Remote work is a popular working design widely adopted by companies outside their home countries. This remote working model is primarily used for building remote teams that allow work flexibility, work-life balance, and high productivity. Nowadays, the term “remote team” is more commonly used for building remote teams outside your country. Organizations build remote teams abroad to access the talent pool which is less expensive than that available in your own country.
There are various methods available for building your remote team. To name a few, building remote teams can use the options of contractors, outsourcing, freelancing, building subsidiaries in a particular country, and international professional employer organizations (international PEO).
This blog post will talk about the top 3 models, which are commonly used in building remote teams. They are remote contracting, outsourcing, and international PEO services. Each model works in different ways and has different types of benefits and challenges for businesses.
Before explaining further about these models, let’s first understand the meaning of a remote team in more detail and its salient features.
What is a Remote Team?
By definition, a remote team consists of a group of professionals whose workspaces are outside the corporate buildings or offices and who work from anywhere, especially from the comfort of their homes. Those internal employees who are working from home or in a hybrid model or located in different cities within a country can be considered as part of a remote team for an employer.
So, the above definition doesn’t really fit the meaning of “remote team” per se as it means slightly different here in this blog. When we say remote teams here, we mean those remote workers who are based in a different country and work in different work environments and conditions as compared to the home country of the employer.
Here, the meaning is that the base location of both employer and employees should have a significant distinction in terms of time zone, cultures & languages, labor rates, regulatory compliance, etc. Remote workers use digital channels or collaboration tools such as instant messaging, video conferencing, and email for communication.
Let’s explore three more core features of a remote team, which underline its essence and advantages of having remote teams.
- External hires: Remote teams involve hiring external resources or third-party experts in addition to the existing company’s internal employees or as a replacement for some. Companies hire these remote workers for specific projects or tasks having a fixed duration. But in some cases, these remote resources can be hired for an extended period of time.
- Cost factor & resource availability: Hiring remote workers from countries having a large pool of cheap labor can be a cost-saving operation. Easy access to the talent pool and employing them cheaper can substantially reduce the overall cost to the company.
- Business expansion: The primary motive for hiring a remote team is adding new talents and experience to help business expansion. To expand operations internationally, companies need to explore new geographical territories with a large talent pool and train the team to align with the company’s values and goals.
3 Options for Building a Remote Team and Their Key Aspects
Let’s explore the three popular models for building remote teams and understand the benefits and challenges of companies under each model.
Contractors: Flexible Hiring & Access to Expertise
If you are looking for flexible hiring and access to subject matter experts for your remote work, you can consider contractors/freelancers.
Contractors usually have skills or expertise in a particular business domain or service. Some contract workers may work on a single project for a limited period or some may continue to be with a company for an extended time. Freelance workers and independent contractors are some examples of contract workers.
Benefits of Contractors
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- Flexible hiring: Contract workers are available for short-term projects and can be employed temporarily whenever a company requires them. It’s easy for companies to resize their employees using remote workers as they can be available for seasonal work.
- Cost-saving: Contractors aren’t part of a company’s full-time employees and, hence, aren’t qualified for regular employee benefits or perks such as medical and insurance benefits, paid time off, or retirement plans. Also, companies can reduce overhead costs by hiring contractors.
- Access to expertise: Contractors normally possess specialized skills or offer particular services a company may not perform internally. Companies can add new experience and expertise to their existing operations to enhance productivity.
- No legal responsibilities: In most cases, contractors are responsible for handling their legal process and compliance such as filing taxes, etc., thus, reducing the legal liability of companies.
Challenges of Contractors
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- Finding the right talents: Companies may face difficulties finding the right talent for a specific country or region as contract workers might have different work environments. Finding and aligning the right candidates with the company’s work culture can be tedious and time-consuming.
- Resource retention: The attrition rate of contractors is normally very high due to the lack of job satisfaction and security. Without employee benefits and career growth in contracting work, these workers often leave jobs whenever they get better opportunities. This can hamper the ongoing project with the contractors.
- Confidentiality issues: Contractors can work with multiple clients as they work on a temporary project. They can even sign multiple contracts for similar projects that may lead to confidentiality issues for companies.
Outsourcing: Need a Ready-made and Experienced Team
If you need an experienced and ready-made team for your remote services, outsourcing can be a better option.
