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Hiring Cross-Border Tech Freelancers Poses Challenges, Opportunities for Businesses

The IT labor shortage is forcing organizations to expand their circle of search and pursue cross-border tech freelancers — but there are challenges.

Payroll and compliance issues are twin pain points for organizations looking to hire cross-border freelance tech talent, although the biggest challenge when hiring a tech freelancer is finding one with a proper skill set.

These were the results of a Solar Staff survey of 400 C-level U.S. managers, which also found only 43% of companies currently engage cross-border freelancers, despite the growing demand for skilled labor in the U.S.

The study also unveiled the challenges facing organizations attempting to tap into cross-border freelance talent — just 22% of companies surveyed said they have an in-house team of experts, while two-thirds said they rely on different kinds of tools to ensure the fulfillment of regulatory requirements.

What Makes a Good Freelance Market

Solar Staff co-founder and CEO Pavel Shynkarenko shared four factors that create a good freelance market:

  • high internet penetration
  • high level of education (both professional and English knowledge)
  • low local demand for skilled professionals
  • low local salary

"There are also additional factors such as culture, experience working with international brands and more," he added. "This narrows your search when seeking professionals that will suit your business."

Shynkarenko noted that each region has historically specialized in different areas. The main ones are India, Eastern Europe, Africa, and South America.

"If we talk about the roles that are in most demand, there are 'classic' ones like support, which is in most cases India; developers in India and Eastern Europe; or translators, found in India and Eastern Europe," he explained.

Most recently, demand for freelancers who can perform marketing services, such as content marketing managers and performance marketers, has spiked (Eastern Europe) as well as media content production (Latin America), according to Shynkarenko.

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Best Practices for Complying with Regulations

Shynkarenko said that among the most surprising findings from the survey was the impact that regulatory changes and compliance has on businesses.

He pointed out that 57% of the respondents expect to face problems in this area when working with international contractors.

"We expected that some companies would be aware of the situation but did not expect the issue to be so prevalent," Shynkarenko said. "Unfortunately, such numbers indicate that ongoing trends have already affected not only banks and the financial system itself, but ordinary businesses as well."

When hiring internationally, Shynkarenko said there are three ways to ensure that your organization is complying with the impending rules and regulations.

Chief among them is to hire in-house employees: If you are planning to start long-term work with international contractors in a specific region, it is better to hire country managers and local law experts to be a part of the team.

"This will help you be aware of any changes in the compliance field, and your same network will help you find new partnerships — with banks, for example," Shynkarenko said. "However, it is a costly and time-consuming process. You will need a couple of months and at least $10,000 to find a good employee."

Organizations can also turn to contractor management services, as SMBs usually do not have the money and scale to hire in-house specialists, but they still need to constantly work with overseas talent.

"Using contractor management systems will allow you to grow your company without expanding your team of local experts, which is crucial if you work with contractors from several countries," he said.

Another option is to hire an agency, which Shynkarenko said is a good solution when you have a short-time project that involves contractors.

The second most surprising finding was the popularity of wire transfers — 57% of respondents revealed they are still using wires to pay contractors for their work.

"It surprised us, because this method is full of cons: It can be expensive — up to $100 per transfer — it can be time-consuming, and not all banks are able to perform such transfers," he said. "It seems like the payroll habits are hard to change, and that if companies have found a suitable payment method, theу won't change it in the future, even if it is ineffective."

Overcoming the Tech Labor Shortage

There is a severe shortage of qualified personnel globally, and that this shortage isn't going away, Shynkarenko  said. "Hence, companies will try to solve this problem in several ways."

Globally, companies have two ways to hire people:

  1. to pay more, which is not always possible in times of recession
  2. to expand the circle of search — to look for people in other countries

"What's interesting is that more and more we can see companies working with freelancers from developing countries like India, selecting them in terms of skills, and then taking the most effective people and moving them to a local office, creating an environment and conditions for their optimal growth," Shynkarenko said.

Why Hybrid Work Is the Winning Formula

Even though many companies and executives are saying that remote working is inefficient, and some organizations are calling for a return to the office, Shynkarenko said he still believes companies that learn how to work with hybrid teams will win, both immediately and in the long run.

"Immediately because, at the very least, they will get cheaper labor, because even when hiring people with the same qualifications, salaries vary widely  across regions," he said. "In the long run, such a system will allow companies to hire and onboard people much faster."

Shynkarenko noted that it's still a difficult process, especially if one talks about creative processes or corporate culture, and it is one that no company can do 100% well.

"However, you can take measures to increase your chances of success," he said.

About the author

Nathan Eddy headshotNathan Eddy is a freelance writer for ITPro Today. He has written for Popular Mechanics, Sales & Marketing Management Magazine, FierceMarkets, and CRN, among others. In 2012 he made his first documentary film, The Absent Column. He currently lives in Berlin.
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