Inflation is common news now. To counter rising costs, businesses are resorting to hiring freezes, salary budget cuts, etc. However, an interesting way to cut costs and still grow is to hire remote talent and save on overhead costs. Once companies lift the bounds of geography, several options become available.
Businesses should note that inflation affects geographic and economic segments differently. While inflation is nearing double-digits in many developed economies, many countries such as Japan (2.6%), China (2.4%), and India (6%) have lower inflation rates. Each of the countries are major English-speaking talent markets for STEM roles and can provide significant relief for employers needing such talent in these times.
Inflation, at controllable levels, also means stable economic growth, political conditions, and business policies. In such circumstances, hiring and compliance policies are also prone to fewer changes which makes hiring a safe affair for businesses. In turn, companies can also expect stability in hiring and payroll costs.
In this article, we help you see why global hiring is a strategically good idea during this inflation.
Global Adoption of Remote and Hybrid Work Models
The growing preference for flexible work worldwide is a great opportunity to capitalize on foreign talent. Apart from enabling employers to hire in low cost markets, remote work can also help attract talent for lesser pay. A recent study by the Society for Human Resources Management revealed that employees would sacrifice 20% of their salary if allowed to work remotely.
Particularly, during an inflation, global hiring can help employees save on infrastructure costs. Employers believe they can save up to $18,000 per employee annually by transitioning to remote work.
With location independence, robust internet connectivity, and lower hiring costs in developing economies, you’ve got a case to go global with your hiring.
Specialists are More Affordable in Developing Economies
Developing countries like India, the Philippines, and Indonesia are prolific success stories in developing skilled workforces. Over the past decades, these countries have inculcated world-class skills in their workforce. Since the 90s, many developed economies have been outsourcing BPOs and manufacturing functions to these low-cost talent markets.
Now, these countries are talent powerhouses that can fill your STEM jobs. For example, according to a Korn Ferry report, India would have a talent surplus of around 245.3 million workers by 2030 when countries like the UK, Germany, France, and the USA may succumb to severe talent shortages. India also has a cost advantage; employee wages are 5-6 times less than western countries.
Hiring Incentives and Less Stringent Compliance
Most developed countries have intricate employment laws informed by various sources in addition to the home country’s constitution. For example, Ireland’s employment laws are guided by constitutional amendments, regulations, and EU labor laws. Countries with strong labor unions have collective bargaining agreements which also influence compliance.
Apart from offering STEM talent at lesser costs, countries like India, Pakistan, the Philippines, and Indonesia have employer-friendly employment laws. Generally, talent surplus countries implement reforms to ensure employment laws are stringent enough to protect employee rights while flexible enough for businesses to hire talent with minimal costs and compliance hassles. Many amended employment laws over the years to eliminate minimum wages, working hours, sick leaves, etc., to ease hiring. Thus, employers from the UK and US can hire in markets where minimum wages are traditionally lower and reduce hiring costs.
Gig Economy can Reduce Payroll Costs
According to Upwork, the most significant increase in freelancer demand has been in the Web, Mobile, and Software Development categories, with 80% of hiring managers stating they have increased their use of freelancers since the onset of COVID. Coincidentally, many developing countries such as Ukraine, India, and Pakistan are growing to be the best hiring hubs for tech talent.
Thus, when going global with hiring, take cognizance of the gig economy. Lately, the gig economy has gained much traction in developing economies, with India alone offering 15 million freelancers. Companies wanting to save on workplace infrastructure, payroll, and taxes, can capitalize on this trend.
According to CNBC, the average US family spends an additional $327 per month relative to pre-pandemic spending. This has increased employee expectations around salary increases. Trends like the Great Resignation show no signs of slowing down. Employers are combating this notorious trend with lucrative salaries and joining bonuses.
With hiring costs skyrocketing, look at developing economies for the skills you need. Taking your hiring global can help mitigate the effects of inflation on your business.