The days where you could run a successful business without expanding into foreign markets are long gone. In an increasingly global world, companies have no choice but to launch new markets and develop their activity on an international scale if they don’t want to lag behind their competitors.
With globalization and technological advances, geographic boundaries have literally dissolved, also with regard to talent recruitment. Companies all over the world have long since started to recruit foreign talent, either because they face a severe talent shortage in their home countries or because they realized that tapping into a global talent pool is the only way to find the perfect candidate for an open position.
However, not all businesses consider having a globally distributed team to be a workable solution from the start. Depending on their mindset and the state of their expansion project, companies might still find it difficult to get their head around the idea of having remote employees all over the world.
So, what exactly are the benefits of a global workforce? And are there any downsides to working with a global team? In this blog post, we’ll tell you everything you need to know about the pros and cons of managing a global workforce.
What is a global workforce?
A global workforce, also known as international workforce or a globally distributed workforce, means that a company’s staff is located in different countries all over the world. It’s the opposite of a local workforce where all staff is located within the boundaries of the same jurisdiction. Working for the same employer, the members of a global team collaborate using a range of tools designed to support asynchronous communication and to facilitate cross-border collaboration.
Advantages of having a global workforce
Some might say that in an era where globalization and international expansion have become a fixed part of the business world, it’s only natural for businesses to not rely on a local workforce anymore, but to start growing a global team instead. However, hiring employees abroad isn’t a decision that should be taken lightly without examining the pros and cons first. So, let’s take a look at what advantages companies can look forward to when working with an international team.
Enhanced creativity and new perspectives to drive business success
It’s a fact that a team of people from the same country who thus have similar experience and background will never be as creative as a multicultural team whose members are at home in different regions all over the world. Having employees from different cultural backgrounds working together on projects will help generate new ideas and drive innovation in your company. Where different ideas and perspectives come together and merge into new trains of thoughts, new concepts and ways of approaching problems can be developed. And it’s no secret that innovation is one of the key ingredients for a business’s success.
New skills and languages to support a global customer base
Depending on the nature and size of your business, chances are that you have an international customer base to cater for. At the very least, this requires a multilingual team. But language skills are not the only thing a global team will bring to your company. It’s also the cultural competence and knowledge employees from different countries bring to your business that will help it move forward. To put it simply: A diverse client base requires a diverse team. What’s more, employees with different backgrounds have different skill sets that might also prove helpful in one way or another.
Cultural exchange and diversity for a stimulating work environment
In today’s world of work, concepts such as diversity and equality are becoming more and more important and have even turned into a non-neglectable factor when it comes to attracting and retaining talent. Having a globally distributed team will favor cultural exchange between employees and create an interesting environment to work in. Not to forget that having a multicultural team will also lead to a more diverse and inclusive workplace culture.
Lower workforce costs when hiring abroad
For many companies, hiring abroad is also an opportunity to reduce workforce costs and gain a competitive advantage. Labor standards, social security contributions and other employment-related costs vary greatly between countries. This means that companies tapping into a foreign talent pool where labor costs are significantly lower than in their home country can save a lot of money compared to hiring all their workforce locally. Setting up shop in a region where production costs are relatively low will also lead to lower operational costs.
Increased employee satisfaction
That being said, hiring employees overseas also offers companies a great opportunity to increase employee satisfaction. Sure, salary, bonuses and other benefits aren’t everything, but the financial side of a job still plays an important role with regard to employee retention and satisfaction. When hiring in a country where wages and other employment-related spendings are significantly lower than where your company’s headquarters are located, it’s a good investment to make sure to offer employees a generous salary and benefits package to show them you value their work.
Better resilience in difficult situations
The pandemic has put topics like resilience and future readiness high up on the business agenda as it has shown how unprepared most companies are to react to disruptive events. Relying on the economic stability of one single country is not a clever move. From a crisis management point of view, it’s better to be involved in several markets and, in consequence, have a team that is distributed over several geographies. In this way, if there is a crisis in one region, it’s only a part of your workforce that will be affected – instead of your entire team. While some of your employees may be prevented from carrying out their work as normal, the other members of your team are there to pick up the slack and provide support to their colleagues.
Access to a global talent pool
Probably the most important benefit of a global workforce is the fact that it gives you access to a much bigger talent pool. Why limit yourself to hiring the best candidate in your local area if you can tap into a worldwide talent pool which allows you to find the perfect candidate for any open position. Being able to give preference to skills and experience over geographic location will allow you to hire the very best talent available and ultimately contribute to the success of your business. This is particularly important for businesses based in geographies that suffer from a skilled labor shortage. Without geographic limitations, labor shortages are a thing of the past. Plus, if your competitors are tapping into a global talent pool, you can’t afford not to do the same.
Faster international expansion and launch of new markets
In today’s world, businesses of any size aim at expanding into new markets to reach new customers. The biggest hurdle in this scenario is often the lack of local knowledge. Having a global team whose members are not only distributed across different consumer markets, but who actually know the local culture, etiquette, language and customer base is therefore a valuable asset when expanding internationally.
First of all, this saves you from having to post a delegation of employees to the new market to oversee the expansion project and the launch – since you already have someone on site. Second, a local employee can provide valuable insights as to how customers in the new target market may react to your brand and products. Third, having someone who speaks the local language gives you a major advantage when communicating with your new customer base.
International workforce: Are there any disadvantages?
After reading about all the advantages that come with a globally distributed team, you might ask yourself whether operating with a global team also has its downsides. Well, the answer to this question would have to be “yes”. The challenges of managing a global workforce can be summarized as follows:
- Different time zones: Having team members based on opposite ends of the world can slow down communication and collaboration processes and ultimately cause projects to take longer.
- Need to rethink work processes: Having an international workforce requires full dedication to the remote-first approach. From asynchronous communication to remote onboarding, everything needs to be adapted to enable borderless collaboration.
- Different employment laws: With your team being distributed across different geographies, you will have to deal with different employment regulations and standards, which is not only time-consuming but also poses significant compliance risks.
- Local payroll operations: Your workforce may be global, but your payroll will still need to be processed on a local level and in full compliance with local rules.
- Cross-border payments: Even in the 21st century, paying a global team is not a walk in the park. International transfers require careful planning to make sure your remote employees get paid on time. Plus, cross-border payments can be quite expensive if you don’t know how to pay your global team in an efficient way.
Grow, manage and pay your global workforce with Lano
This might sound like quite a long list of challenges that come with having a global workforce. Luckily, most of these challenges can be solved with a global hiring solution like Lano. Thanks to our network of Employer of Record partners, you can compliantly hire full-time talent in over 150 countries all over the world without setting up a single legal entity. The Employer of Record will take on all administrative responsibilities related to the employment relationship. This includes a compliant employment contract and a local benefits package for your employee, a smooth onboarding process, all the necessary registration processes and payroll, to name but a few. Meanwhile, you remain in full control of your employee’s day-to-day activities and can focus on driving your business forward.
No need to worry about compliance, payroll or changes in employment law. What’s more, with our Lano Wallet you can easily issue payments to your global team in over 50 different currencies and benefit from free local payments. Book a demo to find out more about how Lano can help you grow, manage and pay your global teams.