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How do some SMBs hire smarter than others?
Maybe you’re exploring a development hub in Macedonia or hiring professional services talent in the Philippines or South Africa. For many European SMBs, hiring globally is an exciting opportunity to access specialist skills and expand into new markets.
Even with more and more businesses looking to hire globally, the struggle is real, though. As highlighted by Euronews, 75% of employers across 21 European countries are struggling to find candidates with the right skills — an issue that’s only widening the talent gap.
You might be reading this because you’re facing that very challenge. And while the benefits of global hiring are undeniable, navigating the complexities of compliance, payroll, and onboarding can feel overwhelming, especially if you’re part of a stretched people department already juggling endless priorities.
If you’re wearing multiple hats and wondering how to make this work, we’ve got you. Take a moment to dive into the data and considerations that can make global hiring a smoother, more manageable journey.
Choosing the right framework for hiring internationally
If your business is looking to grow internationally, one of the first questions you’ll face is how to structure your hiring. Whether you’re targeting a single country or multiple markets, your approach will depend on the kind of team structure and support systems you need.
Chances are, you’ve considered one of these three common pathways:
- Establishing a local entity
- Partnering with recruitment agencies
- Collaborating with an Employer of Record (EOR)
Each approach comes with its own benefits and challenges, and the right choice often depends on your long-term goals, budget, and operational needs.
1. Establishing a local entity
Setting up a legal entity provides full control over your local operations and talent, making it a logical choice for businesses with long-term plans in a specific market. However, this route is far from simple. Establishing an entity requires navigating complex compliance regulations, tax laws, and employment obligations, all of which vary by country. Beyond the administrative workload, the financial costs can be steep (ranging from thousands to hundreds of thousands of euros), depending on the region.
Timelines can also be a hurdle, with the process often taking several months or more than a year. For SMBs testing a new market or needing to hire quickly, this delay can result in missed opportunities.
Tip: Before setting up an entity, ask yourself: is this market a long-term focus for your business, or are you testing its potential? If the latter, consider a more flexible solution.
2. Partnering with recruitment agencies
Recruitment agencies can be a valuable resource for sourcing talent and understanding local hiring practices. Their expertise in identifying and attracting candidates can save your HR team time and effort.
However, their scope is often limited to recruitment. Employment contracts, compliance, payroll, and benefits typically remain your responsibility, adding to the workload of already stretched HR teams. For businesses seeking end-to-end solutions, this approach may fall short.
Tip: Recruitment agencies are a good fit if you have in-house HR capacity to manage contracts and compliance. If not, consider a partner that provides full employment support.
3. Collaborating with an Employer of Record (EOR)
An employer of record (EOR) simplifies international hiring by managing the legal and administrative complexities of employment in foreign markets. The EOR takes responsibility for employment contracts, compliance, payroll, and benefits, allowing you to focus on building and managing your team. Additionally, the EOR model lets you source talent yourself or signposts to vetted recruitment partners in your target markets.
This approach is particularly useful for businesses looking to test a market or hire in multiple regions without committing to setting up legal entities or navigating the complexities of local compliance on their own. It offers flexibility and speed, enabling you to hire within weeks rather than months.
“City Relay expanded their global workforce by 80% with Teamed and can now onboard global hires even within 24 hours —all without requiring additional in-house HR or compliance expertise.” CityRelay
Tip: Use an EOR to scale quickly and test markets without the financial and legal commitment of a local entity. This is ideal for fast-growing businesses.
Considerations for market testing
For many SMBs, the decision to expand into a new market is a test of viability. Setting up a local entity might seem like the ultimate solution, but it’s not always the best move if the market doesn’t deliver the results you expect.
In such cases, partnering with an EOR offers a flexible and faster solution that allows you to dip your toes into a market without the long-term financial and operational commitment of establishing a legal entity.
