Guide Chapters
What you’ll learn
This guide is a must-read for any employer or hiring manager looking for a blueprint to overcome the tricky challenge of hiring in one of the world’s most competitive job markets.
We’ve pulled together the expert insights of Remote’s global HR specialists to share specific tactics you can use to find, attract, and retain remote software engineering talent.
We will cover common pain points and real-world examples, as well as provide valuable solutions for employers committed to finding and retaining talented remote software developers globally.
We want to help you get the jump on your competition to find the world’s best remote software engineering talent in less saturated talent markets. Instead of joining the intense hiring queues in Silicon Valley, Tokyo, Tel Aviv, and Berlin – Remote is here to help you find the best talent in the world, regardless of their home address
Once you finish this guide, you will have the know-how you need to build a dream team of world-class remote software developers.
How to start employing remote software developers
Chapter 1
How to start employing remote software developers
What is a remote software developer?
Finding the right developer for your company can be a challenge, especially if you only look at local talent. Expanding your search to include global remote talent makes it easier, but you still have to attract a large pool of qualified candidates, vet them for fit, onboard your new team members, and keep them happy at your business. It can be a lot to manage, but in this guide, we’ll take you through the whole process.
A remote software developer designs and creates computer programs and systems while working from a place other than a traditional office. Because they are not tied to one specific location, they can share their knowledge, experience, and insight from anywhere in the world.
Software development is one of the most popular job functions for remote workers. Because software engineers work almost exclusively on projects that do not require them to be physically present, it doesn’t really matter where (or even which hours) they work. Software engineering is such a remote-friendly space — and because companies are always looking for more engineers — many companies have begun to accept applications from multiple countries in an effort to find more of the talent they need.
Where to hire remote developers?
Remote software developers work all over the world. You can find remote software engineers from established tech hot spots like London, Tel Aviv, San Francisco, and Tokyo. But there is also a world of talented developers scattered across all corners of the globe. You can hire those developers as contractors or full-time employees, depending on the type of work you need and the laws of the specific country where you want to hire.
Purpose-built tools to help you compare countries for hire
Hiring strategically is critical to keeping your company competitive in shifting economic winds. Employers open to global hiring can adapt quickly and take advantage of changes in the industry’s talent market. Having the right resources at your fingers is also a powerful asset for any hiring manager charged with finding and retaining remote work software engineering talent.
Tools like Remote’s Where to Hire Report can provide real-time analytics on talent pool depth, salary expectations, employment cost, and expected employee benefits by region and country.
Remote's free Employee Cost Calculator goes one step further, helping you to understand the specific costs involved in hiring a software engineer in any given country around the world.
More specifically, Remote’s 2022 Tech Talent Report surveyed 1485 global executives and HR managers from the US, UK, Germany, France, the Netherlands, and Sweden who are currently hiring tech talent to understand more about their views and attitudes toward emerging tech hubs. The report shines light on the misconceptions around remote hiring that may be preventing businesses from finding top tech talent in less competitive markets around the world.
Our research found that businesses open to international remote hiring are still overlooking value by focusing too much on traditional tech hubs. This is a lost opportunity, as these locations all have indicators that point to a tech talent market under duress.
Respondents planning to hire remote talent in each city
Gartner® Inc.’s recent report, Emerging IT Talent Hubs in 2022 provides insights into the “top existing and emerging IT talent hubs”. This research analyzed 120 cities in the 28 countries for fifteen IT roles (The IT roles represent a talent profile made up of criteria such as Occupations, Skills, Certifications, etc.
Where are you looking for new talent when hiring remotely?
Remote has taken a closer look at the top 15 emerging tech hubs to better understand where businesses are currently hiring remote tech talent, what is keeping them from doing so and how they can tap into those new markets.
Results demonstrate there are plenty of emerging hubs for software development talent within reach for startups, enterprises, and everyone in between.
Expert practices for hiring remote international developers
CHAPTER 2
Expert practices for hiring remote international developers
Finding qualified remote software developers suited for your company’s needs can be daunting in a tight job market, where the top talent can pick and choose which companies and projects they prefer. In laying your plan, you must consider both short-term and long-term goals, especially when hiring international talent. Additionally, you must address several ongoing factors to attract and retain the right talent, like your global compensation strategy.
From creating the proper job posting that captures all the elements of the position to building an attractive benefits plan and navigating job markets across the globe, there is a mountain of obstacles to overcome. But with the right plan and knowledge, finding the right remote developer for your business is possible.
"Keep extending your talent pipelines outside traditional tech hubs. The more you expand across borders, the better off you're going to be. I look at it now as a necessity to stay competitive and find great talent. Any cost savings are secondary, because without great engineering talent, you can't move forward on key initiatives."
Dave Walters, CTO at Hired
Your process has to start with recruiting, identifying the qualifications needed to suit your software development goals, and writing a job description that captures those elements. In addition, you need competitive benefits that will drive applications and attract candidates to your company.
How the global remote team at Muck Rack hired 35 engineers in 2 years with 98% retention
Muck Rack is a platform enabling PR teams to work together to find the right journalists for their stories with hundreds of employees spread across the world. The company has successfully hired 35 engineers in the last two years, with a retention rate of 98%. Of those, nearly a third have been referrals from the company’s internal engineering team, demonstrating the level of employee satisfaction and loyalty.
