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4 Things to Know Before Hiring Overseas

In the United States, federal minimum wage is $7.25 per hour. But to get anyone good, you’ll typically need to pay well over $10 per hour. To hire anyone full-time, you’re looking at paying $18+ per hour.

Since human capital is typically the largest expense a business has, nearly every business owner would be wise to consider looking outside of the United States for their employees in order to save money. Yes, actually hiring people who live overseas. It’s largely because hiring overseas means you can find employees who don’t require as much pay. This is usually because their cost of living is far lower than that of the US.

But should you hire overseas? In this article, we’ll examine what every business owner should know before extending their search abroad. This topic isn’t as easy as simply expanding your online job posting to ‘Any Distance.’

1. America Is Great

America is a great country in which to be a business owner. Besides having a great economy, fair taxes and ample natural resources – the people are really what matter. There’s an amazing work ethic in America. People know that if they want to get paid well and make something of themselves, they must hustle. This is immensely valuable.

People from overseas often do not have this same mentality. Here’s what happened when I was discussing with a colleague the topic of hiring someone from overseas. My colleague told me not to hire from that country in particular. He said, “It’s not uncommon in that country to make an appointment with a plumber, only to have him not show up because the next day he tells you he was giving his roommate’s brother’s girlfriend a ride to the airport.” That’s frustrating. Do not discount the work ethic of Americans.

2. Time Zones

Time zones still matter a lot of the time. Sometimes it’s not a bother. If everyone can work independently. But if there’s ever an issue, it can take days – not minutes – to resolve. That’s because your communication can be a day delayed if you’re on the opposite sides of the planet. If you have a problem, you often cannot get an instant response. That’s really frustrating and can lead to some real problems. Things tend to move at a much slower pace when the team is spread to the four winds.

3. Communication

Can the person do the task? Yes. But can they communicate effectively? If the answer is no, it may be time to bring your search back home. What good managers know is that communication is something you look for in an employee long before you examine their hard skills. Hiring overseas usually leads to many cultural differences that can be frustrating. Frustration means loss in productivity.

4. Tax Implications

Foreign employees are viewed differently by the US government. This means another layer of complexity gets added to your tax situation. Though this isn’t a big deal if you are just hiring a freelancer. Make sure though if you’re hiring someone who will earn a lot each year to understand how it will impact your taxes.

Overall Thoughts

Despite the many downsides to consider, hiring overseas is a fantastic opportunity. You can find qualified employees who work for a lower wage than you can get stateside. In fact, you may be able to afford to pay someone a life changing sum of money – something you may not be able to justify doing with an employee from America. That’s a pretty incredible feeling.

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Finance Author
William Lipovsky owns the personal finance website First Quarter Finance. He began investing when he was 10 years old. His financial works have been published on Business Insider, Entrepreneur, Forbes, U.S. News & World Report, Yahoo Finance, and many others.

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