Calculate the real-world costs of hiring international employees

Hiring international talent from wherever it can be found promises a significant return on investment. Doing so affords you the flexibility to choose from a diverse talent pool in the hiring process, a move proven to boost a business’s productivity and competitive edge.

Team members on the ground in a country where you’re expanding your operations will give you strong locaized insight and a fast-track to success.

However, hiring new employees is more complex than simply finding and attracting top-tier talent. Compliance with international labor standards demands smart resource planning, and location-specific benefits packages are vital when planning a talent retention strategy.

But what should your budget be when hiring international employees? Remote’s Employee Cost Calculator can help! 

Read on to learn more about how this tool works, what information you need to account for, and how to implement a realistic budget for international hiring.

Costs of hiring an employee

Hiring new employees represents a significant investment in salary, benefits, and more. In the U.S., the average company invests $4,700 to hire a new employee and $28,329 to replace an executive. These figures represent the soft costs of hiring an employee — in other words, the time and human resources needed to match (and train) a high-quality candidate for a given role. 

The hard costs of a new hire are fairly straightforward, usually including salary, benefits, and one-time onboarding costs.

While soft costs can be easily overlooked, they are necessary to ensure that the investment of a new hire pays off in the long term.

Soft costs often outweigh hard costs in the hiring process and include the time and human resources needed to define an HR need, scout for a position, conduct interviews and background checks, and select qualified candidates.

Example cost breakdown for employee hiring

The following breakdown includes common costs associated with hiring a new employee, aside from their salary, benefits package, and signing bonus. Note that these costs will remain relatively consistent whether you hire locally or internationally.

These calculations are for a standard employee. To replace a manager or C-level executive, the HR costs associated with the recruiting process and loss of productivity as the leader adapts to the organization will be much higher. 

Additional costs when hiring in new countries 

The cost of hiring an international team member extends beyond the dollar amount of their paycheck.

The addition of mandated employment taxes can increase total employee costs to anywhere from 1.25 to 1.4 times their salary, depending on where they’re logging in from. For example:

• You want to hire a software engineer based in Argentina at a salary of USD $60,000 a year. You will incur an additional $15,731.76 in Argentina’s mandated employer costs, which include employee pension and payments into Argentina’s social welfare fund and public healthcare system.

• You’ve recently onboarded a promising 3D artist based in Singapore. While his annual salary totals USD $40,000, you, as the employer, will also be paying $6,897.24 in other required costs.

• You’re now working with an experienced product manager in Belgium who receives a United States-equivalent annual salary of $102,000. You’ll have to factor in strong benefits requirements from Belgium and the European Union, increasing that figure by $26,384.64 per year.

These are just a few examples illustrating how hiring costs vary between different countries.

Keeping track of all your international hiring and onboarding costs can quickly become unmanageable without help. Fortunately, Remote offers a quick and painless way to sort all this out.

Fast, simple budgeting for your international hiring

Remote’s free Employee Cost Calculator will help you quickly understand the total cost of employment (TCE) so you can build a strong, fully-compliant global compensation policy while controlling costs. 

The calculator shows the mandated baseline salary and benefits requirements in the countries where you’re thinking of hiring. With this tool, you can make better decisions about how much and how quickly you can afford to scale your international workforce.

Our Employee Cost Calculator allows you to select a country, job role, and exact salary in U.S. dollars, euros, or any of several other international currencies.

Press “Calculate,” and our expert tool provides a helpful breakdown of hiring costs — including vital cost comparisons across different countries — to help your HR team plan recruitment efforts.

Try the Employee Cost Calculator now!

Understand how costs differ for international vs. domestic hires 

While your internal administrative costs may remain the same for domestic and international hires, the following areas deserve special consideration when hiring internationally. Making these calculations at the start of your international expansion plan will put you ahead of your competition. 

Recruiting

Finding a qualified candidate in a country other than your own takes longer and involves separate recruitment costs. While a lower cost of living in other countries allows companies to find the same caliber talent at a lower salary point, the longer time frame to onboard an overseas employee represents a higher opportunity cost and might involve third-party payments to agencies or other on-site recruitment experts.

Travel costs

A company might need to sponsor periodic travel for international hires, either for all-company retreats or on-site visits with important clients. In addition to airfare and accommodations, companies will have to budget for visa costs and legal processing fees.

Benefits

Many companies fail to factor in the costs of employee benefits in different countries. Governments with a social healthcare system might require employer contributions, and other peripheral benefits are either mandated or commonly expected.

For example, it’s common throughout Latin America (and in some parts of Southeast Asia, Africa, and Europe) for employers to offer “13th-month” and even “14th-month” bonus salaries during the winter and summer holidays. In a few countries, like the Philippines, these additional salary payments are mandatory, although employees in many other countries expect them as customary benefits.

Tax compliance

Different countries have different requirements, but hiring internationally often requires employers to contribute to a national insurance plan or similar social security system. Failure to comply with local laws can result in hefty fees and fines and might jeopardize the business’s ability to operate in that country. 

Terminations

Severance packages may be mandatory when employees are laid off or fired, depending on the country. This liability should be accounted for as a risk in hiring overseas.

If your team were to enter one of these markets unfamiliar with these expectations, you could easily find yourself scrambling to manage a hiring budget that’s been thrown off for the entire year.

Managing total rewards strategically

In today’s distributed workforce with highly skilled employees in multiple geographical areas, your path to structuring a cost-effective approach to all your employee benefits programs begins with the concept of total rewards.