We asked Gregory Galant, the co-founder and CEO of Muck Rack, about the process behind Muck Rack’s sustained success in finding the right software engineers for their positions. Gregory breaks down three distinct steps that recruitment teams can use to find more consistent results:
1
Go deep to get clarity on skill requirements of the role
“Being a fully-distributed company means we can compete with other companies for top talent and hire the best people for the job, regardless of location. Our work starts long before the hiring process begins, via close collaboration with our hiring managers to understand job requirements, including the technical skills and values fit for a particular role. The clarity we gain from those deep dives informs our sourcing strategy and helps us proactively target the candidates with the specific skills and experience we need for the roles.”
2
Develop a standardized process to reduce bias
“We create a standardized interview process that assesses technical, problem-solving, and values fit. All of our interviewers are trained; we use structured interviewing practices to remove bias, and we debrief after each interview to ensure feedback is discussed openly. We make sure all interview panels include a range of team members to incorporate diversity of perspectives, be it a manager or individual contributor.”
3
Create short tests for technical skills (with a contact for support)
“Our technical assessments are a big part of our process, but to ensure the technical assessments are not a burden for the candidates, team members craft critical skills assessments that can be completed within 2-3 hours. Considering all our interviews and assessments are remote, we connect candidates to the talent team as well as the hiring manager via Slack so they always have someone who can answer their questions.”
Take the confusion out of global HR and rely on Remote to handle payroll, benefits, taxes, and compliance from one simple hub.
Sell your role: a job ad is more than a job description
One of the easiest ways to stand out in such a tight talent market is to sell your role on offer more effectively than your competitors.
Too many employers treat a job description as just a list of requirements. This gives your offer less chance to stand out to the highest quality candidates who might be trawling through hundreds of listings to find a truly compelling opportunity.
A little extra effort upfront will differentiate your job advertisement. Start by emphasizing the growth potential on offer, any unique benefits you provide, and an expression of the culture and values of your business. Try to communicate how much you will support and develop each new hire to demonstrate your organization’s care.
"Job boards are browsed by two key groups: people out of work who need a job, and people in an existing role who might be tempted into a new job. Posting a JD will probably attract the first group, but the second has to be convinced. Your ad should focus on what that person will get out of working for your company. Show why it's better to do their job at your company. There should be less ‘Our requirements are’ and ‘our mission is’ and more ‘you will impact these areas of the business’ and ‘you will be passionate about’. Catch the eye of the reader and make them excited to interview."
Yasmine Gray, Senior Talent Sourcer at Remote
Setting the right expectations will also appeal to top international talent. This demonstrates the professionalism of your organization and shows your care for each candidate. Small extra efforts like this make a big difference in helping your offer stand out from the crowd.
Keep your process as short as possible and stick to a maximum timeline. Super long processes with multiple interview rounds, detailed psychological questionnaires, and unpaid technical test tasks take a lot of time from candidates. The most talented and experienced professionals are busy. They don’t want to work for free and are likely to avoid these cumbersome processes. A resume speaks for itself, you can gauge cultural fit during interviews, and you can validate their performance with reference checks.
Engineers who are busy in their current role aren't able to commit to a long and demanding interview process. Streamline where possible and ensure you can clearly explain why each step of your process is important to the candidate.
In such a tight market, you can’t afford to let superstar candidates slip through the cracks. Keep each applicant engaged by giving clarity on each step of the process and the timelines involved. You could even add a note about the format of the interview process to the job advertisement.
Example process overview to add into job advertisements
A snappy overview like the example below can be added to your job advertisement to set a clear expectation and show the candidate their time commitment will be manageable:
1
Interview 1 with HR
To assess cultural fit and values alignment
2
Salary discussion with HR
To ensure matching compensation expectations
3
Interview 2 with Line Manager
To assess technical ability and experience
4
Interview 3 with Team Member
Chance for the candidate to ask questions
5
Interview 4 with Team Member
To validate mentality and strategic aptitude
Use proactive strategic sourcing to cherry-pick top global software engineers
The most effective recruitment teams tailor their approach to hire remote software engineers. Finding and attracting world-class developers is tough. The worldwide undersupply means you need to work harder and smarter if you want to come out on top of the fierce competition.
How to spot and convince the right developer for your team at interview stage
A strong remote culture is so hard to build and maintain, so you can’t afford to have to repair things because of the negative impact of a new hire. Look for candidates who share the company's values and who are comfortable working in a remote environment. Find a mechanism for interviewers to test this out with specific questions.
Seek experienced remote workers
First, look for specific skills and experience that are relevant to the job. When hiring remote software engineers, it's important to prioritize skills such as experience working remotely or in distributed teams, as well as specific experience working with the technologies and tools used by the company. Autonomous and asynchronous work is productive and effective, but if engineers haven’t worked in a business with this working culture, you’ll likely find a longer ramp-up period (or even sometimes an inability to adjust).
Analyze remote communication skills
Secondly, prioritize communication skills when evaluating candidates. Remote work demands deliberate and transparent communication. This should be non-negotiable in your hiring process. You must analyze each candidate’s ability to be comfortable and confident using video conferencing, chat, and email to make sure they can collaborate effectively with team members. Don’t disregard communication outside of interviews. Take notice of the clarity of resumes, cover letters and any emails shared through the process.
Use the power of localized benefits plans
Offer locally competitive compensation packages to attract top talent. Remote workers may have different salary expectations depending on their location and cost of living, so it's important to research industry standards and adjust salaries accordingly, but this can’t be where it ends. Elite remote software engineers will consider a competitive salary as table stakes. A compelling benefits package will often put your offer in front of a competitor.
