Why Small Businesses Should Consider Hiring Global Talent

Remote work isn't reverting. U.S. firms now report 21% of paid days are worked from home—and even return‑to‑office mandates "barely move the needle," according to the latest WFH Research.

At the same time, hiring dynamics are shifting: while 75% of employers struggle to find the talent they need due to talent shortages, 28% of skilled workers now operate as freelancers.

This mix (durable distributed work and persistent skill scarcity) changes the calculus for small businesses. Instead of competing locally for scarce roles, SMBs can access the global talent pool to match skills to projects faster, often at more cost-effective rates.

Hiring international contractors offers wider pipelines, faster onboarding time, and elastic capacity for new initiatives. It also aligns with how businesses are evolving: over the next year, 67% plan more flexible hours, a clear signal that distributed norms are here to stay. With thoughtful scopes, asynchronous workflows, and attention to time zones and compliance, global contracting becomes a practical lever for resilience and growth.

Up next, we'll break down when to use international contractors, the compliance essentials to get right, and how to pay contractors cross‑border efficiently.

The Case for Global Hiring

Hiring remains tight: nearly 7 in 10 companies, or 69% to be exact, still report difficulty recruiting full‑time employees, so SMBs are increasingly widening their search beyond borders to keep projects moving and stay competitive.

The most effective way to expand reach is to go skills‑first. Globally, a skills‑based approach can enlarge the global talent pool by nearly ten times, and international contractors are the fastest way to tap top talent without waiting on entity setup or scarce local supply.

International contractors also improve cost efficiency. On W‑2 hires, employer‑paid employee benefits average 29.5 percent of compensation, and employers owe 7.65% in payroll taxes—burdens that typically don't apply to properly classified contractors. Yes, contractor rates can be higher per hour, but for project-based work or specialized gaps, the fully loaded cost often lands lower.

Speed is another competitive advantage. Traditional time‑to‑fill benchmarks hover around 41 days, while experienced foreign contractors can begin within days—helping SMBs test ideas, reduce backlog, or secure scarce expertise without protracted requisitions.

Taken together—bigger pipelines, lower fixed costs, and faster starts—hiring internationally gives small businesses a flexible, de‑risked way to build momentum now and hire permanently later if and when the role proves out.

Key Takeaways:

  • Global hiring helps SMBs overcome persistent talent shortages by tapping borderless, skills‑first talent pools to gain access to the best talent worldwide.
  • The contractor model reduces total labor burden by avoiding employer‑paid benefits and payroll taxes tied to full-time employees.
  • Faster starts and flexible scopes make international contractors ideal for pilots, backlogs, and hard‑to‑source skills without long hiring cycles.

Contractor rules tightened in the U.S.: the Department of Labor's independent‑contractor final rule took effect on March 11, 2024, raising the bar on how businesses evaluate worker status and misclassification risk.

For SMBs hiring globally, that means classification, tax compliance, and cross‑border controls must be deliberate from day one to avoid costly rework or enforcement and ensure compliance with local labor laws.

At the federal level, classification centers on whether a worker is in business for themselves under a holistic "economic reality" analysis—no single factor controls and the real‑world relationship matters. The IRS evaluates control across behavioral, financial, and relationship dimensions, while the NLRB looks to common‑law principles for organizing rights. Together, these frameworks all emphasize who directs the work, who bears risk, and how integral the work is to the company's mission.

Turn that into process. For U.S. payees, file Form 1099‑NEC when nonemployee compensation reaches $600 in a calendar year, and collect complete taxpayer information to avoid avoidable tax withholding issues. For non‑U.S. individuals performing services in the U.S., withhold income tax at a 30% rate unless a treaty exemption applies (typically via Form 8233); services performed entirely outside the U.S. are generally not subject to U.S. withholding, though you may still need to report and issue the appropriate tax forms for tax purposes.

Zooming out, states and foreign regimes add material misclassification risk. In California, willful misclassification can trigger civil penalties of $5,000–$25,000 per violation; internationally, watch for tax‑nexus triggers, social‑security placement rules, local tax laws, and data‑transfer obligations. Before any cross‑border payment, screen counterparties: OFAC regulations generally prohibit transactions with sanctioned parties, making basic sanctions checks non‑negotiable to stay compliant with tax regulations.

When you standardize classification reviews, get tax reporting and withholding right, and apply sanctions and data‑transfer controls, you can scale global hiring confidently without tripping regulatory wires or violating labor laws in multiple countries.

Key Takeaways:

  • Treat classification as a holistic analysis of control and independence, aligning your engagement terms and day‑to‑day practices to the contractor model to reduce misclassification risk.
  • Build a tax workflow that triggers 1099‑NEC reporting for U.S. payees, applies U.S. withholding rules correctly for non‑U.S. individuals, and captures treaty claims where eligible to meet tax obligations.
  • Layer on risk controls beyond taxes—state penalties, sanctions screening, and cross‑border data safeguards should be part of your global‑hiring checklist to ensure compliance with local regulations.

