Cost effective recruitment strategies and practices: your 4-step guide

The hiring and talent landscape is shifting once again. Driven by instability in the global economy and lightning-quick evolutions in labor markets, the ways businesses are finding, attracting, and retaining workers have changed. But change, even change fueled by uncertainty, doesn’t have to be a bad thing.

Despite the challenges, businesses still need great people to fill their open roles — and talented people around the world are looking for the right roles to fill. 

“We’re seeing these changes first hand while supporting Remote’s clients with their hiring needs,” says Job van der Voort, CEO of Remote. “Companies are adopting more budget-conscious practices. This transition, understandably, hasn’t been completely smooth for everyone. But when done right, these changes can have a positive impact on the business as a whole.”

If you follow cost-effective recruitment strategies and practices, your hiring plans don’t have to slow down in 2023. With the right approach, you can scale your team and thrive in the new year regardless of what’s happening around you. Doing so will require more strategy, finesse, and a global outlook — and Remote is here to help you make it happen.

In this guide, we’ll share the tools, calculators, strategies, and expert advice you need to develop and execute a budget-conscious hiring plan for cost-effective recruitment in 2023. 

Part 1: Is a remote distributed team right for your business?

One of the changes that spurred fast growth for technology companies in 2020 was the rapid move toward remote and distributed work. This has been called the “greatest labor experiment the world has ever seen,” and estimates suggest some 88% of companies globally switched to remote working within the space of a few weeks. 

During this monumental shift, people leaders saw that many workers were just as productive, if not more so, from the comfort of their homes (or other locations of their choice). And this made a lasting impression. As we found in our 2022 Global Benefits Report (based on a survey of 2,500+ remote workers and business leaders), 66% of decision makers expect remote work to become more common over the next five years, and 69% of employees feel the same. 

Leaning into remote work helps your budget

The business advantages of remote work are almost too many to name. However, in times of increased economic pressure, the cost efficiencies of a remote team are among the most important.

Companies in US tech hubs (from Pittsburg to San Francisco) can save $5,580 per employee per year just by downsizing their office space. With the reduction of related costs like utilities, repairs and maintenance, office equipment, and snacks, offering remote work options can ultimately create business savings of $10,600 per employee annually. But that is just the beginning. 

“Many costs that were once seen as necessary business expenses, like office space and utilities, are now optional,” says Marcelo Lebre, COO at Remote. “With businesses cutting down on those costs, the next phase of budget optimization is being able to hire from anywhere rather than just around expensive urban centers like San Francisco or New York, where top talent was previously concentrated.”

Since 2020, workers have been leaving tech hubs in droves for locales where they can create a better life-work balance. Previously overlooked workers in rural or developing areas have been able to find more opportunities working for global companies. These changes are a win-win for workers and the business leaders willing to expand their hiring horizons to places that have previously not been considered top markets for talent.

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Attract new talent from underutilized markets

When you hire from a limited talent pool, you face a number of challenges, including: 

• Fewer candidates to choose from

• Many candidates don’t have the specific skills you need

• Lack of diversity in your local talent pool

• Difficulty attracting talent for locally competitive roles

Remote hiring solves this issue, allowing you to attract new talent from markets you may not have previously considered. You can exponentially increase your talent pool by opening up to new regions and your organization becomes more attractive to top performers who are actively seeking more flexibility from a remote role.

Employees want to work for diverse companies. A whopping 80% of employees surveyed by CNBC said they want to work for a business that values diversity, equity, and inclusion.

“Leading a recruiting function, you see how many candidates today are upfront about their desire to work for diverse companies,” says Anastasia Pshegodskaya, director of talent acquisition at Remote. “Attracting great people to work for your company means you have to hire in multiple places to build the kind of teams those great people want to work with.”

Limiting your hiring plans to local-only candidates harms your ability to build the kind of diverse team that can attract the best candidates for your open roles. The more you walk the walk on diversity, the more candidates will want to work for you.

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Global Study: Inclusive hiring practices to start today

Remote surveyed 1,250 hiring managers and business owners across the world to investigate the use of inclusive hiring practices in 2022.

Retain talent during times of economic uncertainty

Offering remote work is an excellent retention tool. Our data shows that for more than half (57%) of employees who work in a remote or hybrid environment today, flexibility is more important to them than compensation. While employees should never have to sacrifice fair compensation for flexibility, this drives home how important remote work is to those who can do their jobs from anywhere. 

When times are tough and employers are unable to offer top salaries or pay raises, allowing for location flexibility can help attract global talent and retain current employees. Good employee benefits also have a role to play, as we discuss later in this guide in our section on total rewards.