Document and share a clear onboarding process
Lastly, communicate to candidates that you have a structured process to onboard, train, and connect new starters with their team and the company culture. This shows ambitious software engineers that you have clarity on the expectation for success. You can reduce uncertainty by demonstrating how you will connect remote developers to their team, tools, processes, and culture. Onboarding remote software engineers can be challenging, so it's important to make them feel welcome and supported from the recruitment process onwards.
Prioritize cultural fit
This principle might not be the most important factor in determining which candidate gets the role (hopefully you have multiple options that tick this box), but if you’re unsure about the culture fit, treat this as a dealbreaker. Even though remote software engineers may not work in the same physical location as the rest of the team, a poor cultural fit will impact a remote team’s productivity, morale, and connection.
An American backend engineer will likely place great value in health insurance benefits.
An Australian in the same role would place minimal value on this benefit as the local public health Medicare system is excellent.
This is where a global employment partner like Remote can provide the invaluable local insight you need to prepare locally competitive and compliant benefits programs at scale for all international employees.
Amina Moreau, CEO and co-founder of Radius points to the power of transparency in the recruitment process. By leading with authenticity, hiring managers can open up a more honest conversation with elite remote software engineers to better consider the right match for both parties in the interview stage.
"Since it's just as important to make sure our team is the right fit for them, we start by being transparent about who we are, how we operate, what our strengths are, and where our weaknesses lie. As a startup, we operate differently than more established companies, so we are very open about where we are as a company financially, what our current stage may mean for a teammate joining, and both the upsides and downsides of working on a startup team. When we start a conversation with transparency, candidates often feel more comfortable to open up about their own work styles and overall preferences, which accelerates the relationship and allows for a truer assessment of alignment."
Amina Moreau, CEO and co-founder of Radius
The most overlooked aspect of hiring remote software engineers
The answer is simple.
Determine with clarity how to validate that candidates display your company values.
Hiring the best engineers is not an exact science. The best talent for one organization might be a terrible fit for another. Your recruitment process needs to shift focus from “finding the best engineers” to “finding the best-suited engineers for your team”.
Lisbon-based Sergio Pereira is the Chief Technology Officer at Bulk MRO Industrial Supply. As a fierce advocate of remote work, Sergio is constantly looking for ways to improve internal processes for his globally distributed team. He explains how Bulk MRO tries to analyze and assess the culture match of candidates against their internal values in order to find the best possible remote software engineers.
"To guarantee that a candidate is a good fit to the team, we involve several team members in the hiring process, enabling them to assess how well a prospective engineer would mesh with the team's dynamics and contribute to the overall success of our remote work culture. This is an important cultural aspect of the selection process, beyond just assessing that a candidate has the right technical skills to fit the role's requirements."
Sergio Pereira, Chief Technology Officer at Bulk MRO Industrial Supply
Sergio provides solid insight for any leader seeking to increase retention rates and improve this element of the recruitment process.
It’s not enough for you to understand your own company culture and values.
Your team needs to be able to ask the right questions to uncover whether a candidate works by the values of your company.
Remote’s recruitment team looks for engineers who know how to work as a team player. The best fit for Remote is a solid communicator who is collaborative, ambitious, self-driven and curious.
"At Remote we are always focused on operationalizing our values. We do really care about this and we recruit accordingly. There is a technical baseline to meet and we seek developers who are creative enough to write amazing code. But we don’t need ‘technical superstars’ who prefer working alone. We need collaborators. We know that’s where we need to focus while interviewing. I’m really conscious about asking questions that will help me understand how they will act in specific situations so I ask how they would respond to certain workplace situations. I’m looking for a response that demonstrates care and humility. This is how we test for teamwork and collaboration skills."
Gabriela Suarez, Expert Recruiter at Remote
When is the perfect time to analyze a value-match?
The first screening call with a recruiter.
Even though all members of the recruiting process should analyze candidates against your values and mission, this part of the process perfectly suited to going deep in this area.
Use this time to try and assess if the candidate has the desired behaviors you seek in a software engineer. Recruiters should have the space to focus on value-matching. Recruiters can rule out candidates with “cultural” questions, but they don’t have the technical expertise to pass judgment on skills and experience. interviewers who come after this stage will cover this requirement.
Once you create a balanced, aligned, and diverse interview process, you can focus on executing your process with confidence. Defaulting to a clear process will help you eliminate bias, and reduce the likelihood you end up with a candidate who doesn’t mesh with your organization and its culture.
"The benefit of international hiring is obvious and compelling – you can suddenly open up access to the world’s very best talent. Value-based recruitment provides the foundation for lasting success. Leaders who seek out new team members with shared values can build an inclusive, equitable, and trusting environment that empowers a global team to thrive."
Anastasia Pshegodskaya, Director of Talent Acquisition at Remote
How to build a strong and supportive remote work culture
How hiring managers can prioritize diversity, equity, and inclusion in practice
Most growth-focused leaders understand and support the need to prioritize diversity, equity, and inclusion (DEI). Fewer teams know how to translate this goal into actionable tactics, especially in a recruitment context.
The Remote team is passionate about changing the world of work to afford world-class employment opportunities to anyone, regardless of their home address.
Our recruitment process is carefully crafted to find and provide opportunities to underrepresented groups. Below you’ll find a shortlist of practices you can implement right now to start diversifying your team and bringing fresh perspectives into your organization.
If you intend to diversify your candidate pool, try to make sure your interview panel represents different dimensions of diversity. Obviously you won’t be able to cover very many underrepresented groups. But you should make sure you don’t have a homogenous group on your hiring team. Don’t overcomplicate this step. Simply find diversified perspectives by asking trusted stakeholders within and even outside your business to offer their input. Put extra effort into intentional sourcing and outreach across underrepresented groups.
