Stay Flexible: How to Hire Globally in a Post-Pandemic World

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Businesses, communities, and even entire regions of the world are cautiously peeking out from pandemic-imposed isolation, looking for any and all signs of normalcy. Indicators are visible and businesses are beginning to open up, intent on reaching goals and moving forward — albeit in a brand new economic and social environment.

The recovery starts with people. HR departments must first focus on the safety of their employees. The economic and human impacts of this pandemic are significant. As we emerge, employee safety is table stakes. Business can only accelerate once that safety is established. Then, economic growth can resume and HR departments can return to their strategic plans, including global hiring.

But the world offers new risks to manage and a new pace to recover lost time due to COVID-19. Growth strategies must now include safety protocols, real-time local knowledge, and contingency plans that account for immediate global shutdowns. HR leaders are entrusted to hire globally and mitigate risk in this complex, volatile environment.

Global Growth Is Still Possible

It must be said that global growth is attainable. The International Monetary Fund (IMF) forecasts pockets of growth, although at a slower pace than previously expected. The IMF revised its growth projections for China, the world’s second-largest economy, to 1.2 percent for the year. It predicts India will see 1.9 percent growth.

In fact, India is one of the most promising markets for post-coronavirus global expansion. Before the pandemic, 40 percent of the 1,000 US and UK tech companies surveyed for Global Velocity’s 2020 State of Global Expansion  report said India offered the top tech talent for global expansion, while 35 percent saw India as the top market for their overall global growth.

Beyond this year, solid gross domestic product (GDP) growth is expected across Europe. Germany, Italy, and France are projected to see 2021 GDP growth at 5.2, 4.8, and 4.5 percent, respectively. Perhaps unsurprisingly, they are also top of mind for US and UK tech executives: 41 percent of those surveyed for our State of Global Expansion report recognized Europe as the most promising region for global growth, while 30 percent cited the region as a rich tech talent pool.

Yet we are still in the midst of a global pandemic, and that means we’re still dealing with plenty of uncertainty. As a result, businesses’ global hiring plans need to stay flexible. Organizations must test the waters of foreign markets before making any long-term commitments, and they must remain compliant with foreign employment laws, taxes, and regulations while they do so.

Test Markets Before Committing

In this new economic environment, companies need to carefully consider global recruitment and retention challenges, as well as administrative and compliance needs. While companies test international markets, they must also solve for payroll, benefits, and compliance in accordance with local labor laws if they are to operate effectively and compliantly — or manage through a market exit if business or societal conditions change. If a company finds success in a new global market, it must scale quickly to seize the business opportunity and cultivate a positive, engaged workforce abroad.

Businesses that opt to set up a foreign entity need to understand the initial investments of time and money required, as well as the long-term commitment to a country that is always necessary to see a return on those investments. During the COVID-19 outbreak and recovery, businesses have faced particularly arduous challenges in this regard. Many governments halted applications for new business entities as they focused on managing the health crisis, and that sluggish administrative pace is out of sync with contemporary business needs and opportunities — especially for technology companies, which operate in a business environment that changes almost daily.

An alternative to entity creation is to rely on a partner to bear the burden of compliance for international hiring. Using an employer-of-record model to onboard global employees, pay them, and — if necessary — scale back reduces a company’s own legal, financial, and operational risks in the overseas markets. An employer of record serves as the in-country employer, while the business directs the day-to-day activities of the employees. This approach allows companies to focus on global growth and hiring without the burden of administrative complexities.

Utilizing alternative solutions to foreign entity establishment allows a company to get personnel on the ground in a matter of days at an overseas location of its choice while remaining compliant with local labor laws. Onboarding, payroll, health benefits, and all the other administrative and legal needs are provided by a partner serving as an employer of record. If the new location proves to be attractive, the company then has the option to set up a foreign legal entity, and employees can be transitioned from the partner to the new business entity. If a move turns out to be less attractive, the employees can be reassigned or terminated in accordance with local employment laws, thus ending the company’s exploratory business venture in that labor market with little friction.

The pandemic and uncertainty remain, but so do the business goals and opportunities. In today’s economic environment, companies are placing a premium on speed, flexibility, and cost containment. HR departments are empowered to lead the modernization of a company’s global hiring and accelerate its economic recovery — but they’ll need the right strategies to hit those targets successfully.

José Montero is chief operating officer of Velocity Global.

By José Montero