The COVID-19 pandemic disrupted a great many businesses
worldwide. The pandemic tested the resilience of companies to doing
business under uncertain conditions. There was confusion followed by
chaos as California was the first state in the US to lockdown.
Economic activity seemed to be coming to a grinding halt. Businesses
had to rapidly learn new ways of conducting business as their
employees were forced to stay home. Physical teams started
transforming rapidly into virtual teams. It took a while but gradually
remote work and work from home became mainstream.
In this blog, we aim to address concerns about arriving at the
know-how of hiring a remote team. How an Employer of Record
services, i.e EOR services in India or an International PEO can
contribute to finding the right fit with relevant experiences at
competitive rates.
Our blog will educate you on exploring India as a prospective location
for skilled resources, the risks, advantages, costs, and strategies for
hiring and retaining a remote team in India. As well as how
Professional Employer Organizations, i.e PEO services in India can
outrun and serve as the best alternative compared to the other routes
of remote hiring.
The remote working trend becomes mainstream
As it became evident to businesses that high-caliber workers were
easily available in other countries like India for a fraction of the cost, it
kick-started a race to hire overseas employees. There emerged an
opportunity for certain types of businesses using cloud and telecom
technologies to leverage remote workforce and gain a strategic
advantage in their marketplaces.
The pandemic had indeed leveled the playing field for workers to
provide their service to businesses out of their native country. The
wave of remote working started by platforms like Upwork, Fiverr,
Freelancer, Brickworks, and the likes got expedited by the pandemic.
The pandemic has encouraged successful remote teams’ work
culture
The post-pandemic revolutionized the concept of work and business
ecosystem altogether.
Interestingly, the Netherlands has decided to prioritize its employees’
work-life balance. They are just a step away from becoming the first
country to provide work-from-home legally if the law is approved by
the Senate. The pandemic was instrumental in playing a huge role in
implementing remote hiring and increasing staff productivity.
India as a preferred destination for skilled manpower
India is perceived as a land of opportunity for its cultural,
well-educated, and diverse background. India has a talent pool of
highly educated and skilled professionals who are adept at
problem-solving abilities and are immensely creative. People from
India hail from different regions and bring various cultures and thought
processes to the table. As per Quora, 4.4 million employees from India
were employed in the IT and ITES sectors as of 2020.
Diving into the specifics of India, India holds the second-largest
English-speaking manpower. It churns out a great tech talent of 1.5
million engineers yearly from various tier 1 and tier 2 engineering
premier institutes like the Indian Institutes of Technology (IIT) and
National Institutes of Information Technology (NIT). According to the
report published by the National Survey of India, the literacy rate of
India as of 2022 is 77.7 %. India ranks 159 amongst 197 countries.
The cost of living in India on average is 64.6% lower than that of the
US. The country’s average population is young. Moreover, it is quite
easy to find staff who are eager to succeed and adapt to new
business ethos. The salary packages are lower which means
businesses in the west can have a larger workforce for the same
budget.
India has over 75% of the World’s CMM-Level 5 companies and has
the highest number of ISO-9000 certified companies. Whether you are
offshoring to India or hiring Indian talents, high standards,
professionalism, and reliability are a given. The Indian IT sector today
is estimated to be $235 billion.
Companies emphasizing virtual team building
The journey of global companies exploring remote hiring dates back to
global airlines like Texas Instruments and British Airways availing their
back-end offices in India. IT/ITES companies followed the lead
realizing India has great communication, technological and high-end
telecom facilities. It has favorable business working environments as
well. From 1945-1994, companies like International Business
Machines (IBM), American Express, and American Telephone and
Telegraph Company (AT&T) permitted their employees to
telecommute. Considering the telecommuting study conducted by the
United States Federal Government reduced the employees’
commuting expenses and increased their productivity.
Today a lot of global software giants like Oracle, Microsoft, SAP, etc
outsource to India by acknowledging its potential. India has a strong
industrial base, growing infrastructure, and digitization. As well as an
enthusiastic start-up population, encouraging growth, and partnering
vision from the Government. In fact, 8% of India’s total Gross
Domestic Product (GDP) is accounted for in the IT/ITES industry in
2020. The software industry of India has given out an output of $16
billion. The leading IT companies of India are well equipped with
attractively designed buildings and posh campuses in prime locations.
The influx of global companies during the pandemic
There was a surge of companies coming to India. India benefited
hugely from the pandemic. It’s one of the biggest countries in the
world with a fast-growing economy, so it wasn’t a surprise why it
became the top destination for hiring a remote team.
To get some context, the Indian Ministry of Corporate Affairs (MCA)
registered more than 124,000 companies in 2019-20, 155,000 in
2020-21 (25% growth), and 167,000 (8% growth) companies
registered in the financial year 2021-22.
During FY 2021-22, the states that registered the largest number of
companies were Maharashtra with 31,107 companies, followed by
Uttar Pradesh at 16,969, Delhi at 16,323, Karnataka at 13,403, and
Tamil Nadu at 11,020 companies.