This levels the playing field to develop a more inclusive process. Consider the potential and teachability of all candidates – especially for less senior roles. Prioritize these assets over degrees, education level, and years of experience with mature tech organizations. This won’t just lead you to increase the diversity of your team. You’ll also find your recruitment process shifting to uncover pockets of top talent from under-explored countries.
Hiring from emerging markets is more cost-effective, and prevents you from competing in saturated tech talent hubs with higher compensation benchmarks. You can expect more ambition and loyalty in return from hungry professionals who want to demonstrate their value to remain working from their location of choice rather than moving to the likes of New York, San Francisco, Tokyo, or Tel Aviv. The 15 cities highlighted above offer a great starting point for proactive recruitment teams. Start by building connections with tech and engineering communities in these areas.
When hiring globally, focus on the ‘culture add’ that your new engineer can bring. ‘Culture fit’ is the baseline. You should strive harder to find team members who will improve your team and drive your organization ahead. Consider this in terms of the fresh perspective, insight, and background that diversity can bring to your organization. Celebrate and seek candidates who are mentors, coaches and volunteers in engineering communities. Qualities like this demonstrate a commitment and care that is hard to find in the average worker.
Mastering global compensation and total rewards for a distributed team is part art and part science, but the key to the entire exercise is putting the needs of your global team above any single hire. Build your compensation structure to ensure fair and equal pay across different regions. You don’t need unified compensation ranges. Instead, global employers should study local specifics and take into account total compensation packages (salary plus benefits, perks, and equity incentives). Remote takes the complexity out of this challenge. You’ll get access to the localized insight and expertise you need to develop competitive and equitable offers for each new country for hire.
Increasing diversity, equity, and inclusivity should be a constant quest for your organization. Build the foundations to capitalize on a more diverse candidate pool well before you post any single job advertisement. Try to intentionally support communities helping underrepresented groups in IT and tech. Build genuine partnerships, either through sponsorship, mentorship, or other helpful initiatives. When it’s time to post a new job, you now have access to a strong community of diverse talent and you have already demonstrated your value as an organization. This puts you well placed to attract high-class talent from communities you (and your competitors) would have been unlikely to reach otherwise.
The right benefits to attract top remote engineering talent
CHAPTER 3
The right benefits to attract top remote engineering talent
Great benefits are as important or sometimes even more important than a high salary. Remote software developers are in high demand, and they want to work for the companies that offer the best balance of benefits and pay.
For most employees, even if wages are stagnant, substantial company benefits can create a positive environment and feeling of worth. Companies that offer competitive benefits and inexpensive value-based benefits like flexible work and asynchronous working practices can often attract and retain top talent even when they can’t compete with enterprise organizations on wages.
Remote software engineers often expect more than just statutory benefits as competition for talent leads employers to offer additional benefits and perks. Remote software engineering candidates actively seek autonomy through flexible and async work, as well as a strong company culture that supports diversity, stock options, retirement savings vehicles, and more.
Remote’s 2022 Global Benefits Report found that emphasizing flexibility is a critical incentive for top tech talent with employees continually citing remote and flexible work benefits as a top priority when considering a new job offer.
Hiring international software engineers can provide enormous benefits, but HR leaders must build an intentional and equitable remote compensation plan to be able to both attract and to retain top talent.
Software engineers are smart.
Candidates seeking a remote role can quickly discover a rough global benchmark and compare your offer to their colleagues and international market rates.
Remember, compensation is not as simple as paying everyone the same.
Many remote software engineers will place more value on certain benefits rather than focusing on a salary in isolation. Smart employers can leverage local knowledge to understand what benefits are most likely to attract top talent.
Benefits packages require nuance between different geographies
People with the same education, skills, and experience should have access to the same lifestyle and disposable income in their country of residence.
The simple way to offer competitive global compensation packages
Remote’s global employment platform can help you attract and retain the world’s best talent with locally relevant and compliant benefits packages in every country where you want to hire. Our team of global benefits experts create country-specific benefits packages with the advantage of highly negotiated prices.
You can offer equitable, best-in-class benefits, not just to remote developers – but to all of your global team – for a fraction of the cost of navigating things on your own or establishing a legal entity. You can even offer stock options to your international workforce.
Calculating Global Compensation
Ensure you meet local statutory obligations
There are several core benefits employers must offer when hiring internationally. These benefits (like leave, social security, or insurance provisions) vary in each country of hire, but they are non-negotiables for any prospective employer.
This nuance has implications for international employers as the benefits you offer above statutory requirements in one country may be less valued by employees in another country. Private health insurance provides a compelling advantage. This is a key driver for employees in a country like the United States where government provisions are limited, whereas Australian employees place less perceived value in this benefit as the local Medicare system is robust and only 10% of Australian employers offer supplemental health insurance to their workforce.
When recruiting globally, you must familiarize yourself with the secondary and nontraditional benefits in the job markets where you wish to hire.
Software engineers love autonomy and flexibility as much or more than most workers. Nontraditional benefits like flexible hours are attractive, especially for workers seeking optimal life-work balance. More flexible benefits packages are especially attractive to workers who are already working remote jobs.
Essential core benefits — like sick leave, paid holidays, health insurance and retirement plans— are viewed by many software engineers as non-negotiables. Cutting benefits during times of economic downturn could significantly jeopardize employee satisfaction and retention.
