It's puzzling to me because I've been successful in previous fully international remote roles (& have lots of experience building remote workflows), so I'd like to understand the motivation behind why and identify potential solutions to enabling it, as a thought exercise driven by curiousity.
From my perspective, there are a few barriers to this:
- Timezone. This is a huge one when it comes to synchronous communications, especially if you're in the driver's seat (as a team lead etc.) Disparate timezones between team members can break a team's velocity if you're not built to be fully asynchronous from the ground-up, which IMO requires a cultural shift in communications (moving towards async comms where meetings are kept to bare minimum and/or only used for social face time). What can we do to make the switch to async comms easier?
- No "human" touch. Socializing is critical because humans have an innate desire to connect; nothing can replace real-world connections. This is why off-sites exist for remote companies. They're way easier to arrange when your team isn't spread across continents, and arranging for international off-sites can be cost prohibitive as a startup. I believe there is nothing we can do to replace that human touch (not even the metaverse), so what can we do to make travel planning for companies easier and/or less costly?
- Difficult to figure compensation scale. Remote roles typically peg compensations to CoL (Cost of Living). The typical setup I've seen is applying a CoL multiplier to the base comp. for the role and tacking on +/-20% for competitiveness (or as an "error correction"). How can we help them make these decisions easier?
- Lack of legal presence. Having no legal entity in the country you're hiring in is a non sequitur, and setting up a legal entity per-country-per-hire is not scalable (beyond setting up the entity itself, you need to be aware of local labour laws, your tax obligations, insurance, etc.) I think Deel (https://www.deel.com/) has already solved this.
- Compliance & regulations. The company may be handling sensitive data and/or has PCI/HIPAA compliance obligations. Or it may be a government organization where security/background checks must be performed. Systems/data access may also need to be scrutinized in situation of audits and documented ahead-of-time. Not much we can do here and I think it's a question of risk, so no international remote is probably for the best.
I'm sure I'm missing something important. What do you think?
(edit: formatting)
(edit2: fix typo & re-phrase)
(edit3: typo)
Source: I'm a contractor for over 5 years now, working for companies across continents.
Was it difficult for you to convice companies to take you on as a "contractor" (legally speaking)?
In the UK we have a law called IR35 to prevent disguised employment. If a US company hired a UK based citizen and acted in breach of IR35 then the employer would be liable.
In reality it would be hard for tax authorities to enforce, but I think it would be enough to scare off the employer.
If the end client has some UK presence (a branch, etc), then yes the "new rules" apply and the end client is responsible for determination.
- timezone : I have worked and converted companies to global remote. It is surprisingly flowless and often leads to increase in productivity. Yet, most companies are afraid of "not enough facetime"
- employee "ownership". You can make your contract very similar to an employment contract (working hours, copyright ownership...) but most companies want "their own employees". It's a culture thing that I think is linked to perceived loyalty and subordination
- perks and benefits. Most companies think they are cool because they offer a lower salary but plenty of free lunch, gym membership, insurance... you can't put that in a contractor's contract
Oh and, as an Estonian myself, I do not recommend e-residency. If all you want is a company, then the e-residency is one of the worst ways to go about it. In terms of cost, flexibility, taxes, etc.
Assuming you're somewhere else in the EU, that is. I don't really know how the rest of the world would see this setup.
Already have a Swedish limited liability company (“aktiebolag”) but thinking about relocating to Estonia, Ireland or Malta. Do you think it matters what jurisdiction you set up shop in?
One thing I’ve noticed is that Swedish startups in general like to hire people as employees because they think that increases the value of their companies more. Is this something you see internally too? If so, how do you get around it?
I do not contract for local companies in Estonia however. They always expect me to become a local employee, which is not in my interest, and there also aren't any Clojure opportunities here, which I specialize in. However contracting for foreign companies has never been an issue because being a contractor is assumed if applying from a foreign country, at least for Clojure developers.
As to where to set up shop: wherever it's easiest for you. You still need to comply with the local rules, file reports and what not.
Having worked remote across countries for a year now, the simplest solution was to contract and invoice. This makes the interface to your employer a lot simpler, but you have to learn your country's tax system, do basic accounting for your company. When you're used to having your employer's salary department handle this, it can be a little daunting at first. Ultimately, becoming a small business owner may benefit you in the long run, or you may realize that the extra book-keeping is not worth the hassle.
I've never met a contractor who was short of contracts and options. There is pretty constant demand. Most of my contractor friends work 8-9 months of the year, take an extended break, then when they are ready for new work will land a new contract within 2-3 weeks at most. Totally normal to land a new contract within a few days.
* Payroll: how do I pay you, what's the frequency of payment in the region, how do deductions work, is overtime a thing?
* Working time: how many hours, how do I monitor the hours, do I have to give you breaks, do I have to document the breaks?
