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- What Even Is A Strategic Location?
Hello,
it’s Ben from Zabota.
In today’s newsletter, we’re going to go over:
Strategic Locations - What They Are & Why They Matter
A client win
Some great twitter posts and content about hiring
Strategic Locations:
It’s not about hiring the cheapest employees that helps you scale, but sourcing talent that’s actually good from strategic locations. Typically people want to outsource to the cheapest 3rd world country available and then they wonder why they are not successful.
A person who makes $3 an hour is not going to run your company for you.
By no means is this a hit piece on places like The Philippines and India, they have their time and place, but if everyone is hiring from there how can you expect to have a competitive advantage when it comes to talent?
Instead you should hire talent from Strategic Locations.
What is a Strategic Location you ask?
A Strategic Location is a talent pool where ALL of the following are true:
A. Talent is cheaper than surrounding countries
B. Taxes are favorable for the talent
C. English level is higher than surrounding countries
D. Time zones are favorable
job description is one of the most important parts of the recruitment process. Too many people just throw a list of responsibilities into Chat GPT and then post on a job site. In order to really get the candidates you want you need to write words that get them to take action and apply.
Explanation on A - Talent is cheaper than surrounding countries:
We want to find places where the talent is economically attractive for us to hire from. If we are going to pay $5k a month for an in person employee and $5k a month for a remote employee in a foreign country it doesn’t quite make sense to hire out of country. But, if the remote employee is $2k a month and is the same quality or better than the in person employee, you should hire the remote employee every single time.
Explanation on B - Taxes are favorable for the talent:
One of the nice things about running a company in the United States is when we hire talent as independent contractors in a foreign country we do not need to deal with special taxation and complicated accounting on our end. The independent contractor is responsible for the taxes and laws in their own jurisdiction or locale.
That being said, no two countries are the same when it comes to taxation. For example, if you want to hire an independent contractor in Germany, the independent contractor will pay 15% to 45% in taxes. If your suggested wages do not allow for this extra expense then it is a lot harder to be competitive on wages and attract talent.
Instead if you hire a similarly skilled contractor from Montenegro the contractor will only be paying 9% to 15% tax. making it much easier to attract competent Talent at an attractive rate, not to mention the 50% cheaper cost of living in Montenegro
Explanation on C - English level is higher than surrounding countries:
This one is quite obvious: we need to hire from places with strong education systems when it comes to the English language in order to minimize the communication barrier between our independent contractor and our company.
Looking for talent in a place with poor English will make it 10 times harder to find the right type of person we need.
Explanation on D - Time zones are favorable:
The workflow and hours of operations of your company will determine what countries are viable options to hire from. There are four separate time zones in Europe. even just being an extra few hours ahead can affect day-to-day work operations and the length that an independent contractor stays working at your company. Very few individuals want to work until 2:00 or 3:00 a.m. in the morning and if they do they will request significantly higher compensation. If your company is based in Pacific Time or Mountain Time it can be more advantageous to hire from Latin America where your new team members can be just one or two hours ahead or even in the same time zone.
See how an automation company saved $126k+ with a no code developer hire
How We Can Help
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Chat soon,
Ben