Essential core benefits — like sick leave, paid holidays, health insurance and retirement plans— are viewed by many software engineers as non-negotiables. Cutting benefits during times of economic downturn could significantly jeopardize employee satisfaction and retention.
Get your expert guide to building a global benefits plan
Learn how to offer compliant and competitive local benefits to everyone, everywhere.
Remote’s 2022 Global Benefits Report found that decision makers who hire internationally are using the strong desire for more flexible work as a competitive advantage to lure top remote talent.
When considering offering remote or flexible work, most leaders say the decision is driven by a need to improve retention, to gain access to new markets, and to respond to their employee’s requests and needs.
For remote and hybrid workers, flexibility is an essential benefit. In fact 57% rank flexibility as even more important than compensation (40%).
Emphasizing flexibility is key with 29% of all employees citing flexible work and the ability to remote work (23%) as two of the top five most important incentives when considering a new role.
What’s the most effective way to access and retain global talent?
A strong, localized compensation and benefits program, coupled with a remote-first recruitment process strategy is the key to unlocking global talent pools and taking advantage of international remote engineering talent.
Most important considerations when evaluating a job offer
How much should you pay remote software developers?
Figuring out what to pay your staff becomes increasingly difficult when looking at a global market with a mix of employees and contractors. To get started, use an employee cost calculator to see what developers in different countries typically cost. Next, consult Remote’s Where to Hire Report to get a better understanding of where the best opportunities to hire might be.
Hiring software developers from wherever they can be found makes perfect sense in the era of remote work. Doing so affords you the flexibility to access an unlimited and diverse talent pool, a move proven to boost your company’s productivity and competitive edge. Having team members on the ground in a country where you’re developing your business is also crucial when you’re expanding to new markets.
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 salary, depending on where they live and work.
For example, say you want to hire a great software engineer based in Argentina with a salary of USD 60,000 yearly. In this case, you would incur an additional $15,731.76 in Argentina’s mandated employer costs, including your employee’s pension and payments into the country’s social welfare fund and public healthcare systems. You have to look at the whole package, including benefits, not just payroll and taxes, to make your assessment.
For example, say you want to hire a great software engineer based in Argentina with a salary of USD 60,000 yearly. In this case, you would incur an additional $15,731.76 in Argentina’s mandated employer costs, including your employee’s pension and payments into the country’s social welfare fund and public healthcare systems. You have to look at the whole package, including benefits, not just payroll and taxes, to make your assessment.
You need to be competitive when recruiting and looking to retain talent. You don’t want to make insulting offers to potential employees and contractors or risk creating a negative public image. At the same time, you don’t want to be priced out of a market or have to lay off individuals when the market fluctuates. These are all items to consider. Be thoughtful in your approach, and rely on resources like the ones from Remote to help you navigate.
Remote's free Employee Cost Calculator goes one step further, helping you to understand the specific costs involved in hiring a software engineer in any given country around the world.
How to stay compliant when recruiting developers across borders
CHAPTER 4
How to stay compliant when recruiting developers across borders
There are a few different ways you can handle hiring remote developers in other countries. Opening your own entity in the country in question is one option. You can also hire employees using an EOR, or employer of record service.
Keep in mind that each country has its own regulations and requirements for starting a new entity: everything from having a brick-and-mortar location to business and payroll tax requirements.
Launch your own local legal entity
If you choose to open an entity, don’t underestimate the significance of that investment, both in the setup phase and in the ongoing maintenance. The investment is not just a huge financial commitment. The time involved to develop the required knowledge of the local market and legislation often makes the prospect of opening your own entity prohibitive, unless you plan on a longer term expansion into the country.
If you are considering hiring fewer than 25 or so employees in a country, it may not be cost effective to go down this route. Entity setup costs can be substantial, from setting up bank accounts, paying taxes, registering, and possibly establishing a physical location with new staff. You will also need local legal counsel to ensure your operations remain compliant.
Hire developers as contractors
Another avenue to hiring in other countries is to hire your software engineers as contractors. While this can be less cumbersome than creating an entity and a foreign country, it does not come without risk.
You may be able to pay people as contractors instead of employees. However, you must correctly classify your workers. If you fail to do so, you will be subject to fees and penalties, which can even include a ban on your company from hiring in the country.
Before you hire independent contractors, you must ensure your agreement would be considered a legitimate contractor relationship under specific local classification laws.
Use an employer of record to stay compliant
Working with an employer of record (EOR) can be an attractive option for hiring remote developers in another country. By working with an EOR, you can hire developers as full-time employees without opening an entity. If you choose to go with an employer of record, you must know how to evaluate potential employer of record (EOR) partners.
Partnering with an employer of record is the most time- and cost-effective option for global employment in most cases, especially if you need to hire quickly or want to accept applications from multiple countries. Working with an EOR lets you avoid setting up a local legal entity in each country you want to hire while insulating your business from potential compliance risks. The EOR employs the worker on your behalf and signs a service agreement with your company to protect the transfer of your intellectual property.
What is an employer of record (EOR)?
An EOR is a service that helps companies hire people in other countries. EORs take care of all the day-to-day HR work, like managing payroll, paying taxes and social contributions, and administering benefits, all the way through to ensuring your company’s compliance with local law. When you work with an EOR, your EOR takes on the legal risk of local employment, helping you accelerate your hiring plans with significantly less exposure to potential problems.
EORs are not co-hiring schemes, like PEOs are. On paper, your EOR is the sole employer, but in practice, they do not participate in the day-to-day management of your workers.