“Teamed has definitely helped us transform our hiring process. It allows us to cast the net so much further and target talent we know will be beneficial to our business, regardless of where they’re based!” Luganodes
Expert insight
“Launching your own entity can be a complex process with numerous pitfalls,” says Tom, our Co-founder. “Costs can range from thousands to hundreds of thousands of euros, depending on the market, and the timeline can extend from several months to over a year. For stretched teams looking at testing new markets, alternatives like EORs often provide a smarter, more agile solution without adding extra pressure on your teams.”
The actual cost of global hiring
Hiring international talent isn’t just about finding the right skills. It’s about managing the hidden complexities that come with compliance, administration, and employee experience. For already stretched HR and finance teams, these challenges can lead to costly mistakes, inefficiencies, and disengaged employees.
“Thanks to Teamed’s rapid response times and in-depth knowledge, we’ve been able to streamline our onboarding processes and eliminate a lot of the red tape we’d have previously struggled with. Now, we get to enjoy the advantages of a talented global workforce, without the administrative burden!” CT:
Compliance challenges are costly mistakes
Each country has its own labour laws, tax codes, and employment regulations. Missteps, such as misclassifying employees as independent contractors, can lead to significant financial penalties and damage your company’s reputation.
For example:
• In Germany, businesses found guilty of misclassification face fines worth of thousands of Euros to cover backdated taxes, and legal disputes.
• In Italy, non-compliance with labour regulations can result in fines of up to tens of thousands per violation.
Partnering with an Employer of Record (EOR) ensures compliance with local laws from day one, reducing risks and protecting your business.
Tip: Before expanding, review the classification laws in your target market. A partner like an EOR can help you stay compliant and avoid costly errors.
Administrative overload when your team is stretched too thin
Managing multiple payrolls, tax filings, and employment contracts across borders requires significant time and expertise. For HR and finance teams already juggling multiple priorities, this workload can lead to burnout, inefficiencies, and costly errors. According to a survey by EY, 55% of HR professionals in global organisations feel burdened by the complexities of international hiring.
The challenges of administrative overload include:
• Handling unfamiliar tax laws and reporting standards, which can result in delays and fines.
• Correcting payroll errors, which can cost businesses thousands in penalties and time spent resolving issues.
• Navigating complex employment contracts, leaving little capacity for strategic HR initiatives.
Tip: Streamline administrative tasks by working with an EOR. They handle compliance and payroll, reducing pressure on your internal teams.
Employee experience, the link to engagement and performance
Mistakes in payroll or benefits don’t just create financial risks—they directly affect your employees. A missed salary payment or incorrect tax deduction can disrupt lives, leading to disengagement, dissatisfaction, and turnover.
Engaged employees drive business success:
• Companies with highly engaged teams see 21% higher profitability and 17% higher productivity (Gallup).
• Conversely, disengaged employees are 37% more likely to be absent and more likely to leave, increasing turnover costs (Gallup).
An EOR helps ensure a seamless employee experience by managing compliance and payroll accurately. When employees feel valued and supported, they’re more likely to stay engaged, perform better, and contribute to your organisation’s success.
Tip: Prioritise employee experience with accurate, on-time payroll and benefits. Engaged employees are more productive and less likely to leave.
Expert insight
“One of the biggest hidden costs of global hiring is the impact on your team’s bandwidth and focus,” says Tom. “Managing compliance, payroll, and employee experience across multiple countries isn’t just a drain on time — it can lead to an overwhelmed team, and costly, yet avoidable, mistakes. Partnering with an EOR simplifies the process and reduces these risks significantly.”
Conclusion
As you know, global hiring offers immense opportunities for European SMBs looking to access top talent. However, it also comes with challenges that can further strain your already stretched teams and resources. The key to success is understanding your options and partnering with the right support so you can ace global hiring without adding more pressure to your team.
Ready to work with a partner that feels like an extension of your team? Let’s help you simplify global hiring and support your growth.
Speak to us today to learn more. Let's chat!
