What is a pen without a refill, a book without pages, and an organisation without people? Running a business without the right people is like fighting a war without arms.
We live in a digital village, and businesses have made the world their oyster. Modern technology has rendered careers boundaryless, and skilled resources can be hired from across political boundaries. Having a global workforce offers a competitive edge like nothing else. Diverse companies find unconventional solutions to problems and generate better ideas. Global teams offer local knowledge of previously unexplored markets and enable organizations to tackle unpredictable scenarios that arise in new locations. A McKinsey report states that companies not ethnically diverse can suffer by as much as 29% in their profitability.
So, a strategic talent acquisition plan is essential to ensure that the company achieves that ideal combination of productivity, cost and time effectiveness, talent motivation, local expertise with global outlook that makes its global expansion a sureshot success.
The first step towards building a diverse workforce is to shortlist countries the company wants to hire talent from. This can be based on any or all of the following parameters:
- The job roles and functions which need to be filled
- Human resource budget allocated for the hiring cycle
- Future plans of expansion in new geographies
For instance, if your company is looking at expansion into Asian markets, or build a tech product or a cost effective manufacturing setup, or even research something remotely, then a smart solution could be to hire some local employees in India to work remotely for you. This will give you access to world famous high quality Indian engineers, digital marketers, researchers, at a significantly lower cost.
However, businesses that intend to leverage the advantages of a global workforce need to combat some stiff challenges.
Challenges to Business with a Global Workforce
Hiring a skilled workforce
The company’s absence in host location (in this case India), makes employee screening and background verification very difficult. Hiring the right people, especially remote ones, is a big-time challenge. Among other things, remote work demands that the employees work independently, have excellent communication skills, and tune in well with other remote employees. Managing a team that comes from a different culture is also a significant task.
Immigration and related costs
Visa, immigration, or work permit clearances, relocation, and resettling costs can all add on to your employee costs. If you are seconding employees from USA to India, this cost can be more than 100% of employee’s base salary. Although, these costs are eliminated when working with a virtual team.
Most countries require companies to provide mandatory employee benefits. Missing out on these can spell serious legal consequences for the company involved. Businesses also face certain constructive obligations from employees. For instance, it is common practice in India to provide 15-20 days of annual paid leave. The law for paid leave, however, varies from state to state.
The web of employee benefits laws can be tricky to navigate for most young start-ups.
This involves strict adherence to salary payments, withholding tax liability, social security compliances, issuance of salary slips, withholding certificates (Form 16s) per local laws, etc. Failing at payroll management can attract huge penalties. Considering the stakes, most companies usually end up incurring huge costs to hire the right agencies to not falter in payroll compliances.
Corporate tax compliances
A workforce in a foreign country or host country increases the odds of your company having a ‘permanent establishment’ (‘PE’) in that host country. This PE, in turn, increases your corporate tax liability and related tax compliances. For instance, the host tax authorities may exercise the power to tax the company’s income to the extent the source of income is in that host country.
Please note that the exact tax obligations in any country can only be determined by the respective domestic laws and tax treaties between the countries involved. These laws change constantly, and usually without a prior warning.
The Solution- Virtual Employment in India
Virtual Employment involves a third-party overseas service provider (Virtual Employer) recruiting the right people for the right job on your behalf. And that’s not about it. It assumes the entire responsibility to manage all employer compliances in India in adherence with local laws.
- This Virtual Employer takes care of the payroll, taxes, and social security compliances in India
- It eliminates the need to set up an entity and establish a physical office in India, saving significant operational expenses, and let’s not forget – your precious time
- These dedicated virtual employees execute all the tasks per your company’s requirements
- Immigration and relocation costs don’t even come into the picture, since these employees are being hired locally
In short, you get the best of both worlds – enjoy all the benefits of a highly-skilled global workforce without bearing any associated risks.
Let’s understand the model with this diagram:
And if you are worrying about the quality of hires and work performed, then just relax! The Virtual Employer takes up all the operational challenges and works dedicatedly to align employees’ roles, responsibilities, and functions to meet your business objectives.
Why Expat Orbit?
Choosing Expat Orbit can enable your company to build 100% remote teams, in no time. Our transparent system helps you onboard employees in India, without having to set up a legal entity in India.
Also, in addition to the legal entity and operational expenses, consider the quantum of salary expense you save by allowing us to handle your outsourced business activity.
70% cost savings! Yes, you read it right
A Senior Software Engineer’s salary in India is roughly $32,000. In the USA, the same job can cost around $120,000. The chart below gives a fair idea about the salary cost differential between Indian employees vis-a-vis employees from other countries.
Have questions about hiring in India through virtual employment solution? Get in touch with Expat Orbit’s global hiring experts.