Howdy GirdleyWorld!
Today is a hefty one. My colleague Hayden and I held a webinar recently on how to hire offshore and not get screwed. We got a ton of great feedback, so I thought I’d give you folks the highlights!
Or you can watch the whole thing here! (55min)
First off:
Yes, I am cofounder of an offshore hiring company.
But no, this is not a giant advertisement.
Will I plug my company at the end? Absolutely.
But before that, it’s all value. Because it turns out a lot of people have heard about offshoring but are hazy on the details.
First I’m going to give you the 5 biggest mistakes to avoid, then we’ll dive into a Q&A highlights section. My goal is to demystify the process, show how hiring offshore can help your business, and clear up some of those unknown unknowns.
This is a big one, so let’s get started!
My first experience with offshore hiring (it sucked)
Six or seven years ago, we hired two software developers from Mexico. (Not exactly “offshore”, I know, but you get it.)
One of them was not very good.
The other was okay for about a month and a half but then stopped producing much of anything. It turned out he’d farmed our work out to somebody else.
I realized: I had gotten pretty good at hiring in the US and Canada… but there’s a real science and art to hiring people outside the country you live in.
Jump forward to today. Every company I’m involved in, whether on the board or as an investor, is taking advantage of the global talent market.
Because there’s no denying it: running a global talent search and hiring the best people, no matter where they’re located, will help any business.
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5 common mistakes
A lot of people are hiring overseas for the first time. Here are 5 easy mistakes to avoid.
1. Not setting clear objectives.
Without clear objectives, a hire doesn’t know what’s expected of them. You also won’t be able to measure their output against expectations, which leads to poor evaluations.
Solve this by setting short-term goals (first week, first month, first 90 days) as well as longer-term KPIs.
2. Treating people like resources, not teammates.
A lot of companies treat overseas hires like faceless, cheap, disposable labor. They’re hurting their candidates and shooting themselves in the foot. Treat your global hires just like any remote worker you would hire in the USA — they’re part of your team.
Treat global team members like any other first-class employee in the company, and they’ll value you in return.
3. Thinking small.
When you talk about hiring globally, most people imagine virtual assistants and call center employees.
But the level of talent you can hire is as high as anywhere else.
Fortune 500 companies like Exxon Mobil have been running major accounting operations in Latin America for decades.
At my companies, I’ve hired non-Americans to roles all the way up the org chart:
- Cofounder / President
- CFO
- VPs of Sales
- Project managers
- Fund administrators
- Chief of Staff
- Video editors
One company has an entire accounting department in Buenos Aires: 15 accountants, A/R clerks, and controllers.
It’s not because they’re cheaper (though they are). It’s because they are available to be hired.
4. Making it all about cost savings.
There’s no doubt that overseas labor is a lot more affordable than US staff. But chasing the cheapest possible option is a big mistake.
If you end up with the wrong hire, you’ve wasted a bunch of time starting your search again, rehiring, retraining… Invest in your overseas staff, and they will be invested in you.
A friend of mine has had great success hiring overseas by paying a premium to local wages.
Say he’s hiring for a senior position like accounting controller, which would pay $120K in the US but averages $40K in Argentina.
He’ll pay a premium for the local wages and offer $55-60K USD. Then he’s aggressive about getting the absolute best controller on the market. Not only is he getting great candidates, but they’ll trust and appreciate him as an employer.
5. Going in blind
Even with lots of experience hiring in the US, as soon as you leave the country you’re dealing in unknown unknowns.
You don’t know your blind spots. That’s why I started Near in the first place: so that my cofounders could literally make it their job to figure it out.
And even then, they’ve narrowed their focus to become specific experts in the Latin American market.
They don’t draw on Eastern Europe or the Philippines, because doing that well is a whole other world of nuance.
Rapid-fire Q&A
How do I actually find people?
The best way to find talent depends on your needs and your resources.
The easiest self-serve options are platforms like Upwork or Fiverr. They’re best for short-term contracts or per-project work, but you don’t get much company loyalty since people are constantly exposed to a wide variety of job offers.
If you’re looking for full team members, you can run your search in-house or use an agency.
An agency is best when:
- you’re hiring for a niche, hard-to-fill role (e.g. developers in less common programming languages)
- you don’t have time or resources to manage the recruiting process yourself
- you need to move super fast or fill multiple roles at once
- you want to access a specific market that you don’t have the network for
An in-house process makes sense when:
- You have an existing network in the market you’re hiring in
- You have a dedicated recruiting team who know how to source global talent
Do I hire people as contractors or employees?