Think of your EOR as your local HR team in another country. Be sure that your EOR has the correct presence you are looking for in the countries where you want to hire so you do not run afoul of local law. It is essential to do your research and learn the vernacular of the EOR world.
How to hire remote developers with an EOR
In a survey of over 1400 hiring managers, Remote’s 2022 Tech Talent Report found that hiring managers who do plan to hire in new regions are concerned about how to stay compliant when employing international talent.
34% show hesitance to learning local legal requirements for hiring.
31% worry about learning about local payroll regulations.
26% say understanding local benefits packages is a challenge they don’t want to take on.
23% are concerned about managing payroll.
It’s a real concern, but thankfully staying compliant when hiring abroad can be easy for companies serious about onboarding the right talent.
Hiring remote software engineers using an employer of record (EOR) is a simple and straightforward process, provided you have the right EOR partner. All you have to do is sign up for an EOR platform and begin onboarding your employees.
The best EOR platforms will guide you through the details of signing the employment agreement, localizing your contracts, and setting up payroll.
Once your employees are onboarded, your EOR should manage payroll, benefits, and taxation requirements on your behalf. Remote can even provide relocation support, and manage equity incentives and stock options for your international employees.
Leaning on an EOR partner can save you thousands in legal fees and payments to third parties — not to mention save you time by keeping all your international employee management in one place.
Utilizing an EOR can be a handy tool in hiring remote developers. Not only do EORs have specialized staff to open the door to hiring in countries where your company may have no legal presence, but they also offer unique insight into local talent pools and how to attract the right software engineers for your company’s needs.
Hire software engineers from anywhere
We handle local payroll, taxes, and benefits to keep you compliant so you can find cost-effective, world-class talent abroad.
Additionally, EORs can help you manage the remote hiring process. To attract top talent and remain competitive in today’s talent market, companies must make an effort to adapt to a new reality. The line between work and home has never been less clear, and inclusivity is the key to successful global recruitment.
Through the hiring process, EORs can also assist you with navigating what benefits will attract remote software developers. Benefits and perks can be a dealmaker or a dealbreaker in the final stages of the hiring process. A superior benefits package may give your business the edge when a top candidate compares offers from different employers.
Companies often take benefits for granted, focusing instead on salary alone. You can’t afford to offer the bare minimum if you want to attract and retain top talent across the globe. With the right EOR, you can offer competitive benefits packages all over the world, giving your company an edge in the search for the best remote engineers.
How to stay updated with changing local labor laws
Local labor laws are often an amalgamation of different rules and regulations, including written legislation, case law, and commonly accepted practices. Depending on the country where payroll is processed, laws can be highly protective of employee rights or more flexible in how employers choose to manage their payroll systems.
To give a potential international employee a competitive offer, you need to know the norms and expectations in the country where they live. That includes the basics of staying compliant, general payroll practices, tax withholding, and benefits administration duties.
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Labour laws cover a variety of subjects, including:
Minimum wage
Parental leave
Sector-specific benefits
Paid leave
Mandatory benefits
Worker classification
Accounting for all these factors in one country is hard enough. Add multiple countries into the mix, and you would need to build an entirely new arm of your company to manage the administrative work on your own. This is a major reason most companies work with a global payroll services provider who already knows the ropes.
Not all global payroll services are the same, however. Some providers outsource their local duties to third parties, which creates a frustrating experience for your employees and exposes your company to new risks. If you want to hire abroad, ensure you only work with an owned-entity global payroll provider.
Every country handles payroll tax and compliance differently. Onboarding international talent is worth the trouble, but you don’t want to dive headfirst without understanding what you’re getting yourself into. Global payroll partner is one of the best ways to handle all the different tax implications and payroll requirements.
International contractor vs. employee: Pros and cons
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Managing payroll for global teams of remote software developers
CHAPTER 5
Managing payroll for global teams of remote software developers
Paying remote software developers can be a multifaceted exercise. The process can be simple, even if you are hiring international employees, but you need to work through a few key considerations before you start to onboard and pay your new team member.
Employee or contractor?
First, you must consider the classification of your worker. Should you hire remote developers as a contractor or an employee. This isn’t a straightforward consideration. Even though you might be intending to work with an engineer in a contract capacity, local employment legislation must be considered and misclassification is always a risk.
What is misclassification?
Misclassification occurs when a business gives a worker the wrong designation, whether by mistake or on purpose. Although fines and penalties tend to be more severe for deliberate misclassification, businesses still face penalties for honest mistakes. Avoiding employee misclassification is more about action than intent. Treat a worker like an employee, and eventually regulators will see that worker as an employee — even if you never intended to create that relationship.
There are a few other considerations that deal with the mechanics of paying international employees. Questions to consider include:
In what currencies will you pay salaries and invoices?
Do you have currency accounts for every country where your workers live?
How will you transfer money? Will you use a bank or a fintech service provider?
How will you pay employees if they are relocating and don’t yet have a bank account?
What payment arrangement does your new employee prefer? Do they want to be paid in their local currency or yours, and is it legal to do so?
How will you manage foreign exchange fluctuations?
What are the relevant local labor laws?
Each country where you have employees will have specific regulations about how to pay remote workers. This can include everything from frequency of pay, statutory benefits required, and any relevant withholding tax. Understanding the requirements of these regulations before you hire is essential to avoid exposing your company or employees to unnecessary fines, fees, or penalties.
Country Explorer
Visit Remote’s Country Explorer to find key employment considerations by country in one info-packed resource library.