Outsourcing service providers are external agencies that handle specialized business functions on behalf of overseas companies. It is widely used for cost-saving measures and a company can outsource various operations from manufacturing to administrative tasks. By outsourcing, a company can still get the same job done, which could have been done in-house but at a cheaper cost. In addition to cost-saving, companies can get numerous benefits from outsourcing.
Benefits of Outsourcing
- Ready-made team: Outsourcing service providers usually have a team of their own who are experts in the services that they are offering. The only thing a company has to do is find the right and trustworthy outsourcing partner.
- Experience and expertise: Companies can add new experience and specialized talents to their existing operation through outsourcing. The service providers mainly have deep subject knowledge and the team is trained for the particular service.
- Scaling business: Companies can respond to changing business environments and requirements by relocating some of their operations to sustain and support their growth.
- Core business functions: By outsourcing some of their least critical business functions, businesses can gain more time to focus on core business activities.
Challenges of Outsourcing
- Lack of direct control and communication: Companies may face difficulties while managing their outsourced team as there is no direct communication access with and control over the team. The outsourced partners solely handle the selection of the team and assigning of their tasks.
- Lack of transparency: As the outsourcing partners alone decide the employment policy, there is a high chance that the team may be deprived of various employee benefits. In general, outsourcing agencies mostly wouldn’t disclose information about employees’ salaries to companies hiring them. This leads to high attrition rates in the outsourced team.
- IP violation issues: Working with outsourcing partners can be at risk of confidentiality issues such as intellectual property violations. In outsourcing, some individuals in the team may work on similar projects simultaneously from multiple clients.
International PEO: New Talents and Effective Management of Remote Teams
If you want a fresh team of your own by accessing a pool of high talents in a different country, international PEO can be your best option. This model can offer solutions when you face difficulties managing your remote team.
International PEO/Global PEO, also known as an employer of record (EOR) in European style and PEO in the US is a relatively new model and in nascent development compared to other models. It offers a range of non-core business services such as human resources functions to help administer the day-to-day affairs of employees of overseas businesses.
EOR acts as a legal employer for those remote employees working for an overseas company. Using EOR services, a company can save time and resources, allowing decision-makers to focus on core business functions.
Benefits of International PEO
- Direct control over the team: With the help of international PEO services, companies can directly recruit candidates as per their requirements. Since there is no mediator between companies and their team, they have direct control and authority over the team. The EOR partners simply help companies find the right candidates and new talents.
- Easy access to new talents: International PEO service providers have extensive knowledge about the local resources/labor. Using EOR services, companies can easily access a pool of new international talents and employ them at cheaper rates.
- Direct communication and transparency: In the international PEO model, there is direct communication between companies and employees. Companies solely decide the paycheck of their remote employees and execute jobs as per their decisions.
- No scope for IP violation: One remote team will work on a single project under the model. Companies directly handle the team and can actively monitor their activities to prevent the misuse of confidential information or IP violations.
- High employee retention: Employees working under international PEO will get the maximum employee benefits that any full-time employee in an organization would receive. They will get bonuses, paid vacations, retirement benefits, and paid time off besides medical and health insurance benefits. Due to high job satisfaction and security, employee retention is high when working with an EOR partner.
- Regulatory compliance: International PEOs take care of regulatory compliance of remote employees. EORs have extensive knowledge of local labor laws and regulations. This way, companies need not worry about the risks of legal liabilities and penalties.
Challenges of International PEO:
- Change in pay: Working with an international PEO partner may change costs from your end as the company needs to pay all employee benefits to your remote team.
- Misunderstood as third-party payroll service providers: For many, international PEO services are synonymous with a third-party payroll service or human resources outsourcing service. However, EOR services offer more comprehensive services besides payroll and human resource functions.
- Time factors: It may take some months or a year to complete the formation of a new team as international PEOs don’t have a ready team of their own. However, in some cases, companies can easily secure a team within a few weeks or months if the number of employee requirements is less.
You can strategically plan and build your overseas team through these different options. Working with international PEO, outsourcing agencies, and contractors; you can avail of a range of cost-benefit services for your overseas business expansion.
These models are widely suitable for various business sizes, operations, and functions, especially for small & medium enterprises. Freelancing and subsidiaries are other options for building remote teams, but they are not very popular across various services. Choosing the best model for your remote team may require a deeper understanding of each option.