The short answer is, usually they’re contractors. It’s tax advantageous to the company, and simplest in terms of paperwork.
To hire people as employees, you either need to have an entity called an Employer of Record (EOR), or use a Professional Employer Organization (PEO). You would contract with a PEO who hires the employees on your behalf.
Hiring people either way carries some level of risk. You want to make sure you have tight contracts to stay compliant with local labor laws.
You can mitigate that risk by hiring through companies like Deel, which charges more for taking on more liability, or you can use an agency like Near who hires on your behalf.
(Disclaimer: I’m not a lawyer. Talk to your lawyer!)
How do I make sure I’m not getting scammed?
Firstly, this isn’t just an overseas question. You take the same precautions you would hiring American.
It starts with you: make sure you’re paying people fairly, treating them as part of the team, have realistic expectations and deadlines, and reasonable working hours.
Then you follow up to make sure the work is getting done right. You review their output. You make sure there are clear measurables and KPIs and see how they perform.
There are a few simple precautions you can take as well:
- Use a password manager (LastPass, 1Password, Bitwarden). This lets you give employees access to accounts without them seeing the actual passwords.
- Use company email accounts that you have admin control over. (Sounds obvious, doesn’t always happen.)
- Make sure you have well-documented onboarding and offboarding procedures. This helps keep track of what systems people have access to.
- Use roles and permissions on your systems, e.g. make sure people don’t have access to download your entire CRM database
If you want to go further, there’s stuff like time tracking software, and monitoring tools that take screenshots.
But that sets up a very untrusting environment — I always prefer “trust but verify”.
Is there an issue when overseas managers earn less than their direct reports?
We haven’t seen any issue with this. We have several companies that have built entire accounting departments through Near, which means they have access to compensation rnages for the whole company.
The important thing is addressing it up front. If you both agree their wage is fair, then there shouldn’t be an issue. But I wouldn’t suggest leaving it up to surprise.
How do I know what to pay for a role?
It depends on the role, the seniority, and the location. In Latin America, you’re going to save between 30-75% on wages.
Some companies go on Glassdoor to check local salaries. The problem is, there’s basically two markets: local labor, speaking native languages, employed by local firms, and global labor, where American, Canadian, or European businesses are paying significantly more.
An agency can help you figure it out, or you can find resources online like the free salary comparison tool on Near’s website (updated with real data every quarter).
Are certain regions best for certain roles?
Broadly, yes.
Latin America, and Argentina specifically, has a long work history of accounting for US clients. We’ve staffed virtually the entire accounting teams of two 1000+ person companies.
Eastern Europe is great for software developers.
The Phillippines has a great reputation for VAs. (It’s also where I source my amazing video editors, through Clipt.)
What if people get upset that you’re hiring globally rather than locally?
When we were starting Near, we spent a lot of time thinking about this.
Here’s the thing: when it became cheaper to build cars in Mexico, factories moved to Mexico.
When automation tools like Zapier came along, companies started using them and cut low-level jobs.
And now that COVID booted us into a remote-first world, companies are going to start looking for talent worldwide. And if a company refuses to hire overseas, their competitors certainly won’t.
It’s inevitable: business is global.
Secondly, offshoring enables companies to grow more and create more economic opportunity.
And building is easier, because startup costs can be much lower. It made Near possible in the first place.
Finally, some positions are just impossible to fill otherwise. Take accountants and CPAs—we all need them, but we only graduate so many every year. And a number of my companies haven’t been able to find them locally at all.
Can you please shill your company, Girdley?
If you insist!
I’m super proud of what we’re building at Near.
They’re not the cheapest.
But by charging a little more, they help you mitigate the risks of a bad hire.
You get thorough vetting processes.
You get recruiters with deep market expertise, with boots on the ground all over Latin America.
You get guidance on fair compensation, so you don’t overpay (and stuff the agency’s pockets) or underpay (and have to start from scratch when the candidate quits).
We prioritize getting you the best person, not the fastest or the cheapest.
And our customers are super happy.
You can get 5% off your first hire at hirewithnear.com/girdley.
Thanks for reading!
And that’s it!
Still have questions? Drop me a line, and if I don’t know the answer I’ll connect you with the Near guys.
Have a great week,
Michael