The fastest, easiest, safest way to pay remote software developers
Whatever choices you make, be careful to check local regulations and work with a trusted global employment partner that can identify issues and minimize the risks associated with hiring in a new country.
Remote owns local legal entities in every country across the globe where our EOR services are operational. Our global payroll software hub allows you to easily manage payroll and taxes, administer benefits, and ensure compliance for all your employees, wherever they are located around the globe.
Remote is the world’s leading employer of record and our global payroll platform is purpose-built to help you accelerate your global hiring goals.
Simplify payments for both full-time employees and contractors, all in our easy-to-use platform
Guarantee compliance with local labor laws with the help of our international team of legal experts
Reduce payroll costs and streamline your payment processes
If you’re ready, you can sign up now to begin onboarding employees and contractors all over the world in minutes. Have questions? Contact us today and one of our global employment experts can give you specific advice to help you speed up the growth of your team.
How to handle taxes for remote software developers
Companies hiring software engineers abroad must consider and understand the relevant tax implications (with employer taxes varying depending on the country of hire).
Massive international companies have the resources and HR departments to help them manage payroll tax and compliance across the globe while staying compliant. For a small to medium-sized company, it's a different story. With limited resources comes a challenging responsibility of compliantly paying international employees without onboarding new payroll and legal staff in every country you hire.
An employer of record simplifies this process. Remote’s platform is purpose-built to keep you compliant and assist you in navigating the different tax codes across the globe. Partnering with Remote will remove the stress on your Finance team and prevent any non-compliance risks and penalties. An employer of record will manage global payroll compliance on your behalf to make sure you can grow your headcount without running afoul of international laws.
Running global payroll includes much more than sending out checks on the first of the month. Depending on the country and the type of employee, payroll can mean you're responsible for withholding taxes, calculating wages, and staying compliant with any other unique local labor laws. All of this is time-intensive work for your internal HR, payroll, finance, and legal teams.
International Payroll Processing Guide
How to offer stock options to remote developers
Offering stock options is one of the best ways to attract and retain talent. This, however, can be difficult for many companies that are not public. You may wonder how your company can offer stock options to attract remote developers — or, if you have an existing stock options plan, how to legally expand that plan abroad.
An employee stock ownership plan, or ESOP, is a powerful tool to attract and retain great workers for your business. People are more engaged and more committed to group success when they own the fruits of their labor and share in the company’s growth. By offering profit sharing, stock options, employee stock purchase plans, and other methods for employees to share the business’s success, you can reward workers for their contributions to your growth while incentivizing them to do their best. But offering stock options to full-time employees in other countries can be complex.
How to offer stock options (ESOP) to foreign employees
Remote allows you to manage international stock option services for your global team (as well as the setup and management of other equity incentives). We can help you bring your international employees into your ESOP legally and easily. Remote even handles tax withholding in multiple countries, allowing you to get the benefits of a global equity plan without the headache of managing it by yourself.
To realize the advantages of offering stock options to your international team, you must plan and execute your ESOP strategy effectively. That means considering where your employees live, how to handle the taxes, and what your complete global benefits packages should look like. Whether you want to offer stock to one remote developer or a fully distributed team, Remote can help you make it happen.
Offer stock options to your entire global team
Our equity experts guide you every step of the way, from equity planning to tax withholding and reporting
Should you hire remote software developers as employees or contractors?
Knowing the difference between a contractor and an employee is essential. Each offers its benefit and risk, and misclassification can prove costly.
Deciding when to work with an international contractor or when to hire an employee in another country is an important decision. You must perform a cost-benefit analysis and consider the risk and reward surrounding contract management, local employment regulations, and compliance management. Knowing how to stay compliant when hiring international contractors or employees is essential to avoid costly legal and regulatory repercussions. Knowing the difference is half the battle.
What's your employee misclassification risk?
Use our free employee misclassification risk calculator to find out your risk level - and what you can do to fix it.
An international contractor is a person who resides in another country while performing work for your company but is not a full-time employee. You are not the employer in this case, but the client. An international contractor is not your employee, but they have agreed to work with you in certain ways:
On a specific project
For a particular duration of time
To provide specific skills you need for your business
International contractors are responsible for the work you contract to them. They may have multiple customers in addition to your business. Contractors are technically self-employed and accountable for running their own companies.
Employees are employed to work over an extended period, usually for one business exclusively. They may have oversight of a team or handle multiple long-term projects. Typically, employee contracts, unlike those of contractors, do not have expiration dates. The risk in classification rests mainly on the length of the employment and duties.
Employees are employed to work over an extended period, usually for one business exclusively. They may have oversight of a team or handle multiple long-term projects. Typically, employee contracts, unlike those of contractors, do not have expiration dates. The risk in classification rests mainly on the length of the employment and duties.
Factors to consider, especially when hiring remote software developers, are the projects your workers take on and who owns the IP being produced. Remote work changes this dynamic by introducing new vulnerabilities.
If you do not create compliant contracts and fail to classify workers correctly, you could end up in a situation where a contractor in another country owns the rights to intellectual property you assumed would be yours.
This is not to say companies should avoid hiring employees in other countries: on the contrary, a global workforce is an essential strength for companies to remain competitive, especially small businesses. However, companies should be cautious to avoid unnecessary risks while growing their international teams. Every country has its own IP laws, and you must be aware of the nuances within those laws to protect yourself.
Remember that contractors may be dividing their interest between your company and another. Understanding the legal ramifications and protections of non-disclosure agreements, local IP law, and how the information you are disseminating to the software developer fits in with those elements is paramount.