As an Employer of Record (EOR), Remote has helped thousands of companies expand their teams globally and hire the best talent based on skills and organizational fit, not location. Our team of experts understands the ins and outs of making remote hiring work — and all the advantages it can bring. Especially for companies taking a more budget-conscious approach in 2023.

If you want to start recruiting remote talent, check out our remote-first recruiting guide to emulate how we do it at Remote.Our guide reveals the strategies that have allowed us to scale our own internal team across more than 65 countries.

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Part 2: Where to find the best talent (at the right price)

Cost-effective recruitment strategies and practices start with expert knowledge. Hiring costs can vary widely based on role type, skill level, the needs of the organization, and the employee’s location. Your hiring managers need to provide detailed subject matter expertise to combine with local and global market insight from your recruitment team. While compensation strategies can also vary, adopting some level of location-based pay can be the most flexible option for both businesses and employees.

Uncover 15 emerging talent hubs with Remote’s Tech Talent Report 

• Where is the best talent for your open roles? 

• Which job markets are the most competitive in different industries? 

• How can you make the most of the remote work world without spending all your money in saturated, hyper-competitive markets like New York, San Francisco, and London? 

These are tough questions, but Remote is passionate about helping employers tackle this challenge, so we prepared a dedicated research report to put all the answers in one place.

Remote’s Tech Talent Report is a new piece of research with an exclusive look into how hiring managers are finding and onboarding talent from around the world. With this data, collected from 1,400 global hiring managers, you can see where companies are hiring; which markets have the best demand-supply ratios of tech talent; and where the top emerging tech hubs exist today.

Download the Remote Tech Talent Report to learn:

• The state of global tech talent recruitment and why some hiring managers are reluctant to hire internationally 

• Analysis of 15 emerging tech hubs and what specialist skills to look for in each market

• Insight into global compensation and how to develop equitable salaries, benefits, and stock option plans

• The processes needed to enable high-performing remote workers, with resources and advice on how to build a globally distributed team

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Insights from 1400+ hiring managers to help you find and attract top remote professionals (with city profiles of 15 new talent hubs)

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Discover the best spot for hiring engineers globally

Hiring software engineers is one of the greatest challenges companies face, even companies already hiring internationally.Because we employ software engineers in dozens of countries around the world, we know more than most about what it costs to hire engineering talent and how to make competitive offers.

We turned this knowledge and our own data-driven insights into our Where to Hire Report. This is an interactive tool to help business leaders better understand where to focus their recruitment efforts based on role type. We include metrics like talent availability, estimated cost of employment (total), annualized based salary, benefits requirements, and more. 

Here’s an example. The Where to Hire tool shows that top locations for recruiting backend engineers include Brazil and India — locations with high talent availability and competitive total costs of employment ($101,609 and $50,338 USD per year respectively, compared to $200,379 in the US).

However, before you post job listings in São Paulo or Mumbai, you also have to consider the overall needs of your organization. Can you offer the right environment to support employees from those countries? Total cost of employment isn’t everything, and focusing on finding the lowest-cost employees at the expense of other factors can cost businesses more money in the long-term.

The Where to Hire tool currently offers data for 16 top markets (from the US to Spain to the Philippines) and several popular role types for engineering and data talent. This tool’s global compensation data is fueled by research from our partner Kamsa, a compensation management program providing real-time global salary data and expert support to help with compensation reviews and benchmarking.

Develop your global recruiting strategy

Knowing where to find talent and how to plan your global headcount budget is a critical first step. 

But what happens when it’s time to recruit that talent to your organization? How can you do it effectively, stay on budget, and get the right people interested in your company while maintaining diversity, equity, and inclusion?

We care deeply about the importance of transparency at Remote, so we’ve put together a post on exactly how we manage recruiting for a team of hundreds of people spanning dozens of countries. 

In a nutshell, you’ll want to rely heavily on documentation;

• Train interviewers on people-focused tactics for remote interviews

• Build company-wide processes to get the most from your tools

• Integrate your applicant tracking system

• Focus on sustainable growth and automate processes where possible

• Default to documentation that can be accessed by team members at all times

It may sound like a lot, especially if you are new to global recruitment, but don’t worry. As you scale your cost-effective recruitment practices, you will begin to realize just how great the advantages of these remote-first processes can be — first for your recruitment team, then for your candidates, and finally for your whole organization.

Part 3: Building your headcount budget for a distributed team

Companies looking to scale while competition for talent remains high and budgets remain constrained must be open to hiring workers outside their own cities. Doing so presents its own set of challenges, though. How do you create and follow a headcount budget when people live in different places?

