location strategy – Talent500 Blog

8 Steps to a profitable location and talent strategy

Posted on April 5, 2022 by shanthamurthy

An organization’s success depends on many factors, but the two most important are location and talent. The location of an organization is critical to ensure profitable business and to attract employees. Retaining talent is the next priority to maintain a competitive advantage, making talent strategy as important as location strategy.

Simply put, talent strategy entails a comprehensive plan to structure a company’s hiring, retaining, and development policies for sustainable growth of the employees. The workforce is a valuable asset which is why in today’s fast-paced environment, a company’s focus must not only be on hiring the right people for present requirements but also for skills that they might need in the future. This is where talent planning comes in. It can help keep a company’s momentum, giving them an edge over competitors.

Let’s get into the fundamentals of strategy setup that will help in building the foundation of your organization.

1. Discover the best location

A profitable location strategy means more than just where to locate the offices and employees. It also encompasses extensive market analysis and uses labor data to understand the cost, availability, and sustainability of labor. This is why companies need to locate venues that have talent supply appropriate to goals.

2. Real-time data

Having ambiguous datasets doesn’t serve a purpose. In order to determine the ideal location to set up a business in, it requires accurate datasets that will help in understanding the market, improve customer satisfaction, and monitor competitors. This is why companies must focus on getting real-time data to improve the performance in the long run, rather than relying on passive information.

3. Plan ahead

Successful businesses never aim for immediate success but for life-long sustainability. A company’s location strategy must be based on how they aim to progress over the next 10-20 years. This helps reduce operating costs and avoids price shocks. A specified business location decided after planning, shields companies against factors like natural hazards, security threats, and incompatible government policies.

4. Talent analytics

According to a Deloitte report, only 4% of companies use predictive talent analytics capabilities to manage talent, and just 14% of companies implement any sort of talent analytics program. Implementing a talent analytics program is important to analyze the talent your company already has but more importantly, it can help identify skills gaps.

5. Pay attention to critical hiring needs

To ensure that a company’s future goals are not stalled due to open positions, initiate conversations with hiring managers to know about key positions in their departments that might be open soon due to retirements or resignations. Once companies are aware of the need, they can create a hiring plan to attract the right talent by assessing the future skills gaps, budget, and recruitment process.

7. Develop an employees capabilities

True talent planning requires a strategy that focuses on the development of every staff member. It is the company’s responsibility to provide employees with learning and mentoring opportunities. As long as employees can envision a clear career pathway in the company, they are more likely to stay. Additionally, reskilling can help fill departmental gaps without the need to hire externally.

8. Work on retention strategies

Hiring good talent is hard, but retaining them is even harder. Retaining talent is about showing them that they have a clear career path in your company, that they are actively contributing to the overall objectives, and their opinions and concerns are acknowledged and addressed. Employee surveys can help you identify issues and deal with them before the retention numbers start dropping.

Talent500 has helped some of the biggest brands with skill gap management by connecting them to location-independent professionals. To know more, request a consultation online.

5 compliance mistakes to avoid when building your global team

Posted on March 9, 2022March 9, 2022 by shanthamurthy

Global expansion is a tangible milestone in the growth trajectory of every company. In the last couple of years, we have seen a massive increase in the opportunities for location-independent work opportunities. As a result, businesses have been leveraging the multiple benefits of having a global team.

However, hiring across borders comes with its own set of caveats. When it comes to employment, every country has its own set of laws which must be followed strictly. Considering different technical hubs in order to build your location strategy? Don’t forget to factor in the time, cost, effort and expertise required to fulfil legal requirements in a foreign country.

Here are five areas of compliance that must be fully vetted before you start rolling out offer letters:

Taxation laws

When hiring in a new country, ensuring compliance with its tax regime is non negotiable. We know that Income tax is a common deduction across all nations. However, the percentage can differ anywhere between 5% to 40%, depending on the country’s laws. In addition to this, there are multiple other allied taxes that employers must take into account when calculating compensation.

For example, employers in Brazil are responsible for paying a portion of employees’ social security and unemployment tax. In Germany, employers pay taxes toward employees’ social security (unemployment, accidental and health care insurance).

Misclassifying your employees

Many companies prefer hiring independent contractors as compared to full-time employees, as it restricts their employer responsibilities substantially. Full time employees are generally entitled to a host of benefits like pension fund, health insurance, paid time off etc. On the other hand, these benefits are not usually provided to contractors. Due to this reason, many companies choose to intentionally misclassify their full time or part time employees as contractors on their payrolls.