Advantages of hiring a remote team and leading remotely
● Broadens brand reach in two countries
By narrowing down on India as a prospective location for your global
business expansion plans, you will have an opportunity to augment
your brand visibility and culture in dual countries.
● Remote hiring allows you to tap into a pool of diverse and
adept population
India is a place of robust diversity. Skilled professionals stem from
different regions, have an ingrained ability to adjust, and are adept at
problem-solving skills. The authors of ‘Jugaad Innovation’ advise the
West to consider Indians as an emerging market offering creative
solutions in the business world.
● Avail skilled resources at reduced costs
When you hire a remote team, it works out great from a cost
perspective point of view. The wage rates and compensation policies
in India are different, to be precise they are comparatively low. There
is scope for negotiation in India. Also, the costs of recruiting are
affordable. You can resource remote employees in India at an
affordable budget in comparison to your on-location or in-house
employees.
● Leverage the variation of job vacancies in India and time
zones
The number of engineers graduating every year is way more than the
job vacancies available in Indian companies. You can leverage the
difference in this situation. You can profit from the difference in the
time zones. You can make use of your remote team after the closure
of business hours (COB) in your country. With this, you will be able to
avail of the clock customer service and enhance business productivity.
Disadvantages of remote hiring
● Easy distraction and experiencing isolation
When employees work from home, they can get easily distracted.
Their attention span may be compromised. In extreme cases, some
employees may even feel isolated and can sink into depression as
constant monitoring by superiors can be disturbing.
● Asynchronous communication can be inconvenient
sometimes
The difference in time zones and geographical barriers can prove as a
hindrance in managing a remote team. The scheduling of meetings
and follow-ups may be inconvenient keeping in mind the availability of
employees, managers, HRs, and employers. You will lose direct
control and will have to coordinate with your employees virtually.
Meetings will have to be scheduled considering the availability factors.
● Decoding the employee mindset of India
While hiring resources from India, it is imperative to understand their
work culture. The employees in India like to have 10-15% hikes on an
annual basis. They prefer favorable taxations, travel allowances,
health insurance coverages, incentives, etc. They prefer a decent
number of public holidays. They like working in modern offices and
futuristic office spaces.
● Staying digitally connected comes with an expense
Ensuring team coordination and collaboration may be worrisome. You
may face security issues and also incur technological costs to ensure
a smooth virtual business operation.
● Put in extra efforts
This means ensuring your employees feel welcomed into your
company irrespective of the geographical barriers and differences in
time zones. Most importantly, you will have to put in efforts to
understand their behavioral approaches and adjust to their culture
accordingly.
To gather a better understanding of hiring employees in India and how
we, at Remunance, ease your journey, visit hiring employees in India:
a guide for foreign companies.
How can you find new employees remotely?
There are different methods of hiring employees remotely. You can
source the right talent through online job portals like Naukri and
Indeed.
You can also use LinkedIn as a social media platform to find activities
as well as passive talent. Linkedin has 62 million users from India
making it the second-largest market for networking platforms.
According to Linkedin data, employees in India research mechanical
and software engineering job roles the most on social media
networking sites. University campus placements or approaching
recruitment agencies is also a great way of resourcing talent.
However, the approach an International PEO or Employer of Record
services will offer will take off all the stress from your plate.
How do you ensure remote team building in India?
Every job seeker desires for Google-style work environment where the
tech giant ensures employee happiness as a top priority. While you
may practically not be able to create an adult playground kind of work
environment for your employees but you can surely imbibe their
organizational values for leading remotely.
Implementing employee-centric best HR practices and a good HR
strategy play a major role in meeting business productivity and
execution. The sooner you dawn on the realization that employees are
the biggest asset of your company, the faster you will be able to climb
the ladder of success.
1. Keeping an open-door policy
2. Emphasizing creating a happy workplace culture
3. Encouraging innovation and new ideas
To know more about Best HR practices, visit our blog Best HR
practices for business growth.
What are the costs of hiring a remote team?
Depending on the way you decide to hire or the business model you
choose to adopt, you will have different costs associated with hiring
remote workers. E.g. if you are going to set up your legal entity or hire
a contractor directly by using a professional recruitment consultant to
find employees then their fees can range from 10% to 18% of the
employee’s gross salary. There may be additional costs like
conducting a background check etc. If you have hired contractors
directly then you will need to pay them salaries directly into their bank
accounts. Banks will charge you a fixed transaction fee per transfer.
If you use Remunance then we will charge you a fixed monthly fee per
employee. You make one single payment and we will disburse the
salary to each employee. You will receive a bill for their bank
accounts. Each bank account will have a SWIFT code with a clearly
stated purpose for the remittance. This will make it very easy to track
and audit the payments made to each remote employee. Remunance
doesn’t charge you any finder’s fee.
Hidden costs of remote teams
● Remote workers pose a greater security threat
The solution is not to avoid the risk, but to mitigate it. It is very
necessary that you invest in VPNs. Your corporate network should be
protected and private. Remote team members should be able to log in
remotely and access the required tools without putting the business
network at risk.
