Outsourcing talent overseas can be cheaper and satisfy skills gaps – is a borderless workforce set to be the biggest trend in 2023?

Remote work has become the norm since the pandemic, opening avenues for business founders to consider running their businesses in unconventional ways. More than ever, companies are considering the prospect of having a workforce including employees from across the globe. With a recession looming and firms struggling with retention rates and a skills shortage, is outsourcing talent to other countries a way leaders can solve this issue? Business Leader investigates…

In a recent report by Remote, 62% of leaders and 69% of workers said they expect their remote team to expand within the next five years. More than half of leaders (54%) expect their teams to become more geographically distributed in the same time frame.

A review of Google Trends data further supports the shift in business culture toward a global approach. Searches for ‘global talent” increased by 203% between now and the previous five years. “International hiring” has also observed a surge of 208% since 2020.

By removing geographical barriers and embracing asynchronous work models, it seems more businesses are using remote technology to onboard talent from around the world.

“Businesses are facing two major talent challenges right now: increasing the diversity of their teams and finding enough qualified candidates to fill open roles,” says Nadia Vatalidis, VP of People at Remote.

“However, with remote technology enabling businesses to look overseas for new, more diverse talent, there’s no reason to limit hiring to local areas,” continues Vatalidis.

As the UK continues to face a skills shortage, companies may be tempted to welcome employees based in other countries, especially if they are fully remote already.

Euan Cameron, Director at Willo, feels access to a broader range of talent at a sometimes more affordable price is a main incentive for business owners.

He says: “As people get comfortable with the idea of remote working, there has been a big increase in the number of companies outsourcing talent overseas. In the last year alone, we’ve helped Western and Asian companies – particularly in the Philippines – fill customer service, marketing, sales and graphic design roles with candidates globally.

“The change of culture around working from home has encouraged lots of organisations to come round to the idea, especially as it allows them to access a broader – and sometimes more affordable – range of talent. However, with inflation rates rising globally, the savings companies could make from outsourcing aren’t as great as they once were.”

Outsourcing talent overseas has been particularly prominent in the tech sector. Colin Lamb, Chief Explorer at Connect Three, feels that globalised companies will become more prominent as preferences for remote work grow.

He comments: “Especially within the technology sector we are seeing more start-ups and scale-ups who are recruiting remote-only workers based around the world, rather than recruiting locally. This is for a number of factors, but mainly due to skills shortages domestically and cost savings on physical office spaces. There are many businesses who are now recruiting with the expectation that candidates will prefer to work remotely from anywhere in the world.”

What are some of the benefits?

There are many reasons why a company might adopt borderless recruitment, but some of the main reasons include a cheaper workforce, access to varied talent and higher levels of diversity, which in turn attracts more talent and can lead to innovation.

“The benefits from going borderless are multifaceted,” Gautam Sahgal, CEO at Perkbox comments. “Our research shows that the top three motivations for UK business leaders in the adoption of borderless working are encouraging innovation, building a global workforce and accessing a wider talent pool.”

The UK is currently in a skills shortage, with over half of UK businesses reporting they are currently facing a battle to find the right talent for their business. Therefore, access to a wider talent pool seems to be a significant motivation for businesses to go global with their workforce.

Cameron comments: “The main benefit, particularly for us, is access to a larger pool of talent. For example, the UK has about 67 million people in it, but a huge proportion of them aren’t of working age, or they’re maybe not skilled in the areas employers need. Therefore, if companies go overseas, they can actually find people with the skills they’re looking for and will likely have a more diverse team, too.”

The prospect of a cheaper workforce with the same level of talent is a tempting prospect to some business leaders, especially as founders buckle up for a recession and continued economic uncertainty. In a recent study, it was also found that companies with greater diversity are 70% more likely to capture more markets and 35% more likely to experience greater financial returns than non-diverse companies.

Sahgal feels a diverse workforce can also lead to better success if a company decided to expand overseas. He says: “The knock-on effect of going borderless is that businesses can attract a more diverse and inclusive workforce as they are no longer constrained by the physical commute to the office or the disability facilities already in place. As we already know, businesses that prioritise D&I are more likely to attract talent and have greater levels of productivity and innovation.

“What’s more, when businesses look to break into new regions, having ready access to staff on the ground who understand the in-market landscape and culture ensures even greater chances of success.”

What are some of the challenges involved in a borderless workforce?

Despite the obvious positive impact of a more diverse team, having a team with different perspectives, values and from different cultures may bring about unexpected challenges.