However, this is one mistake that you must avoid at all costs, as this can result in hefty fines and significant legal consequences. For example, in the USA, the punishment for misclassification is $1000 and imprisonment for a year. In Japan and the U.K., employees with a fixed-term contract automatically become permanent employees after a certain amount of time.

Not offering statutory entitlements and benefits

While every company can decide what perks and benefits it wants to offer, there are certain basic benefits that all employees are entitled to. These range from employer’s contributions to pension funds, to health insurance, maternity leaves and many other similar aspects. In India, all female employees are entitled to a minimum of 12 weeks of maternity leave. In France, it is illegal to ask your employees to work over weekends under the Right to Disconnect law.

There is no one-size fits all solution when it comes to identifying employee entitlements and benefits. Our advice? Draft your policies in a way that is aligned with statutory requirements of individual countries.

Violating minimum wage/ compensation laws

We understand that one of the biggest benefits of hiring globally is getting access to highly qualified talent with affordable compensation. However, as you set about calculating compensation for employees living in a different country, you must factor in minimum wage laws.

All over the world, over 193 countries have a list of their own minimum wages that must be complied with. India has over 1200 different classifications of minimum wage. The USA has a minimum wage for each state, as well as the federal minimum wage. What remains uniform is the strict penalty dealt out to businesses that fail to comply with these regulations. In Japan, the fine for non-compliance can go up to 500,000 Yen.

Not meeting immigration, visa or work permit requirements

When working globally, you will often have to bring foreing nationals into your home country, or send employees to a different third country. In all such cases, you must ensure compliance with all immigration and work visa requirements.

Some countries on the top of this list are the USA, Canada and most European countries. Individuals on a tourist or dependent visa will not be allowed to work in these countries. Moreover, non-compliance with immigration, visa and work permit laws can lead directly to deportation of the employee. For the employer, it could mean heavy penalisation and black-listing of the company.

A global team is the solution to numerous problems, from the lack of specialised talent, to the ease of entering into any country’s local market. As you build your global team, it is important to prioritise these five factors for a seamless hiring process.

At Talent500, we are helping global companies hire, build and manage global teams in 30+ countries by acting as their Employers of Record. We aim to transform high-impact companies by giving them access to a worldwide community of highly skilled professionals transcending geographical boundaries. Sign up here to take your first step towards global expansion!

Compensation and Benefits across top 4 talent hubs

Posted on March 2, 2022March 2, 2022 by temp

87% of companies worldwide say that they have a skill gap, or expect to have a skill gap over the next few years. The logical solution to this problem? Building globally distributed teams.

In the last few years, rapidly expanding businesses have leveraged the multiple benefits of recruiting across geographies. In order to assist you with your location strategy, we look at the top 4 emerging technical hubs globally and compare the essential hiring considerations.

Poland

Often referred to as the “Silicon Valley of Europe”, Poland is one of the fastest growing technical hubs in the world. Poland’s robust educational system, focusing on core mathematics, science, and engineering knowledge is the perfect recipe for highly skilled tech talent.

Another favourable factor is the country’s strong startup ecosystem. With over 37 tech parks, a strong business infrastructure, and equality supportive governmental policies, Poland has become the most desired hiring location for numerous businesses.

Terms of contract

An employment contract should be concluded in writing. Otherwise, the parties, contract type, and terms and conditions must be confirmed by the employer in writing at the latest on the work commencement date. According to the country’s labour code, the contract must specify:

Parties to the employment contract
Employment contract execution date
Type of employment contract
Work commencement date
Type of work
Place of work
Remuneration for work corresponding to its type, and a list of the remuneration components
Working hours (full-time or part-time)
Holiday entitlement
Notice period
Place, date and time of remuneration payment
The procedures for confirming arrival and presence at work and justifying absence from work

Working hours

The number of working hours cannot exceed 8 hours a day and an average of 40 hours per week in an average five-day working week. Under certain conditions, daily working hours can be extended and balanced by shorter daily working time on other days or by days off.
As a rule, overtime must not exceed 150 hours per employee in any calendar year. However, a collective work agreement, work rules or, in the absence of these, an employment contract, can provide for a higher overtime limit. In this case, employees’ weekly working hours, including overtime, cannot exceed an average of 48 hours a week.

Minimum wage

The minimum monthly wage in Poland is PLN 2,600 (EUR 585) to PLN 2,800 (EUR 630).

Benefits

Mandatory employee benefits in Poland include pension (PPK), social insurance, and occupational medicine (OM). Supplementary employee benefits in Poland include private medical insurance, life insurance and business travel insurance.

Pension
Since 2019, pension is mandatory for all employers in Poland. The new law is called Employee Capital Plan (PPK) and was introduced by The Polish Government to increase savings of the local nationals.

