Overseas Recruitment for US Companies

Overseas Recruitment: How Can US Companies Hire Easily in 100+ Countries?

Overseas Recruitment: How Can US Companies Hire Easily in 100+ Countries?

August 10, 2023


Picture of INS Global



Picture of INS Global



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Key Takeaways

  1. Laws and regulations regarding overseas recruitment can vary significantly between countries
  2. Where an employee should pay tax depends on a number of circumstances
  3. With today’s technology promoting and simplifying the process of working remotely, now is the perfect time to think about new horizons in terms of overseas recruitment


Can a US company succeed with overseas recruitment, and if so, how? There are certainly benefits like that of a generally lower labor cost. In fact, US companies today can save up to 60% on the cost of hiring new employees with overseas recruitment. However, the risks of legal differences, lack of clarity on how different tax and payment systems interact, and the problems of properly utilizing team members spread across multiple countries are real concerns to many.

That’s why INS Global has put together this guide on overseas recruitment for US companies. Here we’ll lay out the pros and cons, as well as look at some of the best options available for US companies hiring overseas.


What are the Overseas Recruitment Options for US Companies Hiring Abroad?


US companies have several options available when considering hiring international workers. However, it’s important to note that laws and regulations regarding international hiring can vary significantly between countries. This guide will provide general information, but it’s essential to consult with legal experts and relevant authorities where possible to ensure compliance in specific markets.

Available options for hiring overseas are:


Local Hires Through a Foreign Branch


The simplest option, and the one taken traditionally, is to hire employees directly in the target country by creating a local company.

Hiring local staff directly means having total control over all aspects of employment. However, the responsibility this entails means following the employment laws and regulations of that country, including contract terms, taxes, and labor standards.

While this was traditionally the go-to option for a US company considering overseas recruitment, it’s not always the best idea. Heightened responsibility and the need to go through numerous company setup steps before adapting HR functions to the local market can make this option more costly than it’s worth.


Independent Contractors or Freelancers


Depending on the nature of the work or project, it’s possible for a US company to hire independent contractors or freelancers to do a variety of tasks. Generally, companies want contractors for their specialist skills or knowledge. However, with a generally high price for their services, they’re unlikely to be a cost-effective option long-term.

Additionally, misclassifying employees as independent contractors can lead to serious legal issues in most countries, so it’s essential to understand the distinction between the two. A contractor or freelancer cannot work in the same way as an employee, which potentially causes problems when a company is facing deadlines or management issues.


International Remote Work


Thanks to remote work options, many US companies hire employees who work entirely from their home country. This is possible in some countries where employment laws and taxes of the remote employee’s location allow it.

However, it’s crucial for US companies to consider factors such as tax implications, employment laws, cultural differences, intellectual property rights, and data protection regulations when hiring for remote jobs. Regulations on these matters and the way that they interact are constantly changing, and even simple mistakes can cost big time.

Seeking legal and HR expertise, either from internal specialists or external consultants with expertise in local and international legal matters, is highly recommended to navigate the complexities of international hiring successfully.


PEO (Professional Employer Organization) or EOR (Employer of Record) Services


More and more US companies are choosing to outsource specific tasks or projects to international companies or service providers. Typically, these service providers have the resources, expertise, or personnel needed to make it easy for US companies to hire overseas. This approach is both cost-effective and efficient, and as a bonus, it can even reduce or remove a company’s liability when dealing with unfamiliar legal systems.

A PEO is a third-party service provider that acts as the legal Employer of Record (EOR) for employees you hire or transfer to a foreign country. Once you make a contract with a PEO or EOR company, they will handle international payroll services, benefits, and compliance with local employment laws for a minimal monthly fee.

This is a cost-effective option beneficial for companies seeking to hire employees quickly without needing to establish a legal entity abroad. In fact, because these options don’t need you to open a foreign structure, they let US companies hire overseas in as little as a few days and for a fraction of the cost it would take to establish new payroll management systems.


Do Overseas Remote Workers Pay US Taxes?


When a US company hires overseas, knowing when and how to pay taxes is essential. Where an employee should pay tax depends on a number of circumstances:

  • Employees typically file US federal taxes where they work, not where their employers are.
  • When US workers go overseas, they pay taxes in the country they’re working in, plus the US. Information about the process of filing taxes abroad and how to exempt a fixed amount from US taxation each year is available on the IRS website.
  • Remote workers who are not US tax residents and work for a US company from their home country generally don’t have to pay US taxes. However, this may vary depending on tax treaties between the worker’s home country and the US.



How to Pay Employees Overseas for US Companies


International Wire Transfers


Overseas wire transfers are a common method for paying employees who work abroad, though other methods have become more efficient. US-based businesses can transfer money straight into an employee’s bank account from a US account.

Although this method is simple, it could be expensive in terms of transfer fees and currency exchange and requires careful planning when making transfers to some countries.


Digital Payment Systems


International online payment systems like PayPal and Revolut provide quick and affordable solutions when transferring money abroad.

As an advantage over traditional bank transfers, these platforms frequently provide cheaper exchange rates and lower fees. Some platforms also offer the ability to work with money in multiple currencies at once, which is especially useful for companies with operations or staff in multiple countries.

However, as international laws are in flux in regard to these newer banks, you must pay attention to the specific regulations concerning any changes.


Local Payroll Service Providers


Employing a local payroll provider in an overseas country can simplify the process of paying employees. These providers handle payroll processing, tax withholdings, and compliance with local employment laws, generally through a PEO or global EOR service structure.

A professional payroll provider can convert funds to local currencies using their size or specialism to obtain the best possible exchange rates, then distribute salaries to employees accordingly.


International Payroll Software


Some US companies use multi-country payroll software that integrates local banks in multiple countries into a single international platform. This global global payroll solution complies with various tax regulations across multiple regions. Typically, these platforms are available either for purchase or through a services provider who can help to run and streamline usage.

Multi-country payroll platforms boost the overall efficiency of how you process payroll, manage currency conversions, and also often offer features such as automatic tax calculations and direct deposits to employees’ bank accounts.

The right payment method for you should consider all factors, including transfer fees, exchange rates, transaction speed, and convenience. Most importantly, you need to ensure that the chosen method is compliant with the laws and regulations of the country where your employees work, as well as in the US.

This may mean seeking advice from financial experts and legal professionals with international payment expertise.


Pros and Cons for a US Company Hiring a Foreign Employee     




Diverse Skill Sets and Perspectives

Global Market Understanding

Language Skills

Lower Labor Costs

Fill Skill Gaps

Competitive Advantage




Visa and Immigration Challenges

Time Zone and Communication Differences

Cultural Differences

Legal and Tax Complexities

Additional Administrative Burden

Visa Dependence