Even small businesses today can compete for the best employees in every country. A startup in Paris can hire remote workers in Poland, and a corporation in Mexico can employ remote workers in India.Any business can hire anyone, anywhere, provided the business compensates its remote workers appropriately.

And therein lies the question: how much does it really cost to hire remote global employees?

Learn to set salary ranges for a distributed team 

“To calculate compensation for remote employees, you have a few options,” explains Job van der Voort, co-founder and CEO of Remote. “You can pay everyone based only on their experience and role, regardless of location. You can also consider the cost of living to adjust pay for your remote employees based on where they live, or create your own formula. But no matter what you do or where you hire, one overarching principle remains the same: compensate fairly to hire great people.” 

With global employment solutions like Remote now enabling companies to hire top talent all over the world, businesses can’t afford to offer low range compensation packages and expect to attract and retain the talent they need. When making your 2023 hiring plan, be sure your strategy keeps salaries competitive in the relevant local market. For budget-conscious companies, this might mean hiring in new places and being more strategic about which roles will add the most value to your team. Our guide to remote compensation strategies can help you pick the best approach for your business. Maybe you want to pay top dollar everywhere to guarantee you always get the best candidates. Maybe you need a blended approach to stay flexible. Deeper insight into various compensation strategies will help you determine which will work best for your team and hiring goals.

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How to calculate compensation for remote employees

Learn how to calculate compensation for remote employees to attract top talent and steer your company toward global success.

Understand differences in global talent markets

The total cost to hire doesn’t start and end with the employee’s base salary. You must also consider the costs of mandatory social programs, benefits, and employment taxes in the country/state/territory/city where your preferred candidate lives. Certain costs, like healthcare in the United States, may not be mandatory by law but can be a must-have for jobseekers.

For example, you might think it’s more affordable to hire an engineer in Brazil than Poland given that the average annual salary is $66,323 (Brazil) compared to $73,865 (Poland). However, the actual price of hiring that person in Brazil is significantly higher – $101,609 compared to $86,719 when looking at the total cost to hire in each country.

This is because Brazil has numerous social programs and mandatory CBA (collective bargaining agreement) costs that are paid for through employer taxes. The person in Brazil might still be the right hire, but if you don’t consider the differences in global markets, you could lose control of your hiring budget.

Trying to understand all these nuances might feel overwhelming, but it doesn’t have to be. At Remote, we simplify this for our clients by billing for all employees, everywhere in the world, in a single invoice, inclusive of all government costs and supplement benefits. We also have a free Employee Cost Calculator that allows hiring managers to input an employee’s salary and see the total cost to hire in that country. You can even compare costs across different countries to help you focus on regions that fit your hiring budget.  Want even more insight into global compensation? We have you covered with our International Payroll Processing Guide, which helps businesses learn how to manage international payroll processing for globally distributed teams.

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Weigh your options on employees vs. contractors

One way to reduce payroll costs is to consider hiring contractors — a strategy that can be very attractive to budget-conscious hiring managers. This can be effective in many cases. However, contractors are not always more affordable in the long run, and misclassification of an employee as a contractor can cause serious problems.

Typically, companies don’t have to pay payroll taxes or offer benefits like paid time off when hiring contractors (although it is possible to do so in some cases, as covered in our Global Benefits Report). Contractors usually do not qualify for severance packages, especially contractors on fixed contracts. So if the relationship isn’t working out, you can quickly cut ties and find someone more aligned with your business goals. Unfortunately, this ease of hiring doesn’t come without risks. 

Understand the dangers of contractor misclassification

Employees and contractors are treated differently in the eyes of the law, and every country has their own definitions for each category of workers. Although you may be familiar with the laws in your home country, there is added complexity when hiring contractors internationally. With the rise of remote workers and the “gig economy,” this area of law is changing quickly.

In general, employees are retained directly by a company to fulfill specific and ongoing roles. Contractors are brought in to perform specific functions, often ones that the company does not have the ability to perform internally. Contractors are not people who work for the company but independent sellers of services, of whom the company is a client.

Ultimately, hiring contractors gives companies more flexibility but less control over the work performed. So what happens if a contractor should technically be an employee?

Here are a few ways to tell whether your contractor might actually be an employee:

1. Does the employer control when, where, or how work is completed?

2. Is the employer responsible for training the worker?

3. Does the worker receive a regular salary?

4. Does the worker perform key business services?

5. Has the contractor relationship continued over a long period of time?

Answering yes to any one of these questions could indicate an employee relationship.

By improperly classifying employees as contractors, companies may face fines, back taxes, penalties, and back pay, not to mention other legal risks and damage to the company’s reputation as an employer.