* Data protection: how do I ensure it, how do I send you the equipment you need, what happens if your device becomes non-compliant?
* Health Insurance: Does your country need it? How much does it cost? How much do I need to monitor it?
* Corporate law: by hiring you, have I established a legal entity in that country? Do I need to make a permanent entity in your country? How does profit attribution work in your country and what are the tax implications of hiring you?
* Personal taxes: Does your country and mine have some sort of double taxation agreement? What about social security type agreement? Who do I pay? Who do I tell that you are working there? What identification numbers do I need in order to tell them you work for me? How do they know who I am if I don't happen to have an entity in that country?
Honestly its just not worth the hassle for most situations. It's expensive, hard to do, complicated and creates all sorts of really difficult to account for edge cases when writing policies or attempting to enforce rules.
1 - No equity. The legal company structure prevents you getting equity in the company.
2 - Significantly reduced employment rights. During the current waves of layoffs people employed through these type of arrangements found they had significantly less rights than normal employees, primarily due to fewer people being employed this way did not meet the usual thresholds for redundancy planning and payouts.
A friend of mine employed through an employer of record was "made redundant" and was offered exactly zero notice, severance or payout. When he tried to negotiate they effectively told him to sue them, knowing it will take significant time and legal costs to bring forward a claim.
Legal differences can be significant - for example, in France it may be difficult legally to ask an employee to put in more than their contracted hours compared to another country where this could be very normal.
A recent example in the news is the Twitter layoffs - in the EU they may have enacted layoffs that aren't legal there but are perfectly legal in the US.
Taxes in different countries can mean there's a significant difference in the difference between the amount an employer pays and the employee receives per country. Sometimes it's negligible enough for the employer to foot the bill, sometimes it's large enough they may need to pass on the difference. This can get even more complicated when share options come in to play.
If you are responsible for this it all really starts to add up, ultimately the more countries you employ in, the more cognitive overhead which can impact an organisation's agility (or require them to take more risks).
Just to add that Deel costs are from $599 per contract / month, so I wouldn't say that this problem is solved, especially for a startup trying to hire abroad.
Also, it's different for employees if you're not employed with your "real" company.
Deel owns most of its entities in its 150+ countries (it used to be less, but they have built out there network a lot in the past year or so).
$599 is not a bad rate, considering all of the overhead to setting up an entity, benefits, and hiring a regional manager than can deal with all the local stuff. You have to get to a good 15-20 people in a specific country before it makes sense to switch to your own entity.
EDIT: One thing that Deel does _not_ solve is visa sponsorships. They only do this very rarely AFAIK.
I was a "Deel employee" and they operated through the same name.
I'm keeping it ambiguous on purpose, since I'm not putting any approach over another, but it helps if the manager and the employee are on the same page (or at least in the same chapter) wrt work culture.
US startup. We tried hiring remote in India and eastern Europe. The biggest hurdle was the culturally implied expectations.
I mean India outsourcing doing a bad job is a cliche by now. But that was precisely our experience. The available remote freelancers in India didn't seem to share US values of what constitutes acceptable quality. Even with reminders to deliver US quality, their work was often on a level where a US employee would have been ashamed to call it "finished". But they happily "solved" those tickets.
Also, there were so many intermediate translators and managers that at the end, a rural US grad student was similar in price to an Indian freelancer in one of the IT hotspots there.
But mainly, that difference in culture leads to a lack of trust. I wouldn't let Indian freelancers interface directly with US customers because I know that their definition of a solution doesn't overlap much.
(They view us a little bit like the outsourced hired help)
As you can see they have a subsidiary in each of the countries in which they hire:
https://about.gitlab.com/handbook/people-group/contracts-pro...
There are a bunch companies with an "open handbook" philosophy, they're definitely worth a read. One of my recent discovery is Airbyte's [0]
From a company standpoint, being fully-remote is already a non-conservative approach and minimizing risks by only hiring in a certain region makes sense. Your talent pool will stop being a constraint anyways so why add more complexity.
One more thing I'll add to this list is culture and language. Even if on paper everyone speaks English, communication is much easier when everyone speaks the same accent / dialect / local non-EN language.
Accent consistency isn't the case even if you're hiring from only one country. The level of English is a legitimate concern but expecting everyone to speak the same accent is weird.
Are you setting yourself up as a local company and just selling yourself as a consulting firm (or using an umbrella firm), or are you an actual employee?
Are there any tariffs in engaging your firm? OK if you're remote in Germany and working for a Canadian that's probably OK, but if you are based in Cuba or Iran would that be a problem.
Lets say you incorporate in Delaware (or work for one based there), does the firm fully outsource the risk to that consultanting firm, or is this like if I employ a contractor who then pays a bribe I'm still liable.