Social security
In Poland, social security consists of pension insurance, disability insurance, accident insurance, labour fund and sickness insurance. Both the employer and the employee are obligated to contribute to the Polish social security system. The employer is obligated to withhold the employee‘s share of the social security contributions and remit them to the Social Security Authorities (ZUS).

Occupation Medicine

Every employer is obligated to conduct occupation medicine examinations for their employees. It involves tests to determine an employee’s individual predispositions to work in a specific position under certain conditions. In this regard, account is taken of any harmful and onerous factors in a given working environment.

Leave policy

Public holidays – 13
Annual vacation – 20 days (for employees with less than 10 years of experience) and 26 days (for employees with over 10 years of experience.)
Sick leave – 33 days for employees under 50, 14 days for employees over 50. Employers must pay their sick employees at least 80 percent of their remuneration for a certain number of days before the Polish Social Security Office (ZUS) takes over.

India

With over 340 million people having access to the internet, India is the second most connected country after China. The city of Bengaluru and the surrounding state of Karnataka is also the world’s 4th largest technology and innovation cluster, and home to more than 400+ global R & D centers. Out of 25 Fortune 500 retailers, about 10 have set up technology shops in India in the form of GCCs or global capability centers. According to Nasscom, the number of GCCs in the country is expected to grow at a CAGR of 6-7 percent to over 1,900 by 2025.

India’s universal digital literacy and deep internet penetration play a huge role in making it a highly accessible tech market. With 3.1 million students entering the workforce annually, the country’s sheer numbers give it a definite advantage. Along with the tech hubs of Bangalore and Hyderabad, India is now extracting the tech potential of tier 2 and 4 cities like Indore, Vadodara and Kochi, among others.

Employment contracts

Labour law and employment in India requires the work relationship to be based on an employment contract. When recruiting or hiring contract must include all relevant details such as:

The identities of the parties
The date of contract and commencement of work
Term of work
Roles and responsibilities
Salary
Working hours
Holidays
Termination details

Working hours

The average work week in India varies between 40 to 48 hours, depending on whether its a 5 day or 6 day week. Overtime is paid at double the rate of the normal pay.

Minimum Wages

India offers the most competitive labour costs in Asia, with the national-level minimum wage at around INR 176 (US$2.80) per day, which works out to INR 4,576 (US$62) per month. However, specific minimum wages vary on the basis of industry and geographical location.

Leave policy

Public holidays – 3
Vacation days – 15 paid annual vacation days. A maximum of 30 vacation days can be carried over to the next year.
Sick leave – 15 paid sick leave days a year and receive 70% of their average daily wage.
Maternity leave – 26 weeks paid leave, or 12 weeks paid leave in case of 3 or more children.
Parental leave – No mandatory leave, government employees receive 15 days.
Casual leave: provided for urgent and unexpected matters. Casual leaves can typically range from 12 to 24 days annually.
Work-related injury leave: Work injury benefits come from the contributions made towards the employees’ compensation and employees state insurance. Temporarily disabled workers receive 50% compensation monthly.

Benefits

Employee Provident Fund: The EPF scheme aims to build a sufficient retirement corpus for an individual. For every company with over 20 employees, employers need to contribute 12% of the employees’ basic salary.

Gratuity: All employees engaged in establishments with over 10 employees, having rendered continuous service for not less than 5 years (except in the case of death or disability) receive a gratuity payment from their employer at superannuation, retirement or resignation, or death or disablement. Gratuity is calculated at 15 days’ wages multiplied by the number of years of service.

Vietnam

At around 20%, Vietnam has the distinction of being one of the few countries to channel the biggest share of government spending in the education sector, which towers over the global average of 14%. Vietnam also gives out supporting policies, tax incentives, and favourable laws, creating an ideal environment for hiring your global team.

Let’s take a look at the specifics:

Employment contracts

Employment contracts in Vietnam are either for an indefinite period, for 12 to 36 months, or fixed term contracts, for less than 12 months. An employment contract should include key terms of the employment relationship including:

Name and address of employer
Name, address, date of birth of employee
Description of job and working address
Time frame of the contract
Salary, payment type, date of payment, allowances and other benefits
Promotion and salary review system
Working hours and vacation
Details of social and medical insurance

Working hours

The standard work week in Vietnam consists of up to 8 hours per day, 48 hours per week.
Overtime cannot exceed 50% of regular working hours per day, 30 hours per month and a total of 200 hours per year. In special cases regulated by the government, the yearly maximum can be increased to 300 hours per year. Pregnant women who are in their 7th month or later or women with babies under a year old are not permitted to work overtime.
Overtime pay:
- The employee is paid 150% of salary on normal working days
- The employee is paid 200% of salary on scheduled days off
- The employee is paid 300% of salary on public holidays

Minimum Wage

Minimum wage in Vietnam is divided into the following categories:

Common minimum wage – VND 1,490,000 (~US$64) This is used to calculate salaries for employees in state-owned organizations and enterprises, as well as to calculate the social contribution for all enterprises.
Regional minimum wage – used for employees in all non-state enterprises based on zones as defined by the government. Divided across 4 regions, this can range between VND 2,920,000 (US$ 125) to VND 4,180,000 (US$180).

