What Is Remote Work?
Remote work is an arrangement where employees are not required to commute to a central office building before they can work. It essentially means that an employee, provided they meet their quota and deliver their deliverables, can work from anywhere in the world. It goes by many names such as work from home, remote job, or mobile work.
Before the pandemic of 2020, the remote work option was nice to have for many establishments and was seen as a flex. Only about 4% of all high-paying jobs had the remote choice before the pandemic; at the end of 2020, it rose to about 15%. Today, almost 60% of the United States workforce is remote.
As remote work began to take shape and lift off the ground, concerns and questions are beginning to rise about corporate tax, local tax, and the most prevalent of them all, if you can hire someone from another country to work remotely. Some of these concerns are straightforward, while others are not.
The Rise Of Remote Work
The sudden jump in adopting remote work came during the pandemic when companies realized that with suitable structures, the remote job might not be so scary. Companies and institutions worldwide started looking into remote solutions to keep their business alive and make a profit without risking the lives of their employees. In 2022, the third year of the pandemic, many companies are tilting more towards remote work than regular office work. About 18% of the talents worldwide and 60% of the workforce in the US are now fully remote.
HR managers have realized that with remote work, it does not matter if you are local or international talent, provided you can meet your deliverables, and they can get your pay and benefits across to you. They also realized that hiring someone from another country could save them money. Some foreign countries have a less expensive labor force and can save up to 50% of the hiring cost. They can also save on the cost of having a robust physical office to accommodate all employees.
The rise of remote work allows HR managers to choose from a broader range of the talent pool. Previously, only people within a certain mile radius of the dedicated office space would be considered for employment; however, remote work has made it possible to hire someone halfway around the world, provided they are a great fit.
The reduction in hiring cost of local employees, drop in the running cost of a physical workspace, and the access to a greater pool of talents fueled the rise of remote work. Today, having an option for remote work is more of a requirement for having a solid team rather than a nice-to-have feature.
Hiring Remote Workers Abroad
Hiring international remote workers may be the solution in the US and other countries with a high demand for workers. Hiring remote workers abroad has become easier than expected in just a short time since the bloom of remote work. There are three main ways organizations can hire remote workers abroad.
Hiring through legal entities abroad
Companies seeking remote workers in a particular country can create a legal entity for their company in the country of their choice, which aligns with the local employment laws in that country. The entity will serve as a daughter company of the hiring company and hire employees in the country. The problem with hiring with legal entities is that the company will have to create new entities for each country where they wish to hire employees and the cost implication.
Hiring through the employer of record (EOR)
An employer of record is a company that stands in the gap for companies not in their location, helping them hire employees. An Employer of record will comply with the local employment laws and can hire remote employees for other companies. EOR is similar to having a shared legal entity abroad.
Hiring an independent contractor
Hiring an independent contractor remotely is the easiest way to engage talents from a global market for the company. The remote contractor is not subject to your local employment laws. You are also not concerned with tax payments or other perks from a full-time employee. However, many foreign workers may not be willing to work under these conditions.
Advantages Of Hiring Remote Employees In Other Countries
Research has shown that the global workforce has received a boost in productivity since the bloom of remote work, and remote workers are 20-25% more productive than workers in the office. Some countries have a higher propensity for work and tend to be more effective. Hiring employees from these countries can significantly increase your productivity coefficient.
Access to the global talent pool
Hiring remote employees gives you the freedom to choose from the global talent pool, the one that best suits your need, regardless of their location. Companies can access young and vibrant employees to do the work from anywhere across the world as they are the most prevalent age bracket engaged in remote work.
Hiring remote employees from the foreign market saves costs for both the company and the employee. The company saves costs on running a full-blown office, medical bills, power, internet, office supplies, cleaning, etc., because they only need a fraction of what they would need to run an entire office. On the other hand, the employees save on commuting prices and are less stressed. According to research, it has been shown that remote workers can save $7,000 per year on food, transportation, and childcare.
Having remote employees from different countries brings diversity to your business. This diversity makes it easier for the company to permeate new spaces and markets. An all-inclusive and diverse team ensures that ideas from around the world are well represented in your remote teams.
Cybersecurity and confidentiality
Confidentiality of documents and cybersecurity can be a big deal when working with a remote workforce. The average remote worker may be unable to protect themselves from hacking and cyber threats. On the other hand, confidential company documents may fall into the wrong hands and might create problems that would not have existed if they never left the office building.
Hiring remote employees from other countries means you need to consider their timezone. Hiring from foreign countries with a 1 or 2-hour time gap may not be too much of a pain. However, hiring from multiple countries with different time zones can be a real headache. Many inefficiencies may develop if no reasonable middle ground is reached.