Is that firm large enough and trusted enough (Cognizant, Accenture, Infosys etc) to take that risk?
What if you live in North Korea? Or China? Does an employer want that risk that the government will be able to interfere?
OK you might think that's OK, but how about Kablankistan? Are you confident they are free from pressures from locals (perhaps who are working for China/Russia/Your Competitor) in the same way someone working in the UK or Canada is?
How about Australia, where the government can compel your employee to insert a backdoor into your product.
On the other hand you claim that compensation scale is important, but surely if the work is being done the local compensation doesn't matter. People get paid massive variations for nominally doing the same job even in the same office.
The value proposition that US tech workers (in office and remote) have is they are literally 100 times better than a worker in a code factory in India. That's either right - in which case it doesn't matter if the worker is working remotely from Oregon or from India (setting aside the timezone issue you already discounted and the legal and risk issues mentioned above), as long as the value you're getting is enough.
If I have two identical candidates who will do the job just as well, it surely doesn't matter if they live in NYC or Buffalo (or other factors aside in NYC or Naples), I'd pay the necessary compensation to get one of them to work for me and keep them happy so they don't leave.
Exactly what you posted :-)
I have rough thoughts. I'm curious about other people's thoughts, experiences, and opinions. Hence "Ask HN"
Thanks a lot, you've given me some nuggets to think about.
> It definitely adds risk
From other comments such as badpun's [0] and ohadron's [1], along with yours, it looks like this is all boiling down to risk + unknowns vs reward.
I wonder if we can make the unknown unknowns easier to manage so that it mitigates the risks involved somehow.
[0] https://news.ycombinator.com/item?id=33997059 [1] https://news.ycombinator.com/item?id=33997049
There are companies who have presences in many countries. I once worked for a US-Canadian company from Scotland, so they hired me through their London branch, although the person that was officially my manager wasn't the person I reported to.
There are specialized "middle man" companies that exist purely to make your arrangement tax-compliant.
In the UK, there is an additional regulatory problem called "IR35", which is about working as contractor for the same client for too long, so you would be treated like an employee. This is only an issue if you go the contractor route, which is financially attractive as you may get GBP 450-GBP 1200 a day there, depending on experience.
Sometimes, contrctors found their own limited liability corporations, which makes some issues easier, but doesn't resolve everything. The hardest part for the employee side is finding a competent tax advisor knowledgeable with international setups.
Regarding the time zone, this is both a pro and a con, depending where the other team members reside. I've been in GMT+0 working with US and Asian teams so sitting in the middle makes you an ideal communication hub between sites that have difficulties meeting at humane hours.
Tax should not be an issue if you are paying someone as an independent contractor. Their tax arrangements are on them.
If you have an employment arrangement however, then you begin to hold responsibility for ensuring that local taxes are paid. You need local payroll, relationships with tax authorities etc.
Legally, again you are mitigated somewhat if you use a B2B contractor relationship, but HR, Data Protection and liability rules are going to be complex and risky for the hiring entity. Imagine if you misunderstand vacation or pension rules in Timbuktu and find yourself in a lawsuit with an aggrieved employee.
2. No "human" touch - just make Zoom calls and drink beer.
3. Difficult to figure compensation scale - I wouldn't bother with CoL. just pick a floor and see who you get. You are fishing globally.
4. Lack of legal presence - this matters if you generate sales in the same country that you have contractors. Tax office will prefer a local entity that files taxes. The labor office will probably pressure you to hire contractors as local employees since you have a local entity. Employees may get taxed more brutally than as employees.
5. Compliance & regulations - I guess your ops people should be in home base. and I guess get your devs to develop code using dummy data. I guess if the code touches HIPAA-ish data, remote work does not really work.
Many companies we talk with usually mention your key point here. Another crucial one we often see is businesses need help knowing where to start or are intimidated by the idea of doing something wrong.
I’m a bit biased here, but I think we’ve certainly solved most of the other issues you mentioned. We connect people with tryroots.io, tackle salary bands with https://www.deel.com/salary-insights, and handle compliance/payroll/local entities with our core product. There’s still work to do, that’s for sure. However, it’s our mission to democratize global hiring and simplify the process so companies can get started with complete confidence and know they have all the tools needed.
Things got 100x better over (maybe even more) the last two years, and I’m sure they’ll improve over the next 10+.
P.S. If you want to help us make it happen, we are hiring!
* Cultural integration to generally to the US, and specifically to the US way of doing business. Except for a few rare cases, software is ubiquitously embedded in the culture that requires such solution. This has a _lot_ of non-salient culture-domain-specific parts that nonetheless comes as second nature to peeps growing up here. For example -I'm implementing a module that requires accounting for eg income tax brackets. A person from the EU would fire an email to product asking what these are. Here we come to the "US way of doing business", moving fast: a senior US sw engineer at a startup is enabled, and expected to do whatever it takes to drive things forward. So, the right move is to go to IRS website, look up the table, write an implementation, and note to product to double-check it.