Benefits

Vietnam has the standard requirements when it comes to employee benefits – employers need to provide compulsory social, health, and unemployment insurance. Employers usually withhold employees’ contributions from their salary and directly transfer them to insurance companies.

Companies with more than ten employees should make a mandatory contribution to unemployment insurance. Foreign nationals with local employment contracts have mandatory contributions only towards health insurance.

Social Insurance – 17.5 % (Including accident, retirement, sickness & maternity and gratuity contributions.)
Health Insurance – 3%
Unemployment Insurance – 1.00%

Additional benefits

Some employers provide a 13th-month salary as a bonus. Others provide additional days of leave per year, and even private health insurance.

Paid time off

Public holidays – 16
Annual leave – 12 vacation days of leave per year.
Sick leave – 30 days (if they have paid the Social Insurance Fund for less than 15 years) and 60 days (if they have paid more than 30 years to the Fund). Employees are entitled to 75% of their salary for sick leave pay.
Maternity leave – paid maternity leave for 6 months, which increased by 1 month for each additional child. Employees receive 100% of their regular salary, paid by the Social Insurance Authority. Salary during the maternity leave period is capped at VND 29,800,000.
Paternity leave – can range from 5 to 14 days. New fathers receive 100% of their regular salary paid by the Social Insurance Authority.
Other leave – employees can take 2-3 days of paid leave in the event of a wedding, or a death in the family.

Indonesia

The past few years has seen Indonesia emerging as one of the biggest tech giants of Southeast Asia. The country offers great potential for entrepreneurs who need excellent tech talent, a supportive tech ecosystem to build their remote teams, and accelerated market penetration.

Employment contracts

Employment contracts can be either for a fixed term or of an unspecified duration (usually limited to 2 years, after which they must be renewed).

Fixed-term employment contracts must be written in Bahasa, the official language of Indonesia. If not in writing, fixed-term employment contracts are deemed indefinite-term employment contracts.

All employment contracts should specify:

Job responsibilities
Salary in Indonesia Rupiah (Rp)
Benefits
Rules around termination

Working hours

The average work week is 40 hours, which can be divided over 5 or 6 days.
Any work beyond the 40 hours in a week is considered overtime. An employee can perform overtime work for a maximum of 4 hours per day and 18 hours per week.

Leave policies

Public holidays – 16
Annual leave -12. All employees are entitled to an off on ‘Cuti Bersama, intended to encourage domestic tourism
Sick leave – no specific number. As per Indonesian law, Employees receive the following sick leave allowance if they provide medical confirmation:
- Full salary for the first 4 months of sick leave.
- 75% salary for the next 4 months
- 50% salary for the 4 months following
- 25 % thereafter until the employer terminates the employee contract

Maternity leave – 3 months of maternity leave ( employees receive their full salary during this period.)
Parental leave – Employees are entitled to 2 days of parental leave for marriage, death, baptism and circumcision.
Menstrual leave – Female employees can take leave on the first and second days of menstruation.

Minimum wage

The minimum wage varies from region to region and ranges from IDR 1,798,979 (USD 123.85) in Central Java to IDR 4,416,186 (USD 304.04) in DKI Jakarta. Find a detailed list of region wise minimum wages here.

Benefits

Health Insurance: With rising health costs, health insurance is the most attractive employee benefit in indonesia. Employers contribute the following percentages for employee insurance:

Health Insurance – 4.00%
Old Age – 3.70%
Pension – 2.00%
Death – 0.30%
Work Accident – 0.24% – 1.74%

Additional benefits

Employees receive a yearly payment called the Tunjangan Hari Raya (THR) payment, before their longest religious holiday. THR is a one-time salary for employees who have been with the company for 12 months. If the employee has been working at the company for less than 12 months, they receive an amount proportional to the length of their employment.

Thinking about building your global team? Take the first step towards building your distributed workforce with Talent500. Our team of experts and network of highly skilled professionals help you build your global team in over 50 countries. Ready to take the first step? Set up a consultation with our team here.