The use of remote workers and teams of remote employees is gaining acceptance for many companies with foreign operations, and global mobility professionals can incorporate this strategy as an alternative to long term international assignments. It can be effective for certain industries and work roles, but there are management and compliance issues that have to be addressed first.
Overview of Remote Work in Foreign Countries
Remote work is any job function that is performed outside the home country of a company, by a worker that resides in the foreign location. This distinguishes remote workers from employees sent on temporary or long term assignment from the home country to carry out key responsibilities.
Remote workers can either be residents of a foreign country, or expats that choose to live and work there. Because they are already located abroad, this may be a viable substitute for assigning employees from home, which is often filled with expense and logistical challenges. Certain roles can be filled effectively by remote workers, such as sales, customer service and technical positions that can be carried out independently or as part of a remote team.
Why Companies Are Turning to Remote Work
The main reasons for a company to use remote workers is the time and cost savings over sendng an employee on assignment, as well as the worker’s familiarity with local culture and language. Local residents may also accept a much lower salary than an expat assignee, and there will not be the risk of employee assignment failure that is all too common.
Are Remote Workers a Viable Alternative to Sending Employees on Assignment?
There are advantages and disadvantages to using remote workers, and they cannot always be used in place of a skilled and experienced employee assigned from the home country. For example, management roles may be difficult to fill with local residents who are new to the company, and other positions that require time spent at the home office may be impractical to staff with host country residents.
However, there are many types of positions that could be handled more effectively by a local resident, and they may be eager for the opportunity to work for a multinational business while remaining in their own country.
Employees vs Independent Contractors
Hiring an independent contractor as a remote team member has benefits for a business, given the ease of engaging a contractor instead of a full-time employee. It can also be one way to hire a worker for a trial period, prior to offering full time employment.
This decision should be based primarily on the type and scope of the worker’s role, and the degree of autonomy in their position. The compliance risk of using a contractor is that of misclassification, where they actually function as an employee under the rules of their own country and could demand employee benefits. Some countries, such as China, do not recognize contractors at all, so those workers must be employed somehow at the local level.
Local Residents or Expats?
While it is natural to look for local residents to fill remote work roles, it is possible that some countries may have an expat population with the required skill set. Those workers can also be hired, but there may be a different set of payroll and employment expectations, or local requirements. Expats are probably most effective as independent contractors, hired on a project or hourly basis, with responsibility for their own immigration, tax and employment compliance.
Primary Challenges for Global Mobility Professionals
If the use of remote workers is starting to look like a universal solution in global mobility, it is necessary to understand the limitations and challenges. Remote work will not fit every situation, and careful assessment of business goals is needed.
Recruitment and Hiring
Because candidates for remote work are located abroad, recruitment, interviewing and hiring will likely take place via email, phone, video conference and other internet based platforms. If there are already employees on assignment in the host country, they may be able to assist with some HR functions, but otherwise all onboarding will be remote as well.
This takes the personal touch out of the hiring process, but does give an indication of how well the candidate communicates over virtual mediums, since that may be a part of their job.
Payroll and Tax Issues in the Host Country
This is a primary challenge for global mobility professionals especially when hiring remote employees who are residents in the host country. Most countries will not allow a company to simply pay the worker via remote payroll from the home office, and some form of local entity and legal employment will be required.
Other Compliance and Management Issues
If a remote worker is a resident, there are not any immigration issues, but the use of expats should be handled carefully to avoid compliance problems with work permits.
Unless there are assigned management employees in the country, worker supervision and communication has to be a high priority with strict protocols and project deadlines.
There are also concerns with intellectual property, access to data and technical training that all have be addressed for remote workers abroad, since they may misuse sensitive information with little legal recourse for the company.
The GEO Solution: Legal Employment and Payroll for Remote Workers
Many of the compliance issues for remote workers can be solved with one simple solution: a Global Employment Organization (GEO). The GEO establishes a local employer of record that can quickly and legally employ residents, expats and even assignees simultaneously. This allows a company to make payroll locally, avoid contractor immigration problems, and provide a resource and point of contact for all workers in the host country.
The company will still preserve the value of remote workers, while minimizing the compliance risk. It is a viable alternative to the DIY approach of incorporating a branch office simply to employ people locally, and is a cost-effective method of setting up a remote team in one or more countries.
