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?
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.
- Keeping an open-door policy
- Emphasizing creating a happy workplace culture
- 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:
- 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.