What if you find an amazing developer in Singapore, the perfect sales rep in the US or great admin support in India? There are new ways to make hiring, managing and paying international employees a lot simpler.

There’s been a shift in how Australian businesses think about our workforces.

We’re thinking more globally than ever before, as we look to fill the gaps of local skills shortages (36 per cent of occupations, according to 2023 statistics). Tech jobs in particular are growing in demand, yet nearly 70 per cent of Aussie IT jobs are in shortage.

At the same time, remote work has become a way of life for flexibility-seeking workers. Businesses are looking to harness the right talent for the right roles – and that talent could live anywhere.

So here’s what you need to know if you’re thinking about hiring international employees:

1. Setting up legal entities overseas takes time and money

Before you hire, you’ll need to familiarise yourself with the laws, payroll taxes and benefits of the countries you want to hire in.

Many businesses think this means you need to set up a legal entity in each country you enter into. In fact, according to global HR platform Remote’s recent The Rise of Globally Distributed Teams Report, 70 per cent of companies hiring abroad are opening their own entities in other countries.

The thing is, unless you have long-term plans to set up an office in a specific region or enter into a joint venture, you may not need to go through this exhaustive process.

“Launching your own international entity is expensive, time-consuming, and a complex process,” says Jane Lee, Remote’s Vice President and Head of APAC, Go To Market.

“The average cost of launching an international entity can vary widely, including hefty incorporation and legal fees ranging from tens of thousands to a couple hundred thousand dollars.”

The time it takes to set up a legal entity in another country can vary from a few months to a full year. If you run a small business, that’s precious time and money that can’t be wasted.

2. There is a lower-cost alternative

International employment law and payroll obligations differ from state to region to country. It’s complex business, so unless you’ve got the time to become an expert, outsourcing to an employer of record (EOR) is an option worth considering.

An EOR is a third-party organisation that businesses can partner with in order to employ legal, full-time workers in other countries. The EOR already owns legal entities in different countries, so you don’t have to.

“Using an EOR is a cost-effective shortcut for startups going global,” says Jane. “Companies around the world now employ tens of thousands of full-time employees and contractors through our EOR platform.”

An EOR takes on the burden of legal requirements and manages hiring, payroll, benefits, taxes and compliance with local labour laws.

Businesses can use an EOR as a long-term solution to minimise risk, when dipping their toes into different regions; or as a short-term solution until it becomes more financially viable to become an entity.

“When using an EOR, you can expand with significantly more speed, ease, and flexibility,” adds Jane.

Jane Lee, Vice President and Head of APAC, Go To Market, for global HR platform Remote. Image: Supplied.

3. EOR is for businesses small, medium and large

“While some sectors are more commonly known for using EOR services than others, such as technical, IT, and business services sectors, the common denominator is that these companies are hiring and managing employees in several different countries,” explains Jane. “They tend to range anywhere from budding startups to large corporations.”

Australian-founded video tech platform Shootsta started small in Sydney in 2015. As demand grew for their products and services – a suite of apps and services for global companies to create high-quality video content cost-effectively – so did their need for international employees.

Shootsta enlisted Remote to hire in Hong Kong, Mexico, Turkey and the US. At first they formed legal entities in different countries, but found the administrative, legal, compliance and tax requirements were costing the company time and money.

“We’d already spent over four months on the entity setup process in Mexico, and we were no closer to success. We needed to expand our team so we started looking for a faster and more efficient solution,” says Shootsta CEO Daniel Chiha.

Remote’s EOR helped them get up and running with their first hire within weeks. They were also able to provide evidence to international suppliers that they complied with local employment laws, data requirements and people processes.

“It’s not just our reputation and integrity on the line – it’s also our clients. Everything about our business needs to be top-notch,” says Chiha.

4. You don’t need to be a one-person HR department

An EOR is like an active, centralised HR department in another country. Instead of needing lawyers, accountants and payroll providers to help manage employees outside of your area, an EOR can do all the work for you.

“This practical solution allows the company to focus on its core business operations while also reducing the number of HR tools needed to manage a global team,” Jane says.

EORs provide expert guidance on labour laws in each country. They also speed up HR processes like onboarding, including local right-to-work and identity checks, so they take days instead of weeks.

With payroll processes, an EOR can pay people in different countries on time in their local currencies, with the right taxes and benefits, and in compliance with local laws.

If you’re not looking to hire someone full time, Remote has a contractor management solution that’s suitable for microbusinesses or anyone hiring on an ad-hoc basis. It’s also useful for hiring in complex labour markets like the US where there are different income reporting regulations.

“It’s a simple way to pay global contractors in their local currency, with minimal costs and fees. It is also recommended to go this route if the company does not have a dedicated HR team in place,” adds Jane.

So if your business is scaling or you’re looking to fill a skills gap, there are plenty of options out there.

Want 15% off Employer of Record or Contractor Management services for 1 year? Head to the Remote for Startups page and use this promo code: RFS15OFF.

See Remote in action and book a demo to see if it’s right for your business.

This article is brought to you by Kochie’s Business Builders in partnership with Remote.