Never before in the history of the human race have we been able to easily hire someone who lives on the other side of the planet. This ability has allowed us to find expert staff – often times at a lower cost than hiring locally. But on the other hand, there are still some very tangible reasons to forget hiring online and look for someone local. This post will explore these two choices. This is important because human capital is the most valuable capital and thus the most costly form of capital. It’s important we get this right. The ability to hire is possibly the best trait a business person can carry in their tool belt. Richard Branson certainly thinks so. Let’s begin the examination:

Why Hiring Online Is so Popular

First, the costs must be mentioned. Basically, if you are in a developed country and you can hire someone from a developing country, you will save a lot of money. It’s due in large part to the fact that the cost of living is so much cheaper in popular outsourcing countries like the Philippines and India. You pay less but the person in the developing country still gets good wages.

Furthermore, business owners can improve a person’s life much greater if the hire lives in a developing country. Say you find a programmer who is really, really good. Simply paying them the same rate as you would need to pay someone stateside would transform that person’s life. It’s a pretty awesome feeling knowing that you can dramatically change the life of a fellow human being.

Money aside (because hiring people shouldn’t be all about money) hiring online can work because you have a huge candidate pool. Theoretically, everyone who’s good at what they do can be found online. Even if you live in rural Kansas, you can still find the world’s best programmer.

Downsides to Hiring Online

The first downside is the sheer quantity of people. It can be overwhelming. Narrowing down your selection of candidates can be time consuming. And you can try to keep people from applying to your job by setting strict applicant guidelines, keeping the listing private and you selecting who may apply or by networking invites only. Though this can still lead to a serious case of information overload. Consider hiring a staffing agency to connect you with the right candidates. This will add to your cost and possibly frustration since there will be a ‘middleman.’

Another downside is the possibility of cultural differences among team members. This means people take off different holiday’s. And perhaps the people just don’t gel well due to living in different areas of the country.

When Hiring Local Is the Right Choice

Sometimes you want to be able to look at someone face-to-face and reach out and shake their hand. If you enjoy this type of communication, hire local. Hiring local can also be nice because it leads to more personal accountability. If your new programmer lets you down on the job, you can easily tell your peers that the programmer is a poor one. The programmer knows this so they will likely work hard for you.

Downsides to Hiring Local

It can be costly. And local hires sometimes take more time since the candidate pool is limited and face-to-face meetings usually take place. A local hire could also use your business ideas and share them with your competitors. Even if they have signed a nondisclosure agreement, there are many things a person can subconsciously do to let out proprietary information.

Which is right for you?

If you want to save money – go global. If you enjoy face-to-face interactions – go local. You can win either way, so pick whichever suits your style.

William Lipovsky owns the personal finance website First Quarter Finance. His most embarrassing moment was telling a Microsoft executive, "I'll just Google it."

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