When businesses are planning to expand into foreign markets, they must make the choice of whether to deploy expatriate employees or hire locally. Both choices are met with a number of challenges, but hiring a Global Talent also has its benefits.
Thus, as a business, you must first properly assess your business needs and decide whether hiring a global expat is right for you. The pros and cons of hiring a global expat will be discussed in further detail below.
What is a Global Expat?
A global expat or expatriate is a local employee that a business sends to work in a foreign market. Most notably, they are sent when the business is still establishing itself or is going through some major adaptations. However, the worker may also take this position independently, in search of more opportunities in a foreign market.
An expat is described as “a professional or skilled worker in [their] profession” (as seen on Investopedia) that lives and works in a foreign country, often for a temporary period. Expats also tend to move their whole family with them for this period of time, going through a complete adjustment to adapt to the new venture.
However, this is not to be confused with employees sent on business trips. When sending a worker from your local headquarters to a foreign country, they are considered an expat for the period of time that they are living and working there. But, when sending a worker on a short-term business trip to explore business opportunities in a foreign market, but not relocate to work in that market, they are just on a business trip.
How can a Global Expat benefit your business?
Sending a global expat to the new business territory tends to be met with extra costs and employee benefits. However, there are a few significant benefits that expats bring to your business expansion:
- Expats provide the business with consistency – An expatriate worker is already proficient in the culture and processes of the local company and can bring that knowledge to the new office or branch in the foreign territory.
- They have better knowledge of the business – Most expatriates already know how the business works, and this is an important skill for your overseas employees to pick up – especially when establishing a new office. As a business owner, you want your international office to work faultlessly with your local headquarters, and an expatriate can ensure that happens.
- Global Expats Combat Overseas Talent Shortages – Expats provide the skills that your business need when the local talent pool is limited. Whilst developing markets benefit from low labour costs, this is often met with a skill gap in the labour market.
Thus, sending an expat who has already proven themselves in the workplace can provide local employees with an example of the strong work ethic, motivation, skills, and expertise that they can emulate.
And the effects of this can be far-reaching and impactful on the success of your business expansion.
The Risks – Cost, Compliance, etc.
However, the implementation of global expats also provides the business to take on certain risks. These include:
- Extra costs: Hiring an expat can cost the business two to three times higher than local employees.
Expats also usually earn more than would in their home country, and businesses also include other employee benefits for expats. These include relocation costs, housing benefits/allowances, family benefits (schooling and childcare), language training, and cultural training.
Also, using techniques such as tax equalization can create extra costs for the business at their local headquarters, as well as compliance issues due to keeping up with more than one type of tax system.
- Risk of burnout: Living as an expatriate can be exciting and present some great opportunities for career advancement – but it can also able difficult transition, both emotionally and mentally.
Running a new business in an unfamiliar culture and work environment and being isolated from friends and family is both demanding and exhausting. This increases the risk of the expat suffering from extreme stress and fatigue, or “burnout”.
This not only affects the expat’s well-being, but it also affects their work.
- Legal and compliance complications: As mentioned before, dealing with legal procedures such as tax equivalence and immigration and permit policies can be risky. If not executed properly, your business could be barred from trading in the overseas territory completely.
To prevent these penalties, a clear understanding of the overseas territory’s legal obligations is required – but this can be difficult and provides more costs and resources, due to cultural and language barriers.
What to do – use a PEO/EOR
In order to prevent these risks, get the most out of hiring global expats, and make sure that your business gets the best talent for your business global expansion, acquire the services of a Professional Employer Organization (PEO) such as Bradford Jacobs.
With years of in-depth knowledge in global recruitment, laws, processes and cultural practices, our team of experts can provide support in all stages of global expansion.
Global Talent Acquisition can be handled both efficiently and cost-effectively, and our Employer of Record (EOR) services guarantee that your employees are cared for in all stages of employment. Your employees are registered under Bradford Jacobs, but you maintain full control over their day-to-day tasks and activities.
Our global infrastructure ensures that both local employees and expats are employed according to the country’s employment conditions and attractive benefits. Our services also guarantee that all payroll and tax contributions are handled efficiently and effectively.
We take on all administrative and legal responsibilities of your employees, so you can focus on your business’s core operations.
To learn more about how you can hire expats compliantly and benefit from utilising our PEO solution (which is present in over 100 countries), contact us today.