Creating a Successful Management Strategy When Collaborating with Overseas Contractors

Creating a Successful Management Strategy When Collaborating with Overseas Contractors

A growing number of domestic businesses are outsourcing services to talented contractors overseas. According to the most recent estimates, there are 14 million nonresident contractors getting compensated for work in the United States.

There are numerous benefits of hiring nonresident contractors. They can often be employed much more cheaply, since many of them live in regions with lower costs of living. The cost of living in India, for example, is 41% lower than in the United States, so you can feasibly hire equally skilled contractors for around half the price.  They also have unique perspectives and skill sets that may not be common among United States workers.

On the other hand, you are going to need to deal with some challenges as well. Working with nonresident contractors can be a difficult learning curve. However, things will go much more smoothly and they can be invaluable asset once you understand the steps that you need to take.

Here are some things to keep in mind.

Understand taxation requirements for nonresident contractors

Dealing with tax challenges is one of the biggest issues of working with nonresident aliens. Too many businesses believe that foreign contractors are exempt from paying federal income taxes. However, that is certainly not the case.

The IRS has a page on hiring contractors from other countries. The IRS points out that most income derived from US passive income sources such as dividends and interest must be taxed at a flat rate of 30%. Wage income must be taxed at the same rate as domestic employees. They are also required to file a federal income tax on this money, unless they are exempted from doing self under treaties between the United States and their country of residence.

You will need to familiarize yourself with the countries that are expected to file taxes with United States. If an employee lives in an area that is not exempted from the filing requirement, you will need to issue a 1040NR-EZ.

Try to overcome any language barriers

You will want to hire contractors that are fluent in English. However, even foreign employees that speak English fluently are going to have some difficulties with contextual meanings. This can even happen with people that speak other variations of English. Contractors in the United Kingdom and Australia often have misunderstandings with their colleagues in the United States that try to communicate with them in English, because the slang terms are often very different.

There are a few things that you need to do to resolve these misunderstandings:

·         Try to minimize slang terms and figments of speech that may not be coming to non-native speakers. This includes talking to English speaking contractors in the UK and other parts of the world where English is the native language.

·         Make sure that employees have access to tools that help them with grammar issues. EnglishSoftware.org is one great tool to try.

·         Carefully observe their work and see how closely they are following instructions. If they seem to be doing steps in correctly, then you may need to double check what you said. You may have phrased your instructions in a way that was misunderstood.

You should be able to have a smooth working relationship with contractors that have some proficiency in English. You just need to take the steps to address any difficulties.

Be wary of regional censorship issues

Some countries have much stricter censorship laws than others. You are going to need to be familiar with them. If a contractor lives in an area with stricter censorship issues, you are going to need to understand the limitations of their Internet capabilities. You might need to either help them use a VPN to get around them or delegate those types of tasks to other workers familiar with them.

If a contractor lives in an area with stricter censorship issues, you’re going to need to understand the limitations of their Internet capabilities. You might need to either help them use a VPN to get around them or delegate those types of tasks to other workers that are not subject to those draconian assaults on speech.

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