Cross‑Border Payments: Methods, Costs, and Controls

Speed is improving: on modern bank rails, SWIFT gpi reports that 92% within 24 hours of cross‑border payments are credited to the beneficiary—good news when you're paying international contractors across different time zones.

But costs remain stubborn. The World Bank's latest benchmark shows a 6.4% average cost to send a typical small cross‑border transfer—well above policy targets—so the rail you choose (and how you execute) meaningfully affects margins when you pay contractors.

For SMBs, wires offer reach and traceability but can be pricey: many banks charge a flat outbound fee plus FX margin. For example, Bank of America lists an international outbound $45 wire fee for USD wires, and notes that exchange‑rate markups apply. Fintech alternatives and local‑rail options can lower all‑in costs, while wallets add convenience where account details are hard to collect—so match the method to payment size, frequency, and contractor's preferred currency.

Controls aren't optional. U.S. sanctions rules require screening counterparties—OFAC states that All U.S. persons must comply with its regulations—while the FinCEN Funds "Travel Rule" kicks in at a $3,000 threshold for specific recordkeeping and transmittal requirements. Layer these with strong payee verification and dual approvals to reduce fraud and failed‑payment risk.

Select rails and controls deliberately and you'll pay international contractors faster, spend less on fees/FX, and stay compliant without adding operational drag.

Key Takeaways:

  • Pick the right rail by use case: wires for reach/traceability, local rails/fintechs for lower all‑in cost, and wallets for convenience in hard‑to‑reach corridors.
  • Model true costs by considering flat wire fees, FX markups, and speed/traceability needs before defaulting to your primary bank.
  • Bake in controls including sanctions screening, Travel Rule thresholds, and payee verification to reduce regulatory exposure and failed or fraudulent payouts.

How to Start: An SMB Roadmap to Global Workforce Development

Regulators are moving fast—so should your plan. In May 2025, the U.S. Department of Labor issued Field Assistance Bulletin 2025‑1 clarifying independent‑contractor enforcement posture, a fresh reminder to nail your process before you go global.

Start by deciding your engagement model and documenting status. In the UK, if off‑payroll rules apply, the client is responsible for employment‑status determinations for income tax under IR35. If you hire in Canada, the CRA examines the total relationship using a two‑step approach—use this (and your U.S. rules) to build a consistent screening questionnaire and contract templates that reflect genuine contractor independence on a fixed-term basis.

Then set your tax/reporting basics. For foreign contractors, the sourcing rule is straightforward: the source of earned income is where the services are performed, per IRS Pub. 54. Document foreign status correctly (e.g., W‑8 series) and expect U.S. reporting only when amounts are U.S.‑sourced; separately, remember that true independent contractors and individuals not physically working in the U.S. generally don't require Form I‑9. An employer of record can provide a comprehensive solution to navigate these complexities across different countries.

Add risk gates before you pay contractors. Screen counterparties and pay routes against U.S. sanctions lists—U.S. persons are generally prohibited from engaging in transactions with sanctioned parties, per OFAC notices. If you handle EU personal data, ensure a lawful transfer mechanism and GDPR coverage of your processing footprint; the GDPR applies extraterritorially to organizations offering goods or services to EU data subjects under Article 3. Round out onboarding with IP assignment/confidentiality clauses, basic cybersecurity controls (e.g., MFA, minimum‑access), and a payout method that aligns with contractor preference, career growth opportunities, and corridor costs. Digital collaboration tools can enhance the employee experience for remote workers and help manage time zones effectively.

With a lightweight checklist—status determination, tax docs, sanctions/data checks, secure onboarding time, and the right payout rail—you can start compliantly and scale your global bench without slowing delivery. This approach helps businesses stay ahead of larger companies while accessing international markets and foreign markets with unique strengths.

Key Takeaways:

  • Decide the model first by documenting status using country rules (e.g., UK IR35) and keeping contracts, scopes, and workflows aligned with genuine contractor independence to avoid misclassification risk.
  • Get the tax workflow right by applying the U.S. source‑of‑income rule ("where services are performed") from IRS Pub. 54, and document foreign payees before you report to meet tax laws.
  • Build guardrails into onboarding by running OFAC screens, confirming GDPR coverage for EU data, locking down IP ownership and basic security, and choosing cost‑effective payout rails for international talent.

Make Global Hiring Pay Off—Without the Payroll Headaches

Scaling with global contractors is easier when payroll isn't the blocker. Bitwage gives small businesses a single, secure way to pay teams same day in stablecoins, crypto, or local currency—while keeping reporting clean and compliant. Trusted by 4,500+ companies to pay 90,000+ workers across nearly 200 countries and over $400M processed, Bitwage also streamlines invoices, expenses, and automated accounting, all backed by a 10‑year, zero‑breach security record. This comprehensive solution helps businesses manage their global workforce efficiently while maintaining long-term commitment to top talent.

If you're ready to move from pilot projects to a repeatable global hiring engine, modernize payouts and cut operational drag with Bitwage. Start in minutes and run your next cross‑border payment today—Sign up for Crypto Payroll today or schedule a quick demo to see how stablecoin and local‑currency options can keep your contractors paid on time and your books airtight.