Hiring internationally presents many opportunities for companies looking to expand, but it can quickly strain your budget if you don’t plan carefully.
It’s easy to underestimate compliance costs, forget about mandatory country-specific benefits, or get caught off guard by currency swings.
The good news? With some savvy budgeting, your HR team can fuel global growth without letting costs spiral out of control.
Key takeaways:
- Mandatory and expected-but-not-required benefits vary widely by country, so HR leaders should factor both into their benefits budget to attract and retain talent.
- Investing in HR technology like global payroll platforms, an HRIS, and communication tools streamlines operations and reduces legal compliance risks.
- Building flexibility into HR budgets helps companies quickly adapt to changing labor laws, market conditions, and unexpected costs.
Tip 1: Account for Local Employment Law and Compliance Costs
When hiring in a new country, your HR team must familiarize itself with local laws before finalizing the budget. That’s because every country has unique regulations that they’ll need to take into account when budgeting for expenses such as:
- Minimum wage
- Overtime pay
- Payroll taxes
- Statutory benefits
- Pensions
- Severance packages
- Healthcare
- Unemployment insurance
- Workers’ compensation
If your HR team fails to account for each country’s legal requirements accurately it can lead to inaccurate budgetary forecasts and unexpected expenses down the road.
In addition, failure to comply with local standards can result in fines, back payments, and legal penalties.
Tip 2: Factor in Employee Benefits Beyond Salary
Benefits that are optional in one country may be required or widely expected in another, so it’s important to know local cultural norms when planning your offerings.
For example, in more than 40 countries, employers are legally required to provide “13th-month pay”—a bonus equal to one month’s salary, usually paid at year-end. In other regions, it isn’t legally mandated but is widely expected, and companies risk losing talent if they don’t offer it.
Health insurance obligations vary, too. For example, in the U.K. and Canada, healthcare is funded by general taxation, not employers. However, German and French employers split the cost of public health insurance 50/50 with employees. Meanwhile, in Singapore, public healthcare is primarily funded through the Central Provident Fund, but many companies also provide private health coverage to cover co-payments or additional services.
HR teams need to budget for both benefits that are legally required, as well as those that are customary to offer.
Tip 3: Plan for Shifting Currency Exchange Rates
Managing global payroll requires navigating currency fluctuations and the hidden fees that sometimes accompany international payments.
Shifts in currency value can quickly derail your budget. For example, a sudden currency depreciation could dramatically increase payroll expenses or inadvertently push salaries below a country’s legal minimum wage, leading to compliance risks.
Meanwhile, when exchange rates shift and employees end up with less pay in their local currency, their purchasing power drops. This can quickly lead to dissatisfaction and lower morale, especially if colleagues in other regions aren’t facing the same issue.
It’s essential to take steps to protect your budget, such as building a buffer of 3% to 5% into the payroll budget to absorb the cost of sudden fluctuations or utilizing forward contracts — a financial agreement that fixes today’s rate for a future payment — to lock in an exchange rate.
Other options include using multi-currency payroll tools or partnering with an Employer of Record (EOR) to streamline costs and insulate your company from the rollercoaster of evolving exchange rates.
Tip 4: Factor Technology and HR Tools Into Your Budget
Sure, tools cost money, but the right ones pay for themselves. They free up HR’s time and keep global hiring on track. Some of the best options include:
- Global payroll platform: Simplifies multi-currency transactions, automates tax calculations, and ensures international employees are paid accurately and on time
- Human Resources Information System (HRIS): Centralizes employee data, records, and benefits information across countries
- Applicant Tracking System (ATS): Talent acquisition platforms streamline hiring by organizing candidates, tracking applications, and simplifying collaboration for your recruiting team
- Asynchronous communication tools: Communication platforms like Slack or Microsoft Teams help international workers collaborate across time zones
- Employer of Record: Simplifies global hiring, onboarding, payroll, benefits administration, and more in countries where companies don’t have a legal entity
Tip 5: Budget for Recruitment and Relocation Expenses
Some expenses — such as the cost of advertising open positions and conducting background checks on potential hires — are standard whether hiring domestically or internationally. However, expanding globally can introduce additional costs that HR teams must plan for.
For example, when hiring in other countries, you may need to turn to recruiting agencies, which typically charge 15% to 30% of a new hire’s first-year salary. Other potential costs include legal fees for adapting employment contracts to comply with local regulations and document translation expenses.