Remote workers are more susceptible to phishing and more
likely to use insecure devices
If remote team members use unsecured devices then they make the
business network vulnerable. If they’re using the same device for their
personal use and company use then they are putting your company
network at risk. It is best practice to use devices exclusively for work
while using separate and unconnected devices for personal use.
It is equally important to train and retrain your employees on security
best practices.
Different models to hire talent in India
Remote teams can be formed through routes like outsourcing,
freelancing, contracting, and subsidiary formation. You can choose
your route depending on your needs, the time you desire to continue
business operations in India, and the control you would like to have.
If you are looking for a long-term relationship with talented remote
resources, then an International PEO or EOR may just be the ideal
option for you. An International PEO will offer their expertise in
handling the HR department. This includes loading off administrative
responsibilities like HR management, payroll, and tax filing onto them.
EOR services will step in as the legal employer for your employees.
The ideal takeaway for your small and midsized business (SMB)
employees is that a PEO will offer them the same benefits a larger
company would do.
These are the different routes of remote hiring in India:
1. Partnering with an International PEO/EOR services
An International PEO works out great when you are on the lookout for
a better remote team selection, work allocation, deliverables, and cost.
An International PEO will ensure a business continuity plan, a
dedicated team in a full-time role, negligible upfront investments, and
the opportunity to have an entity at an opportune time. A PEO model
will assure complete protection of your projects, by adhering to all your
company’s confidentiality clauses and in a leak-proof secured
infrastructure. A PEO International charges either straight costs or
percentage costs. They will charge you per employee per month or
take a percentage of the employee’s gross salary costs.
Click here if you would like to explore the benefits of using
Remunance as your India EOR.
2. Outsourcing model
Outsourcing has forever been a favorite and popular buzzword for
global companies seeking international talent, especially in the IT
industry. Once you have defined the project’s scope, you need not
monitor their deliverables as long as they are in line with your
business expectations.
However, in an outsourcing route for hiring a remote team, you do not
have direct control over your resources. This will be the lookout for
their parent organization. It is difficult to find the right resources within
a stipulated time. You may lose your peace of mind when it comes to
confidentiality in an outsourcing setup. Your resources will work for
you for a finite period of time and on a particular project. You may
have to shell out more money from your pockets if you would like to
retain them for a full-time dedicated project. You may have to pay
additionally for the added effort they put in other than their designated
tasks. Such situations will be out of your control.
3. Hiring and engaging contractors directly
In a contracting model of remote working, the resources will work for
you in a short-term or long-term project. The biggest drawback with
contracting is you will have little control in maximizing throughput in
human resources. Contractors can legally work for other clients or
multiple companies simultaneously. In such a scenario, their attention
span and deliverables will perhaps be compromised. They may work
for your rival companies as well.
From a cost perspective in a long run, maintaining a team of
contractors will turn out to be an expensive affair. They will charge on
an hourly basis, and if there’s additional scope of work loaded onto
them, they will incur additional costs for the same too.
This is relatively easy for the business when the number of
international contractors or remote workers is small, less than 10. It
gets complex, cumbersome, and expensive quite quickly the moment
you have more than 10 remote (international) contractors. It is not
easy for remote (international) contractors who have to face multiple
challenges like local tech support, and filing complex end-of-year tax
and GST returns.
The working culture and mindset of contractors are like
near-autonomy. They like working independently and won’t go the
extra mile to meet your business expectations.
4. PEO versus subsidiary formation
Setting up your entity in India is the most traditional and the most
obvious method known to most business professionals. It gives you
full control and autonomy to (say) run the payroll, pay taxes and stay
compliant with the local laws. However, this pathway is very
time-consuming and also expensive. It needs a fair amount of country
expertise in the local legal, corporate, and payroll regulations. This
method is usually used by larger businesses that have the resources
to manage the extra workload. We do not recommend this to SMEs
and small businesses that have got no immediate plans to hire a large
number of employees.
To understand why to choose an International PEO before you form a
legal entity in India, read our blog PEO vs legal entity.
And to gather an even more comprehensive understanding of the
process of subsidiary formation, simply read this blog.
Build remote teams the Remunance way…
At Remunance, we understand a remote team acts as the backbone
in managing your global business. We also comprehend the
importance of building and retaining skilled resources. By becoming
your ally, we provide complete HR admin and office infrastructure
support. We aim to inculcate a winning team culture through our ideal
selection process conducted by our efficient team of HR professionals.
We understand the Indian pulse, are aware of the changing trends in
the market and HR policies, and share your employee responsibilities
by finding the right fit accordingly.
Our EOR/International PEO services will handle your employee
taxation, salary processing, and employee benefits. We have a
well-equipped self-servicing employee portal. Our Founder, Mr.
Rajendra Vaidya has devised an innovative PEO model to offer you
the best of both worlds. Remunance has successfully served 70 plus
clients from 16 countries to date.
To know more about our International PEO and EOR services, get in
touch with us here to nurture a collaborative business relationship.
Reference links for credit sources
To know more in detail about the developments in infrastructure and
the initiatives the government is taking to build the infrastructure in
India, visit India Brand Equity Foundation
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