Looking to hire your next developer in Singapore, or get boots on the ground to break into the US? Australian startups can now fast-track what can often be glacially slow and complicated employment processes.
Australian businesses are thinking more globally than ever before.
Tech skills shortages are leaving acute gaps in our startup ecosystem (nearly 70 per cent of Aussie IT jobs are in shortage).
Flexible working arrangements have made remote work the norm, and ambitious startups are looking anywhere and everywhere for the right talent to fill the right roles.
But hiring, paying and managing employees in different countries is a complicated business. Startups don’t have the luxury of time and endless resources to set up legal entities in different markets in accordance with specific regulations and employment obligations.
There are four things to know if you’re looking to hire global talent sooner rather than later:
1. Setting up an international legal entity takes time and money
Any startup doing business overseas will need to understand the laws, payroll taxes and benefits of the countries you want to hire in.
Many believe this means you need to launch a legal entity in every foreign market you enter. 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.
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 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. It’s precious time you just may not have.
2. There’s a lower cost alternative for quicker scaling
If you like unpredictable waiting times and are already an expert in international employment law and payroll obligations, that’s great. But if not, you want to consider another option: employer of record (EOR) services.
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 startups at all stages
“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. “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.
Whether your next hire is in Delhi or Dubai, Santiago or San Francisco, there are plenty of options to help make that global vision a reality.
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 you.
This article is brought to you by Startup Daily in partnership with Remote.
Trending
Daily startup news and insights, delivered to your inbox.