To help you minimize misclassification risks, Remote has launched a Contractor Misclassification Risk Calculator. This is a free and easy-to-use tool to help you determine your risk level, including suggestions on how to reduce your risk if you have misclassification exposure.

Use our Contractor Compliance Checklist to avoid misclassification

Work through this checklist to help determine if a new hire should have a contractor or employee relationship.

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Part 4: Considering benefits, stock options, and more in your total rewards plan

Cash compensation is far from the only consideration for organizations trying to attract high caliber employees. Most want a strong benefits package, which can include everything from pension plans and healthcare to stock options and gym memberships.

At Remote, we call the complete package of salary, stock, and benefits “total rewards.” This catch-all term is useful to help us be more specific when we’re talking about total employee costs, just salary, or one specific piece of the compensation puzzle.

Build your total rewards policy

The total rewards umbrella includes salary, statutory benefits, supplemental benefits, perks, stock options, and any other form of compensation a business offers to employees. In global compensation, where statutory and expected benefits may vary greatly from one country to the next, speaking in terms of total rewards allows HR teams to have more productive conversations about compensation, growth, and offers to prospective hires.

Building a comprehensive and flexible total rewards plan is an important strategy for attracting and retaining talent during uncertain economic times.

By providing complete packages, company leaders can demonstrate they care about their workers as whole people. 

That helps with hiring goals as well as building trust and increasing retention among existing employees. Attractive perks and benefits can even make up for lower cash compensation in the eyes of candidates, so don’t forget to stress your total rewards in your job descriptions and in interviews.

Remote has made our own total rewards policies publicly available to guide and inspire other companies who are exploring global hiring.

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Celebrate the value of a great benefits package

In September 2022, Remote published our Global Benefits Report — a first-of-its-kind study of the benefits that employees want and need in top hiring markets around the world. We surveyed 2,500+ employees and decision makers, and the results are now helping shape our own benefits plans and practices going into the new year. 

Among the most significant findings was how employees view benefits during challenging economic times. According to the vast majority of global workers, good benefits are even more important when company budgets are constrained.

• 88% of employees say that when money is tight, having good benefits that cover their fundamental needs becomes even more important.

• 79% of employees agree that if a company needs to freeze salaries due to a difficult economic climate, offering good benefits can still set that company apart as an appealing place to work.

If you can’t be as competitive as you would like to be with cash compensation or if you have had to pause pay increases, the benefits you offer can make all the difference in being able to meet your hiring goals. But which benefits are essential for international employees, and which perks might be going unused?

Our Global Benefits Report provides global data on specific benefits as well as regional breakdowns, including a look at what remote/hybrid workers want compared to their on-site counterparts. We also look at which benefits employees utilize the least, which may help you save money by slashing what’s nonessential while prioritizing the things your workers see as non-negotiable. 

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Make flexibility your company’s superpower

One of the most surprising findings in our research has been that remote work is not, in fact, the top benefit employees want. What people actually want is flexibility — a term that can include remote work but is more reflective of a company’s respect for employees’ time and working styles in addition to working locations.

Flexibility allows parents to be more present for their children, free spirits to travel the world, couples to spend more time together, and committed grinders to pursue their passions on the side. Everyone benefits from flexibility. And the more flexible your working policies are, the more attractive your company becomes to more types of employees.

At Remote, flexibility is at the center of how we manage our own global team. We work asynchronously, which means people are generally free to set their own working hours and are evaluated based on results, not time spent online. People have the ability to relocate anywhere in the world — and digital nomads are not the only ones using the perk. Many Remoters have used our relocation services to move closer to family or to new locations that are more aligned with their values.

Remote offers relocation services for our customers’ team members as well. Have an employee who wants to move from France to Finland or from Portugal to Peru? We’re here to make it easy.

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Did you know? Remote’s entire company handbook is public! Check it out to learn how we build culture, manage PTO, develop products, and celebrate success as a fully distributed team — then use our documentation to inform your own remote-first culture!

Everything you need to build a global team on a budget in 2023

We hope the resources provided in this guide will help you develop cost effective recruitment strategies, scalable compensation plans, and a remote company culture that reflects the success of your growing business. Whether you have a few remote contractors, a team of 10 people in 10 countries, or a fully global team with hundreds of happy team members, Remote is here to help.

Our easy-to-use platform allows you to onboard, manage, and pay employees and contractors around the world with ease. Think of us as the easy and friendly solution for all your global employment needs.

Want to chat with our team about how to scale your own global team? Schedule a demo today! 

Want some advice on hiring in a specific country? Contact us any time — we’re always happy to chat. No matter where you are in your global hiring journey, Remote will be ready with the services and support you need every step of the way.

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