Article by Louis B Calamaras
Image courtesy of www.gtci2017.com
Accessing Global Talent Quickly Causes Misconceptions
“We assumed cutting the contractors a check out of our internal AP was most efficient and compliant route,” said the Contingent Workforce Program Manager.
This is a typical response I often hear, however this time was different. This situation called for speed as the company recently laid off 1000 Full-Time IT workers, a small chunk of the 10% workforce downgrade due to corporate restructuring. The speed is due to the 3 dozen IT projects that still need completion before Q1 begins and the sense of urgency called for a massive IT Staff Augmentation strategy that required contractors beginning work in 2 weeks’ time.
On the Talent Acquisition side, all their eggs were in one basket. Internal staffing, external suppliers, talent acquisition marketing, consulting firms, and on-demand talent platforms were all placed on high-alert for this specific IT skillset to replace the laid off IT talent. Within 2 weeks 750 contractors were assembled from all the strategies collectively, secured, and their projects were now starting to take shape. That was until a contingent workforce program manager discovered that 22 contractors possessing data migration skills crucial to the main project were located in Singapore. Upon fact-checking, this program manager realized the company did not have a legal entity in Singapore nor capability for conversion from USD to local currency. And now the international contingent workforce world opened up to this program manager!
“I understand that maybe the local government will have concern but the contractor prefers to be paid in USD,” said the same program manager.
“Well of course the contractor prefers it,” I answer. “They stand to make more money when converting the USD to their own currency and not reporting all the income, placing your corporation at risk for not only reporting this worker’s revenue non-compliantly, but also not classifying properly as Singapore requires workers with special skills to be labeled as a full-time contractors.”
“Full time contractor, tell me more.”
The United States is blessed to have defined work-force classifications for those who choose a freelancer lifestyle. Those classifications have easy accessed definitions through the IRS. On the flip side, the majority of the countries outside of the US, contractors are treated the same as their fellow employed workers, unless repetitive vetting guarantees a contractor is deemed self-employed but hardly the case. This simple reasoning is socialized pensions and medical benefits are accessed to all who live in a country and abide by its laws. It is a universal system that is different from the US method of paying workers, however has to be taking seriously when paying global workers. That is why a trusted partner such as CXC Global should be deployed to ensure proper payment through an in-country legal entity with currency conversion best practices.
The conclusion of the story is this program manager took the time to reach out and ask global questions instead of comparing international project-based workers to their counterparts in the US. In addition, this program manager cared enough to realize that the human element behind the project is not a commodity but rather a citizen of a foreign country. This foreign national relies on taxes to support in-country resources, infrastructure, retirement for all, and medical coverage.
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