Relocating employees across borders can also be a significant expense. International relocation involves many moving parts — whether for expedited visas or extended housing stays — and costs can quickly add up.
For example, the average starting cost of an international relocation is USD 77,000, which includes visa and immigration fees, moving and travel costs, temporary housing, and more.
HR needs to develop clear relocation policies, including what’s covered and what’s not, in order to accurately forecast expenses for employee moves.
Tip 6: Standardize HR Workflows
When your HR team spans multiple countries, utilizing different tools and practices can create chaos and confusion. Standardizing HR workflows for onboarding, performance management, policy documentation, etc., helps maintain compliance with local labor laws and makes the process more efficient.
For example, Australian Wool Innovation saved 1.5 days per month in administrative time simply by using an HRIS to streamline time-off management across 12 countries.
Payroll is another HR component where standardization pays off. A single platform that integrates regional compliance rules simplifies operations and reduces errors. EOR solutions, like RemoFirst, combine HR, payroll, taxes, benefits, and compliance in one unified system.
Centralized platforms reduce mistakes, minimize manual data entry, and enable consistent reporting across your global workforce.
Tip 7: Invest in Cultural Training and Employee Support
As you build a global team, investing in programs and resources that help employees adapt to new environments fosters collaboration, boosts engagement, and improves retention.
Language training is a great place to start, especially if your teams are based in multiple regions and speak different languages from your company’s primary language.
Offering professional development opportunities for employees to improve their communication skills can make day-to-day collaboration smoother and help employees feel empowered.
Cross-cultural workshops on communication styles, conflict resolution, cultural differences, and workplace etiquette can help teams avoid friction and improve productivity.
Supporting employee well-being is equally important. Remote employees often face unique stressors such as isolation, time-zone challenges, and the pressures of adapting to different cultural or regulatory environments.
Including these types of employee-centric programs can pay off in the long run with a more engaged workforce and employees who stick around longer because they feel valued.
Tip 8: Build Flexibility into Your HR Budget
International expansion is unpredictable. Hiring plans change, markets shift, and labor laws evolve. Building flexibility into your HR budget helps you absorb unexpected costs, like a sudden minimum wage increase.
Global employment laws and compliance requirements can change quickly, from tax rates and social contributions, directly impacting payroll costs. A flexible HR budget helps you respond to sudden changes, like increased pension contributions or new severance rules, while staying compliant and within budget.
Budget flexibility is even more critical when scaling globally. Entering new countries often means adjusting hiring timelines, offering competitive salaries, or adding benefits to attract top talent, especially in high-demand sectors like tech. It also allows you to handle external risks, such as currency swings, geopolitical instability, or new trade rules, without derailing your operations.
Tip 9: Plan for the Cost of Establishing a Local Entity or Using an EOR
One of the most significant decisions when expanding into a new country is whether to establish a local entity or partner with an EOR.
Setting up a local entity makes sense if you’re hiring a significant number of employees, but it comes with a large upfront investment (typically starting at US 20,000 to US 150,000) and can take three to twelve months to establish.
Typical costs for setting up an entity include:
- Business registration fees
- Legal expenses
- Local office space
- Administrative costs
- Insurance
Once established, entities require continued investment in local expertise to stay compliant with evolving tax and labor laws.
Read more: 10 ‘Hard Truths’ About Establishing a Foreign Entity
For many companies, especially those exploring new markets or hiring only a few international employees, working with an EOR is a more efficient solution.
An EOR acts as the legal employer of international employees and eliminates the need for entity setup — dramatically reducing upfront costs and allowing you to onboard talent in days rather than months.
It also minimizes risk, as the EOR assumes responsibility for compliance with local labor laws.
Maximize Your HR Spend When Hiring Globally With RemoFirst
Expanding internationally can be a significant turning point for a company, but global growth can quickly feel overwhelming without smart HR budgeting.
With RemoFirst, you can hire employees in 185+ countries and contractors in 150+. We handle the complexities of international employment — from onboarding and compliance with local labor laws to managing benefits, taxes, and payroll.
Employees get paid accurately, on time, and in their local currency, taking the stress out of global payroll.
We are also one of the most affordable EORs on the market, with pricing starting at just $199 per employee per month — further helping your bottom line.
Ready to expand globally? Book a demo to learn how we can help.
