For founders ready to scale – from the first serious funding round through to rapid growth – hiring across the region has gone from experiment to smart strategy.
Before jumping in with both feet, though, there’s a structural decision to make for every hire: contractor or employee.
Get it right and you can build a distributed team quickly and compliantly. Get it wrong and you may be risking fines, backpay claims and potential intellectual property disputes.
SmartCompany dived into Deel’s Global Expansion Strategy: A Guide to Building an International Workforce guide and spoke to Ilana Elbaz, head of international sales at Deel, to get more clarity.
Southeast Asia, India and Japan have deep pools of skilled and well-trained talent that global tech recruiting has largely overlooked, and competition for candidates in those markets is lighter than in Australia’s capital cities. The cost case is compelling too.
“Larger markets naturally mean more people to choose from for every role,” Elbaz tells SmartCompany. In a tight labour market, competing for talent leads to compromise in order to sign a good candidate rather than risk waiting for a really strong one.”
The catch is that every market has its own contractor laws on how workers can be engaged – and that is where the contractor versus employee question begins.
The primary benefit of contractors is that they offer speed and flexibility. There is little setup involved, no local company to register and engagements can scale up or down with the work. That makes contractors well suited to project-based roles with a defined end point, like a product launch, a design sprint or a market test.
The trade-off for that is control. Contractors run their own working arrangements, and directing too much of their day-to-day work can tip your relationship into employee territory in the eyes of local law – what regulators call misclassification.
Hiring employees is best suited to core, ongoing roles. They can be managed directly, offered the same benefits as their local peers and built into the team for the long term. The cost is a slower legal setup and a potentially higher ongoing spend, particularly if the hire means registering a company in that country.
“Depending on the market, the paperwork to register a company alone can take up to four months,” says Elbaz.
Both paths carry costs that may not be immediately obvious. For contractors, that means questions over tax status, ownership of the work they produce and the risk of misclassification. For employees, it means company registration, local payroll and legally required benefits.
Vietnam, the Philippines, India and Singapore each treat contractors differently, with their own rules on classification, tax and payroll. A playbook that works in one market will not transfer cleanly across the entire region.
If you’re a time-poor founder, it can be tempting to hire first and sort out the paperwork later – but that approach can cause headaches down the line.
“Worker misclassification – treating people as contractors when local laws say they are employees – is among the most common compliance risks in global hiring,” says Elbaz. “Get caught, and the consequences can include fines and backpay, not to mention reputational damage.”
Treated properly, compliance doesn’t have to be a handbrake – and it helps to avoid the more expensive process of unwinding mistakes later.
Start by classifying every role before you recruit: employee through your own registered company, employee through an employer of record (EOR), or contractor.
An EOR is a provider that legally employs staff on your behalf in countries where you have no company set up, handling compliant contracts, payroll and benefits, and carrying responsibility for compliance penalties as the legal employer.
“Hiring through an EOR lets companies onboard local talent in days, rather than the months it can take to register a company,” says Elbaz.
It’s a route many Australian companies have already taken.
Sydney-founded drinks business Lyre’s used an EOR to hire key staff in markets where it had no registered company, helping it build its non-alcoholic spirits brand into 65 countries within a few years of launching.
In Deel’s Global Expansion Strategy guide, Lyre’s co-founder Carl Hartmann says hiring a great candidate in a country without a local entity “can take more than six months and the candidate is already gone by then”.
“Solving that challenge is what attracted us to Deel,” Hartmann says.
For businesses keen to take similar steps globally, it’s important to build a compliance checklist for each market covering tax registration, employment agreements and local benefits. Standardise your contracts and payroll across regions rather than improvising country by country.
If you already have people working for you in APAC, audit those arrangements now for misclassification risk.
Deel’s Global Expansion Strategy guide, developed with its in-house network of legal, HR and employment experts, includes a step-by-step expansion framework, a breakdown comparison of registering a company versus hiring through an EOR, and a full international expansion checklist. Download it free here.
Carolyn Tate is a journalist and brand storyteller with a fascination for big ideas and the people behind them. She likes to find the human stories at the heart of brands and businesses, and has worked across global brands, government and the not-for-profit sector, including Amazon, PepsiCo, the Australian Government, Cancer Council and Medibank. Carolyn enjoys asking unexpected questions and following the rabbit holes they lead to.
