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Hiring a Local vs Sending an Employee on Assignment

A company expanding abroad has two options when it comes to staffing their foreign operations: 1) Hire a local resident of the destination country or 2) Send an existing employee on assignment away from home.  These are very distinct choices, and both have their own advantages and potential challenges.

Hiring a Local Overseas

For some roles, hiring a local in the overseas location will be appealing.  For example, sales positions, customer service, and technical roles can all be filled by locals.  You may also be hiring a local to work remotely for your company, even if you don’t have a business presence in the country.

If your company does find a local with the right skill set and they appear to be a good fit, you will want to assess the pros and cons of bringing them aboard.

Pros

There are some very real advantages to hiring a local, and the fact that they are already based in the destination country can be extremely appealing. Some of these ‘pros’ include:

Easy and Low-Cost Hiring

The key advantage of hiring locally is that you don’t have relocation costs or the hassle of sponsorship and work permits.  All you need is a way to run a local payroll for them, in order to meet tax and social contribution requirements.  Furthermore, a resident will be compensated based on rates in the local economy, which can bring even more cost savings.

Local Knowledge

A resident is going to have existing knowledge of the work environment and how to operate as well as their own personal networks and professional connections.  This is something that could take an expat many years to develop, and is one of the hidden values of employing a local.

Brings Diversity

If you are staffing with a mix of locals and expats, then you will have a more diverse team with a wider range of views and experiences.  The locals can be a real asset to help assigned expat employees understand the country and customs, while at the same time learning your business operations.

Language and Customs

Because language and cultural barriers can impede business expansion overseas, hiring a local will help your company operate more easily and to develop relationships quickly.  It is unlikely that an assigned expat will have the equivalent language skills or cultural savvy as a local employee.

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Cons

New to Your Organization

Like any new hire, the local will have to learn about your organization and it may take some time until they are fully integrated.

Remote Work Challenges

If you are hiring a local as a remote worker, you will need to find a way to overcome communication challenges and possibly a difference in time zones.  Project management and accountability can also be difficult when it comes to remote work.

Need for Support and Training

Because they are new, locals will need some type of on-the-job training to get started, which can be another big challenge if they are remote. You will have to think about how to execute an effective training process before you can move forward on business activity.

Sending an Employee on Assignment

Sending an employee on assignment from the home country is a traditional method of staffing expansion plans overseas.  The expatriate employee basically relocates for either a short or long term assignment, depending on their position and your business needs. 

These assignments are usually offered to upper management or specialists with knowledge and experience that cannot be easily found in the host country.  However, there are risks that come with assignments, that can offset some of the advantages.

Pros

Existing Understanding and Experience with the Company’s Business Model

This is hard to duplicate with a local, and if your company has a commitment to the destination you will need experienced personnel on the ground.  Any major expansion into one country or region will require some assigned staff to initiate and manage business activity, as well as train any new local hires.

Relationships with HR and Management

Employees assigned from home will be able leverage their existing relationships for management or strategic support.  This becomes important to maintain a degree of continuity and business direction in the destination, as well as offering some personal support to the assigned staff.

Cons

Cost and Effort

Cost is the main downside to foreign assignments. There will be housing and relocation expenses, as well as the time and effort required to obtain sponsored work permits.  The overall cost of an assignment can equal two to three times the same position at home.

Training

Expats may also need training in the local language and some orientation to local business culture, which may delay the start of an assignment.

Risk of Assignment Failure

Assignment failure is a very real possibility where the employee cannot make the transition, has family issues, or is otherwise ineffective.  While international assignments may appear attractive, they are full of both personal and professional challenges for the employee.

Risks of Non-compliance

Whether you hire local residents or send employees on assignment from home, there will be compliance risks.  For expats, you may be tempted to keep them on the home payroll, but that is only viable for shorter assignments.  At some point, you will need to find a way to run a local payroll through a valid entity in the host country.

Equally, locals need a way to get paid in their own country, and you will have to set it all up according to local regulations.  Locals are also going to have a greater awareness of labor protections in the host country such as leave entitlements, termination causes, notice periods, and severance.  They will see those as their rights, just as if they were employed by a domestic company.

The easiest way to overcome the risk of compliance is by employing locals and expats through a GEO with a single employer of record in the country.  This gives you a one-stop solution to run payroll for all employees at the same time, and simplifies administration of foreign employment for your HR department.

Hiring Locally and Sending Employees on Assignment

As you consider the pros and cons of hiring locals or expats, it becomes apparent that there is no ‘best’ solution, and the choice will depend on some key variables.  Both locals and expats bring valuable and distinct knowledge sets to your foreign operation, and it may be that a mix of both is optimal.

For example, some positions simply can’t be filled by local residents who are new to your company (supervisory, project management, technical specialists), and it may not be cost effective to assign staff for support positions or customer service reps.  The most practical approach may be to initiate activity with several assigned expats, and then expand with locals who will have the benefit of training and supervision by experienced employees.

If you need a flexible and efficient method for employing all types of staff overseas, we can help you set up and manage your international employment.  We will ensure that you are in full compliance when employing both locals and expats overseas for your foreign expansion.

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