Sahgal comments: “One of the main challenges businesses will face is aligning a diverse and distributed workforce to the same unified purpose and culture. How do we encourage this wide group of people, from different backgrounds and with different perspectives, to believe in the same thing — the company mission and purpose?

“Whereas previously, this may only have been a challenge for your super large multinationals — now it’s a challenge for all businesses. In a borderless world, business leaders need to ensure that employee experience becomes a central pillar around which company culture is built and communicated. Doing so relies on ensuring people feel valued and part of something bigger than themselves and their role. This is where having a holistic rewards and recognition offering really comes into its own.

“Measures such as enabling peer-to-peer recognition increase awareness and acknowledgement of good work and better engagement with colleagues in the future. What’s more, managers can recognise behaviour that aligns with company values. This not only helps employees feel valued, but it increases the chances of those behaviours being replicated by other employees, across locations.”

Debates around productivity in relation to remote working have been alive and kicking since the pandemic. An increase in borderless companies could have the effect of lower productivity rates. Cameron feels global companies could pose issues for businesses with deep-entrenched cultures. He explains: “A lot of businesses face challenges around motivation and productivity. Sales-driven businesses in particular will struggle, especially if they were used to an in-person culture before.

“Companies that have been around for more than ten years will struggle the most, as they have deep-rooted cultures that exist around being in the office physically, whereas younger companies will be more adaptable. Their expectations and boundaries are already set and the channels of communication are already figured out. There are also challenges around pay and taxation. At Willo, we overcome that by paying our staff the same rate depending on their job role.”

Despite this, borderless recruitment may offer more benefits than not. Lamb feels this is particularly true for the tech sector where there is an ongoing skills shortage. Outsourcing talent may offer a solution to this and bolster the government’s ambitions to make the UK “the next Silicon Valley.”

Lamb explains: “The benefits definitely outweigh the challenges for some industries, especially the tech sector where sourcing international talent could really be a driver for growth. As well as reducing costs around physical infrastructure, fully-remote jobs allow for flexibility, meaning an employee could theoretically carry out their tasks while lying on the beach, rather than being confined to sitting in an office within a traditional 9-5 workplace. Of course, that helps boost job satisfaction and, in turn, increases productivity.”

But remote work in general has seen some criticism from many employers. For example, James Dyson, the Founder of Dyson has condemned working from home as “economically illiterate and staggeringly self-defeating” and condemned government plans to extend employees’ rights to work from home, saying the move would “hamper employers’ ability to organise their workforce.”

Additionally, Spotify reported a stark decrease in revenue earlier this year as a result of them introducing a ‘work from anywhere’ policy in early 2021, which caused 6% of workers to move, illustrating the potential negative business consequences borderless recruitment could have.

How will this impact domestic job markets?

Borderless workforces could negatively impact domestic businesses and economies too. If companies are investing their money in talent abroad, that money is going outside of the UK and could lead to a drop in the nurturing of domestic skills.

Lamb comments: “There’s no doubt this style of working will make a big impact on the domestic jobs market. We risk excluding home-grown talent, all the way from graduate to senior level, which could lead to career changes because of a lack of opportunities. As a result, we could see a deeper divide develop between “remote” industries and those where employees are required to make or produce physical items in local communities.”

Despite this, Cameron feels this could have the effect of forcing UK workers to upskill to stay relevant to companies.

He comments: “It will certainly force candidates to improve and upskill where they can. For example, a customer support specialist in the UK may outsource tech support from another country as a means of finding candidates that may be more skilled or affordable.

“That will mean candidates in the UK will be more likely to invest in their own development, or they could risk entering employment at a lower skill and wage level. But there are lots of opportunities to change the way we do things, and by taking time to invest in skills development, then we can nurture the domestic workforce of tomorrow.”

The current job market and skills shortage illustrate the employee-driven environment companies are living in. Sahgal thinks that companies can look to talent abroad to attract talent domestically.

He says: “The fact is the current job market is extremely competitive in many of the core markets in the aftermath of the pandemic. Whatever the workplace trend – the Great Resignation, The Great Reassessment or Quiet Quitting – one fundamental thread passes through all of them in that employees hold the power. This means that businesses need the right policies in place to attract, motivate and retain the best talent. Ultimately, they need to consider adopting a more international, diverse and flexible approach to talent retention and acquisition.”

Outsourcing talent to other countries could be the solution to a national skills shortage and expensive talent. It can have the positive effects of higher productivity, lower costs, and more diversity, which could lead to attracting talent and innovation. Despite this, higher levels of diversity and a team that never meets in person can cause a lack of understanding of a company’s objective and lower levels of productivity. Whether this phenomenon will catch on in 2023, we will have to wait and see.