Due to changing attitudes and new technologies, it is possible for companies to use remote work as a long-term strategy to expand and supply skills. Unfortunately, many business leaders are worried and do not dare to act. Instead, they should take advantage of the changes and increase their recruitment pool to a global level.
But switching to global remote work seems to be easier said than done, not least for Swedish companies. A recent survey shows, among other things, that only 16 percent of Swedish companies see the entire world as a potential talent pool for technical competence, which is significantly less than the global average of 29 percent. There is development potential here, not least considering that the availability of competence is often greater abroad, for example in emerging technology hubs such as Helsinki and Warsaw, than it is in Sweden.
But what are the pitfalls when hiring internationally? One thing is the legal aspect, which 27 percent of Swedish companies consider to be a significant challenge when they want to hire internationally. In the case of large businesses, they often have dedicated legal departments and corporate units around the world that make hiring relatively easy, both inside and outside the EU. But for SMEs, which lack the resources to manage payroll and employment-related laws, it’s significantly more complicated. As a result, access to highly qualified skills is limited. To adjust this imbalance, SMEs need strategies to overcome international employment barriers.
Hire independent contractors
Companies looking to hire foreign talent must ensure they can bring together management and work cultures across the globe. This is one of many obstacles to hiring globally and the main challenge for Swedish companies to hire globally according to the Remote Tech Talent Report 2022.
Many companies hire local consultants to minimize the legal challenges, as well as to avoid the hassle of opening a local entity. But even that option has drawbacks, as companies can face financial penalties related to the legal definition of being an employee.
Create a local drive
One option to ensure that the company complies with local labor, wage and tax laws is to create a local entity. This allows employers to hire like any other local company. However, it is considerably more complicated and more expensive than hiring consultants. When opening legal entities, companies usually have to find their own local payroll providers, banks, accountants and lawyers, with all that entails in terms of time, administration and money.
Work with a registered employer
Today, it is possible to streamline the entire process with the help of a registered employer – a so-called Employer of Record (EOR). This option allows companies to tap into talent in another country without having to create their own local entities or risk violating local employment laws.
This option frees SMEs from the administrative burden related to local labor laws, but even here there are disadvantages. Companies using agencies must pay for the service, and most registered employers also require security deposits.
These costs sometimes deter smaller companies from searching for talent globally. But as more and more large companies make use of global competence, small and medium-sized companies must find cost-effective alternatives here.
The importance of taking up the fight for global competence
It is clear that our global economy is, in a sense, not global at all. Smaller companies face major challenges when it comes to finding and using global expertise when they need it. International expansion depends on how well you succeed in this area.
By: Johanna Sylvander, Head of Northern and Eastern Europe at Remote