* Related to this, "extremely remote" (different timezone + different country) requires a degree of autonomy, requires a level of trust, that is very difficult to build over videoconferences alone. Most successful "extreme remote" I've seen always added at least a weekend of flying peeps into retreats, doing mindmelt.
* The issue of trust: US is a high-trust country; it is default expected that everything you say is true, and you're not omitting materially relevant facts; and there are severe (but only country-wide) consequences of getting caught. For international peeps, trust level is highly varied, with very limited ability to enforce.
These are the top-level bits on making hiring decisions, and the root causes why none of the items on your list are being addressed.
Every country should require:
1) companies to have local taxable legal entities before they can hire remote workers 2) Pay remote workers above the minimum wage and similar salary as non-remote workers of their local country 3) incur a reasonable tax penalty when prioritizing offshore remote talent
That way everyone gets paid fairly, taxes are paid nicely and remote offshore workers are hired only when there truly is no better local candidate, not simply because they are cheaper and can be exploited more.
Eg UAE- specifically Dubai, with its virtual work visa [1]. Only thing you need to provide is healthcare (you must buy a Dubai-specific healthcare policy) and everything else they don’t care about. Your outside-UAE employer can treat you however is permitted by their local laws.
Also note: if you’re not an American, and aren’t tax resident in America, but are working for a US company while not physically in the US, the IRS simply doesn’t consider you employed. So truly no tax.
However if you are in UAE but working for a UK company, there is still some tax to pay (National Insurance tax).
1. https://u.ae/en/information-and-services/visa-and-emirates-i...
- Monoculture. While diversity is valuable, monoculture teams generally run teams. Banter is easier (less likelihood of people being offended), relationships between team members form easier (collegues become 'friends'), conflict is easier to resolve. Never mind different regions around the world, it can be difficult to integrate different genders or ages into existing teams. This especially happens when team members get to interview candidates, they will (subconciously) favour people that are similar to themselves. When you have limited management skills or time, a smoothly running team is useful.
Btw, I hate those companies which post their jobs as remote, but turns out it's "US only remote"
This can also hurt due diligence when selling out or having the next investment round. For example, I was once working remotely in a US startup from Poland and they promised me stock options, but later rescinded it, citing the lawyers as the reason (I got a raise instead).
In South Africa if you derive >80% of your income from one contracting client, they're obligated to treat you as an employee (with all the benefits and complications that that brings). Technically speaking, for international companies this would mean they have to set up legal shop in the country. This is not easy to enforce and the tax man mostly just wants his dues, but it is something to be aware of.
Now multiply that intricacy with that of every other country you consider hiring in.
Its a bit more hassle, and I technically have less protections (e.g. No mandatory vacations, severence etc), but USA pay is more than double Taiwan pay for the same position so it was an easy trade off for me.
For anyone who wants to work for an international company in a different country I recommend just biting the bullet, find a CPA in your area and just pay them to help you.
If you have a contractor working from the outskirts of Timbuktu, who do you call if they go completely rouge on you?
Find a third party contractor that looks the other way, not caring where you are physically as long as you have an 'in country address and bank'. They take a percentage, and you can work remotely from where ever you like. If you don't have a bank or address in the same country as your employer things get more difficult.
We used remote.com, they charge a sizable fee (like 600 quid a month), but the net costs come out about even after considering other costs. You still have to pay for the whatever the local countries requirements are for e.g: holiday pay, sick leave, redundancies etc, but I think it's a decent system.
I suspect the costs will come down quite quickly as it scales/has more competitors.
Of course you can outsource that (so called employers of record) or hire people with freelancer contracts. But just hiring locally is much easier
"Compliance" is the catch all term for "not doing something awry of someone's law just in case they come after me".
They're worried about unknown unknowns, and it's a ridiculously complicated area. Not just tax, but things like health insurance and pensions and employment law.
For instance, a US employer expects to be able to fire an employee at will. Few other countries allow that. So it creates uncertainty: if I need to fire them, what would I do?
It's far easier to just avoid it all by saying "Remote, US only".
This area of law also has more of a "rule of man" rather than "rule of law" feel. Tax law is a constant moving target, and even a tax professional can't say 100% what would happen in the many gray areas. It's a crapshoot.
So most employment is done only where the employer has a company in the employee's jurisdiction, or via quasi employment where the employee is actually contracting via another company (either their own company or an EOR).
The short of it is that employment in the 21st century has massive government involvement, there are hundreds of states in the world, and therefore there are enormous permutations of employee and employer country pairings, each with unknown unknown compliance consequences, and therefore most employers don't want to wade into that.