Moonlighting is a situation when someone gets other jobs apart from their regular job. It becomes a problem when they begin to underperform in their tasks or work with a competitor. When hiring a foreign employee remotely, the chances of them engaging in moonlighting are higher than when hiring regular full-time employees.
Paying remote workers in your own country may pose no hassle, as you can add them to a local payroll. However, with employees from other countries, cross-border payments may be an issue, especially if they were hired as independent contractors. If they were employed through an EOR, the EOR could also serve as a payroll company in their location.
Suitable Roles For Remote Work
Working remotely has perks, and many companies and workers want to get into the flow. However, not all roles are available or suitable for remote work. Some roles can run entirely remotely, some can be hybrid, while others cannot be run remotely. Depending on the size of your company and your needs, some of the roles that you can hire remotely for include Graphic design, writers, digital and growth marketers, accountants, software engineers, product managers, translating services, etc. Companies can hire international or local employees remotely to fill these roles.
Companies can outsource some of the tasks to independent contracts on a freelance basis without making them full time employees. Research has shown that outsourcing some of the positions can save the company up to $10,000 per position. Hiring independent contractors for these positions relieves the company from withholding taxes and providing other entitlements.
Effects Of Remote Working On The Global Workforce
Remote work has had some effect on the global workforce, changing the way we approach work. About 70% of the global workforce now offers some form of remote option to their employees. Some companies are now fully remote, with no physical office space, while some offer hybrid options, allowing their employees to come into the office two or three times a week.
Remote work has unified the global workforce and put structure to earnings regardless of your location. Remote workers in India, Nigeria, Brazil, Singapore, and other English-speaking countries are beginning to get paid for their expertise rather than their location. Skilled professionals in these locations can now earn what they deserve rather than what companies in their locality can pay. On the flip side, a US company, for instance, that needs a service done can pay what it is worth, rather than the most affordable price within their city.
Remote work has increased the productivity of the international workforce. According to research, between 2020 and 2022, the productivity of the international workforce increased by about 15%. Workers are reaching high productivity levels from working in their convenient space rather than in the regular office. Commute time and time spent doing chit-chat at the office have been converted to time for putting quality work out there.
Remote employees with a foreign source of income positively affect their local economy. The average remote employee pays local tax to the country where they are domiciled. The government can then use the taxes paid to make their country a better place. It is a form of foreign trade where the country exports an active workforce and gets taxes in return.
Being a remote employee can allow for a broader range of workforce. Remote work can have youngsters get into employment as soon as they are legal and work till they are old and gray. About 62% of all remote workers are between 22 and 65 years, while the rest accounts for people between 18 and 22 and a few people above 65. It allows people to work for a few more years above the regular retirement age of 61 in 2022.
Last modified on March 31st, 2023 at 2:37 pm
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Yes, a US company can hire a foreign employee remotely. The US company can either employ remote workers as full time or independent contractors, depending on the capacity of the company and the agreement between the two parties. It is legal, according to the dictates of the IRS and the US labor department. According to the law, US companies can hire outside their headquarter state or outside the country.
Ideally, remote workers can work from anywhere in the world where they can get access to the internet and electricity. However, concerns may be generated about data protection. Data protection laws differ from country to country. The company data protected in one country may not be covered in another. Aside from data protection, nobody cares if you are in the Bahamas or South Africa, provided you send in your deliverables.
International employees working remotely in other countries do not need a visa to work in the US since they do not have a reason to be in the US. However, if they need to work at the headquarters of their US company, they will need to get their H-1B visa. The US company can save money on Visa sponsorship by allowing foreign employees to work from their home country.
The choice of who to employ depends on the company’s needs, what they have to offer, and the role they need to fill. Hiring a full time employee would cost the company more, as they have to become a legal entity in the country where the employee stays or go through one. They also have to provide other perks associated with the status. Hiring contractors, on the other hand, takes all the requirements off the shoulder of the company and places it on the individual. For a seamless working experience, the contractor and the company will agree on what works for them and stick to it.
The US employment laws do not affect workers in a foreign country; instead, the workers are subject to the laws obtained in that country. However, foreign workers are bound by law to stick with the company laws and policies spelled out in the contract between them and the company. If any of the regulations contained in the contract is violated, the company can take legal action against the employee.
Statistics and industry experts are accurately predicting that remote work is the future of work. The number of remote workers worldwide has increased by about 159% from 2009. About 6 in 7, or 85% of the managers interviewed in the US, believe that remote work is the future of work.
In conclusion, you can hire someone remotely from a different country to work for you. It opens employers to endless possibilities and a pool of talents to choose from. There are many structures in place to ensure it is a seamless process.