project.
So, how do you decide? It helps to start by evaluating the type of work and commitment level your company needs.
Contractors are ideal for short-term initiatives. You might hire a contractor for a pilot program or a role that requires specialized skills. Contractors provide businesses with the flexibility to experiment without the commitment of a full-time, long-term employee.
Employees are better suited for core business functions and ongoing responsibilities. They become immersed with your team and can drive long-term growth.
The challenge lies in getting classification right. Misclassifying an employee as an independent contractor can result in fines, back taxes, and legal action — especially in countries with strict labor laws, such as Germany.
For instance, if a company requires an employee to work specific hours and provides equipment, but calls the person a “contractor,” the company risks employee misclassification.
Some countries have a very clear definition of what distinguishes an employee from an independent contractor, while others are less clear. Still, they all typically follow the same guiding principle: if a company exerts a lot of control over the work, the worker is considered an employee. Companies can’t skirt employment laws simply by calling a worker an independent contractor if the worker functions as an employee.
An EOR will ensure you remain compliant, whether you’re hiring an employee or a contractor. The EOR will handle contracts, onboarding, payroll, and benefits — reducing your administrative burden and compliance risks. If you need to reclassify a contractor as an employee, an EOR can help with that process.
EORs as a Strategic Tool for Evolving Business Needs
An EOR is more than an HR solution. It’s a partner that keeps your workforce running smoothly as your business grows. When the market shifts, you can move into new regions or roll out a new product line without missing a beat.
An EOR lets you scale talent up or down quickly. You can hire in a new country without the expensive startup costs of establishing an entity.
EORs also centralize your payroll, benefits, and legal documentation across different countries. This reduces the administrative load and compliance burden for your company. It also reduces the mistakes that can occur when processing cross-border payroll manually.
Expand Your Global Team With RemoFirst
Economic uncertainty is inevitable. Even after the dust settles, future fluctuations are unavoidable. However, thanks to EORs, a changing business environment doesn’t mean your company needs to hit pause on hiring, even when the future is uncertain.
You can continue to grow with access to a global talent pool. Whether you’re hiring employees or contractors (or both), you can scale and make changes quickly.
With RemoFirst, companies can adapt to market conditions and continue to build high-performing teams. You can hire employees in 185+ countries without establishing a local entity. You can also compliantly hire and pay international contractors in 150+ countries.
RemoFirst simplifies workforce management by providing payroll, benefits, and compliance solutions for your entire global team. You can focus on finding the best talent, and we’ll take care of the administrative details.
Book a demo to learn how RemoFirst can help you build your global team.