“Total rewards” tallies the total value of compensation, benefits, and rewards that a company provides its employees. This includes optimal salaries and bonuses, of course, but also the location-specific benefits required to retain quality talent.

Remote VP of People Nadia Vatalidis has developed a total rewards strategy for hundreds of employees across dozens of countries. In her experience, getting total rewards right is critical to ensure employees feel welcomed and valued.

“Total rewards is about the value, both intrinsic and extrinsic, that sets the tone for an employee’s entire experience with an organization.”

The best total rewards systems demonstrate a company’s commitment to putting people first. They work by respecting individual preferences in an international business climate that is increasingly geared toward building an equitable work environment.

When you offer a strong and diverse total rewards portfolio, you position yourself as a leader in attracting, developing, and retaining top-performing employees who will add value to your organization.

But in order to put in place a comprehensive total rewards program across multiple target countries, you need to understand costs in global markets. The first step is to get a 360-view of how much it costs to hire in each country, then gauge that against your budget. That’s what this calculator helps you accomplish.

Taking 13th-month bonuses as an example, the real cost of hiring international employees can surprise companies entering new markets. For Vatalidis, planning a global compensation strategy is all about balance.

“When you understand how hiring costs play out in the particular country or countries where you might want to do business,” she says, “you’ll be better able to select the countries that will connect you with the workforce you need while crafting rewards packages that are both genuinely responsive to their needs and realistic in terms of your budget.”

See also: How to create your own global compensation plan

Mandatory employee benefits around the world

Although every country’s system is different, typical mandated expenses charged to employers include taxes and premiums that support the following government programs:

• Healthcare programs

• Retirement, pensions, and social security plans

• Unemployment compensation

• Life insurance

• Workplace injury, accident, and disability protection administered through worker’s compensation plans

The list may also include paid time off for holidays, illness, and parental leave. In many non-U.S. markets, governments stipulate that all employees receive substantial allowances of paid time off for a variety of reasons. 

Even where core benefits are not mandated by law, highly skilled international employees often expect them as part of an employer’s ethical commitment to equity across markets.

In some locations, like many Western European markets, strong public health and social welfare systems make employer-sponsored health and safety net benefits superfluous. But even here, for many employees, employer-provided private health or other insurance plans become highly attractive supplemental benefits because they offer greater choice in providers and types of care compared to even the best-run public healthcare systems.

In other countries, the lack of publicly-mandated healthcare or health insurance makes basic health insurance an essential employer-sponsored benefit, either as required by law or as part of the cost of doing business equitably in a particular market.

See also: What is the modern benefits stack?

Which supplemental benefits do employees expect?

Employers also pay for the benefits listed below in many markets. They do this because they are either legally required to offer them or to remain competitive:

• Professional liability insurance plans

• Ongoing employee training

• Home office supplies

• Equipment required for use on the job

There are additional supplemental benefits employers need to consider as part of their total rewards package. These packages might vary between countries, industries, or types of roles. It’s common now to see the following supplemental perks included in employment packages:

• Supplemental retirement savings plans

• Mental health support

• Wellness and fitness perks

• Personal development programs

High-value fringe benefits are often what make an employer stand out to attract top talent internationally. When calculating international hiring costs, the issue becomes more complex without the requisite in-country experience.

See how Remote’s Employee Cost Calculator can work for you 

Remote launched the free Employee Cost Calculator to give you everything you need to start budgeting for finding new talent in dozens of countries that are among the most popular for hiring remote workers.

The Employee Cost Calculator leverages our team’s in-depth, up-to-the-second knowledge of local markets to reveal the total cost associated with any particular type of new hire. Aside from the employee’s salary, you’ll see a breakdown of the average cost of benefits per month or annually. You can even download a handy PDF with all this information to use in your headcount budget meetings.

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Remember that 3D artist from Singapore, for whom you’d be paying close to $7,000 annually in mandatory benefits? The Employee Cost Calculator’s comparison tool will show you that hiring someone for the same job classification and salary level in South Korea will cost less than $4,000 in mandatory benefits. This kind of information can be mission-critical for emerging companies (or any organization on a tight budget). 

While information on supplemental benefits costs isn’t available in this public version of the calculator, you can use the calculations to see the mandatory contributions and better understand what kinds of supplemental benefits you can afford and would like to include.

Remote delivers across borders and across the board 

If you hire someone in a country in which you do not have an established presence, you’ll need to go through an employer of record or EOR. By partnering with Remote as your EOR in a particular country, you’ll gain access to our local experts and their collective knowledge of local laws, workplace culture, and employee expectations. Our offices can not only handle compliance-related issues but also help you hire, pay, and manage benefits with ease.

Remote customers have access to the complete suite of services in the full version of the Employee Cost Calculator. This customer-only tool will allow you to see cost breakdowns for mandatory contributions and supplemental benefits in a particular country. Our Fair Price Guarantee means that you’ll enjoy transparent and highly competitive rates with no hidden costs — wherever you hire.

You and your team deserve the freedom, confidence, and peace of mind that comes from partnering with an experienced employer of record that understands both your balance sheet and the exceptional value you want to deliver as an employer. With Remote, you can start adding the world’s best talent to your team, no matter where you operate or where they live!

Budget your next hire with our free Cost of Employment Calculator

Use the calculator to find the total cost to hire an employee in a new country including all government mandated contributions.

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