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One of the earliest dilemmas most entrepreneurs face is how to expand a workforce as efficiently as possible. Getting access to more skilled workers, or simply a greater number of employees is vital to keep your operation growing but at the same time, you’ll be working with a limited budget. Trying to find a middle ground requires entrepreneurs to think outside the box.
Industrious entrepreneurs might consider hiring an international contractor, or even a team of international contractors, to save money and keep expanding, but is this the best path forward?
The Advantages of an International Contractor
Let’s start by evaluating the benefits of hiring international contractors:
No strings attached. When hiring an independent contractor, you’ll face far fewer restrictions and regulations than you would hiring a full-time employee. This can be useful if you’re trying to keep things simple; however, independent contractors in the United States can provide you similar advantages.
Inexpensiveness. International contractors are inexpensive, at least compared to conventional hiring options, for two reasons. First, they’re typically paid per-project, and will likely cost you less money than a part-time or full-time alternative. Second, there are many contractors available from countries with lower wages and weaker currencies, so even a small salary from your business can give them enormous spending power.
Modern travel possibilities. International travel for business used to be a hassle, but these days, initiatives like the Visa Waiver Program are making it much easier. If you need to meet with your contractors occasionally, or even just once to establish rapport, you’ll have to deal with far fewer hurdles and complications than you might have previously.
Flexibility. You’re not limited to hiring one foreign contractor, nor does hiring a contractor preclude you from hiring someone else in the states. You can also let them go at any time or look for other opportunities to hire. Overall, there are more possibilities and more flexibility, which is vital for a young organization.
That said, there are some consequences and drawbacks of hiring an international contractor, including:
Language barriers. First, depending on who you hire and where you hire, you may run into language barriers. You may find it difficult to exchange information or communicate consistently, or you may misinterpret each other on a regular basis. That said, you can use language fluency as a prerequisite for hiring and selectively work only with people with whom you’re able to communicate efficiently.
Time zone issues. Even if you communicate well with a contractor, you may experience issues related to time zones. If your contractor lives on the other side of the world, your main work hours may unfold as they’re going to bed. Some foreign contractors are willing to adjust their schedules to fit your time needs, while others prioritize work during the natural “overlap” that likely occurs during your workdays. Through experimentation and compromise, you should be able to find a system that works.
Payment processing trouble. If you’re paying a worker in a different national currency, you may experience problems with payment processing. For example, you may have to pay extra fees to convert your currency into a different currency, or you may experience delays when sending payment. Choosing the right payment processing provider, or working with a better worker-management platform can help you mitigate this problem.
International regulations. Though you’ll likely find fewer restrictions for hiring in certain areas, some countries have tighter or more specific labor laws that might dictate your approach. For example, Brazil is known for having strict labor laws and impressive provisions for its employees; depending on how you hire a person from Brazil, you may be forced to comply with these. You may also need to work with another country’s separate system of holidays.
Taxes. As you might suspect, hiring a foreign contractor can also make it difficult to plan and manage your taxes. Contractors in the United States don’t require any tax withholdings, but you’ll probably need to issue a 1099 form at the end of the year, depending on the circumstances. Make sure you work with a tax attorney, and understand international and local tax laws as they pertain to hiring foreign contractors.
Unfortunately, there isn’t a straight answer. It’s become easier and more efficient to hire a foreign contractor in recent years, but there are still some disadvantages that prevent these contractors from being a surefire bet for all entrepreneurs. Think carefully about your budget, your business’s needs and what a contractor could do for you before making your decision.