Because protecting your IP is critical, Remote created Remote IP Guard to protect your IP as you hire internationally. With Remote IP Guard, you always receive the maximum transfer of your IP rights when you hire abroad.
How to work with remote developers
Chapter 6
How to work with remote developers
Working with remote developers is not always easy. Many developers prefer flexibility and do not thrive in restrictive environments. They like to work when they are at their creative best and feel they have the autonomy to develop, test, fail, and find solutions. When considering how to manage remote employees, remote software engineers are often one of the first considerations.
Many software developers need to work at their own pace. This type of working structure can be complex for companies that are used to the traditional 9-5 structured work schedule. However, when you hire internationally, you have to learn to adapt to a variety of schedules and time zones. But there is hope in this new world of remote work: asynchronous work.
Asynchronous (async) work is a valuable and essential concept to allow remote software developers to thrive. Async work is a way for workers to do their best work at the times that work for them, regardless of what times others may be working. In asynchronous work, communication is not expected to be immediate, meaning workers can fine-tune work to reduce pressure on themselves and their colleagues. The key to asynchronous work is creating processes that allow employees to work autonomously and give them the trust they need.
Multiplexing
Multiplexing means breaking large tasks down into small manageable parts. This allows workers to complete large projects faster and also provide for positive reinforcement when tasks are completed. By completing smaller tasks, employees can move easily from one task to the next, instead of being overwhelmed by one massive project.
Communication
Asynchronous communication empowers independence. It focuses on ensuring that a task and its effects are independent of whoever planned or executed it. Asynchronous communication brings and enforces some of the long-sought best practices, such as good documentation, public records of progress, and long stretches of uninterrupted deep work.
Action
In asynchronous work, action means not waiting for someone to tell you what the next steps are. This is perhaps the most important part of async work for the organization. It’s not about procedure: it’s about attitude. It’s about caring about where you’re going as a whole. There are times when work isn’t ready for us to tackle, tasks aren’t planned, decision-makers aren’t online, etc. In these times, successful teams execute, even if they later have to refactor and adapt. They don’t waste time waiting, but instead default to action.
In short, async work isn’t about procrastinating or isolating. It’s about letting employees get into their groove, a mental flow-state, to complete the most work with the highest quality in the shortest time frame. Async work allows remote developers to concentrate on accomplishing goals instead of being overwhelmed by micromanagement.
Synchronous work planning
Typical (synchronous) planning relies on kicking off things in a bulk fashion. On its own it’s not a terrible thing to do, however, a system will go as slow as its slowest element. In this case any delay will be propagated through the pipeline, as each stage depends entirely on the step that precedes it.
The workflow diagram shows a three terminal software development pipeline organized with synchronous planning. To deploy a feature a team would need tasks A, B and C to be completed individually before deployment, which can slow production significantly, especially if teams are working across timezones.
Asynchronous work planning
Async planning relies on breaking tasks into smaller tasks as much as possible and releasing Minimum Viable Changes (MVCs) as frequently as possible. This technique allows you to deliver work more frequently. You can also measure success and counteract any negative feedback as fast as possible.
In this example, by separating Tasks A, B and C you could achieve three times as many deploys as in the previous example (M1). Multiplexing each task with async work gives more time to validate their impact, and rollback or reassess the next steps required. In this instance, iteration time is reduced to a third of the original planning.
Generally, the async methodology allows teams of software developers to multiplex tasks, combine them to produce faster, and continue to work remotely across timezones without the need to wait for other tasks to be completed.
How to protect your intellectual property with remote software developers
Protecting your IP is essential. But how can you ensure your information is safe with remote employees all over the globe, some of whom are contractors and may be working for more than one company at a time?
To protect your intellectual property, you need to account for the fact that the creation of that IP is a cross-border process. Some countries have rules that protect companies, whereas others credit the creator over the commissioner. That doesn’t mean contractors will own your IP, but it does mean you need to be careful in how you create contracts and work with people in other countries.
Intellectual property rights are relatively straightforward when everyone works in the same office. Employees produce work on company time, using company property, at the company’s office, and that work belongs to the company. This traditional structure insulates businesses from most claims against their IP and invention rights. IP and invention rights for tech companies or those working with software developers can be complicated, though. Many countries lack the proper regulations to account for all the different types of tech IP and creation methods. Businesses with foreign engineers, programmers, product managers, and other tech talents must be vigilant.
Working with an EOR like Remote provides you with the knowledge base and security you need to prevent IP loss. Remote offers the industry's most secure, most reliable IP and invention rights protections through Remote IP Guard, Remote’s proprietary protection system for international IP rights. As the top global employment solutions provider, Remote helps businesses with workers in dozens of countries protect their IP from internal and external vulnerabilities.
IP and data protection guide
Start hiring remote software engineers to grow your business
Hiring a remote software developer can be a daunting task. The first step is to commit to bettering your team — the second step is partnering with the right professionals for legal, social, compliance, and payroll support, whether in the form of an EOR or through your own entity and local partners.
Remember, there will be stumbling blocks along the way. Stay the course and gather your resources, and you will see that finding the right developers to diversify your staff and knowledge base will dramatically improve your company’s ability to innovate.
Opening your business up to a new global talent pool of highly skilled remote software engineers will allow you to futureproof your recruitment strategy and help you build a platform for sustained success.
Remote offers the resources and flexibility to fill the gaps and provide protection where you need it most. Contact our global team if you would like more information on how to get started hiring and paying remote software developers.