Saving money is important in business, but sometimes a cost-cutting mindset can actually get in the way of making the most efficient employment choices.
It may seem obvious that doing something yourself is cheaper than outsourcing but often that is a false economy when it comes to employment decisions for expanding your global workforce.
The DIY option
There’s a common misconception about outsourcing. Companies and staff alike think it is a luxury that’s reserved for large corporations with strong cashflow’s. But the truth is that choosing to outsource early on actually makes more money, because it saves on a most precious asset: time.
• Time to devise business growth strategies
• Time to plan your projects
• Time to research an unknown and business critical HR topic from scratch.
The perceived advantages of DIY are that money can be saved on:
– Establishing the business infrastructure, hiring staff and rolling out processes at a new location
– Interviewing prospective candidates
– Screening CVs and performing background screening checks
– Processing the local payroll
It’s true that these practices can be done in-house, but the reality is that it takes time, money and access to resources that typically are only available to large corporates to facilitate this expansion. And, if it is only for one or two hires, is it all worth it?
Here are the real pros and cons of choosing the DIY option:
Pros:- Cost and timeframe expectations are managed internally and you have some level of control.
Cons:- Lack of expertise can lead to mistakes in the processes involved with employment.
– When expanding overseas, lack of knowledge of domestic practices and regulations may hamper prospects accepting the role.
– No reliable way of managing overseas human resources and administration effectively. Global HR reporting software is a possible solution but it will add to the costs.
– A huge drain of time if staff are unfamiliar doing all the work associated with company expansion.
The needs of the overseas worker
International employees usually fall into one of three distinct categories: local remote workers that live in the country of expansion, expats seconded to a new country or globally mobile independent consultants working on long term projects.
Local remote workers will always want to ensure their own security and financial compensation will be adhered to by their foreign employer. When building global teams, achieving benefits and compensation parity with Head Office can be a challenge. Having access to local intelligence will avoid potential pitfalls if these factors are understood from the beginning.
This is where working with a global professional employment organisation (PEO) like Portas Global comes into the equation. Working as a natural extension of your existing HR department, Portas Global can relieve any difficulties associated with international business expansion and importantly, help organisations expand swiftly into new markets.
Doing it right
Carlos Ruiz, Portas Global’s Managing Director, speaks about the many mistakes made by companies wishing to do it themselves, when discussing the benefits of working with an experienced Global PEO.
He says: “We set up new team infrastructures in different countries every week, handling locally-compliant processes for payroll, employment contracts, social insurances and employee benefits. If practical we can also manage visas and work permits. If companies are not confident handling all of these elements themselves or have the associated knowledge of the domestic laws and practices of the new territory, then the DIY option is not a practical or cost-effective solution.”
The global employment of a remote workforce is far from being a straightforward process. International employment law and regulations differ greatly from one territory to another, and it takes a lot of time and work to fully understand a new host country’s legal employment compliance. You cannot simply cut and paste your local contracts and HR practices and assume they will be compliant in another country.
By attempting to save money on outsourcing work, inexperienced companies are likely to end up spending a great deal more on developing the necessary understanding of what they need to know before any staff deployment even takes place. Not to mention the enormous investment of time that is required.
Ruiz adds, “Many companies try DIY for their first global hire and we often find this experience gives them a real appreciation of the work that occurs in the background which is better managed by a Global PEO. When it comes to global employment outsourcing, price should not be the most important consideration. It is about all about compliance.”