Should You Consider Hiring an Offshore Finance Team? Pros, Cons, & Tips for Making It Work

Reduced overhead, round-the-clock operations, and simplified hiring. 

These are just a few of the many reasons why businesses are jumping into the offshore hiring trend. 

But is it right for you? Would your business benefit from hiring an offshore finance team?

In this article, we’ll look at reasons why hiring an offshore finance team may — or may not — be the best move for your business.

What Is Offshore Financial Hiring?

Offshoring financial hiring refers to when a company outsources a portion of its financial business activities to third-party service providers in a different country. 

This could include outsourcing:

• Accounting
• Project financing support
• Regulatory activities
• Tax compliance
• And more

7 Reasons To Consider Hiring an Offshore Finance Team

#1: Lower Employment Costs

A popular reason for recruiting offshore talent is that you’ll pay less for a service that otherwise would have cost more. 

Here’s how it works: 

Each country uses a unique currency, and each currency has its own conversion rate. So, you’ll automatically spend less on salaries if the value of your country’s currency is higher than the currency of the country you’re hiring from.

The national minimum wage is another significant factor in cost reduction. For example, India’s minimum wage is the equivalent of $2.16 U.S. dollars/hour. 

Hiring offshore also allows you to save on overhead, such as …

• A building
• Computers
• Desks; and
• Utilities 

#2: Simplify the Hiring Process

Another benefit of hiring offshore is that you can use a hiring service instead of having to navigate the hiring process yourself.

Rather than having to find your own contractors, the service takes care of the recruitment piece for you by sourcing qualified individuals and presenting you with the cream of the crop. You can then conduct Zoom interviews to make your final decision. 

No posting jobs, reading resumes, or sifting through applicants who don't meet your qualifications.

#3: Access Global Talent

A significant limiting factor in growing and maintaining a business is finding highly-qualified employees. Add to that the ongoing IT (information technology) talent shortage in the U.S., and landing a talented financial team can be a formidable hurdle to overcome. 

When you’re only hiring employees from your country, you’ve only got access to a limited pool of IT professionals. 

Consider India and the Philippines, two of the top offshoring destinations in tech development. Both enjoy flourishing IT industries due to focused educational programs and active government support. And those are only two examples of countries known for their IT capabilities.

Hiring offshore talent gives you a wider range of choices. Plus, when you have a variety of talented professionals, your business has a healthy competitive atmosphere that can allow you to achieve maximum productivity. 

#4: Operate 24/7

Hiring an offshore finance team gives you a cutting edge by enabling you to have both an onshore and offshore team — resulting in a higher level of productivity. 

Your offshore team can cover any time zones that aren’t covered by your onshore team, giving you a continuous 24/7 workflow. 

You’ll service more clients, deliver faster than ever, and should enjoy increased client satisfaction.

#5: Receive Tax Benefits

Some countries, known as tax havens, offer tax incentives to foreign businesses and investors. This encourages more foreign companies to invest in the workforce, provide opportunities, stimulate growth for businesses, and can help promote a healthy investment environment that draws outside wealth. 

A tax haven is generally a smaller country that has workforce constraints and limited resources. The ability to attract outside investors allows these countries to boost their economic activity exponentially.

Creating additional jobs at an offshore location and returning those earnings to the investing country also encourages both economies to thrive. 

A perfect example is the Bahamas, which doesn’t impose …

• Income tax
• Corporate tax
• Value-added tax; or 
• Wealth tax 

… on offshore companies.

#6: Diversify Your Investments

We all know it’s risky to put all your eggs in one basket. 

When concentrating the bulk of your wealth in one place, one of the biggest risks is currency deflation — which can often lead to the decline of the currency’s purchasing power. 

Diversifying your assets through offshore hiring is one of the best ways to avoid this unfortunate scenario.

Diversifying your team means you’re lessening your chances of getting caught up in a country’s economic downturn.

#7: Reach Optimal Scalability

Hiring an offshore finance team allows your business to have a more flexible team, which can quickly be modified and scaled as the need arises. It equips you to easily adapt to the changing needs of the market.

This is an invaluable tool for smaller companies that want to grow quickly. Hiring offshore allows them to keep pace with their growth without having to incur the additional costs of hiring permanent employees.

5 Potential Limitations Regarding Offshore Hiring

#1: Timezone Differences 

One mistake businesses make is using a service that only delivers the needed position in the evenings or during the night. In other words, they work while you sleep — greatly reducing the time available for communication. 

For a smaller business, this may not be a big deal. But for larger businesses, not having the real-time ability to mentor offshore employees during your daytime hours can be stressful. One party either has to stay up late or wake up at the crack of dawn. 

Hiring from a timezone different from yours can work, but you’ll want to put a communication plan together ahead of time that's agreeable to both parties. 

#2: Language Barriers 

While you'll most likely be hiring from an English-speaking country, language barriers can still be a formidable obstacle. 

Before hiring, you’ll want to ensure the providing party has effective written and oral communication skills in the language of your business.

#3: Management Challenges

Unlike in-house teams, offshore teams operate outside your company’s home country. And this can result in day-to-day management challenges, including: 

• Communication gaps
• Cultural barriers
• Time zone differences
• And more

You may also face:

• Employee performance issues: It’s hard to assess an offshore team.
• Quality concerns: Working conditions and regulations can differ from country to country, and may result in low-quality work output. 
• Delayed deliverables: An offshore service provider’s employee may have different working styles from your company which may result in delays in project completion.

#4: Increased Government Scrutiny 

A major downside to hiring an offshore finance team is the regulatory scrutiny offshore jurisdictions endure from foreign tax authorities and governments due to money laundering and tax scandals.

Notable examples include: 

• Pandora Papers (2021)
• Panama Papers (2016)

• Paradise Papers (2017)

These scandals have, for good reason, prompted governments across the globe to modify policies and create tighter tax laws.

Take the U.S. as an example. The government enacted laws such as the United States Foreign Account Tax Compliance Act (FATCA) in 2010 requiring American citizens at home and overseas to file annual reports on their foreign account holdings. And the IRS also taxes U.S. citizens on their worldwide income. 

#5: Potential Political Unrest

Depending on where you’re offshoring, you may have to deal with an unstable political climate in your outsourcing country, such as: 

• Government shutdowns
• Election riots; or
• A military coup 

We probably don’t have to elaborate too much on just how risky this can be. 

When you’re picking an offshore location, take a close look at the country’s current affairs and political and economic history before making a move.

Tips for Making Offshore Hiring Work for Your Business

Here are a few things you can do to help create an effective offshore team:

• Be sure you understand all tax and legal implications. These can vary drastically depending on the offshore destination you choose. Consider consulting with an investment advisor, accountant, or lawyer who specializes in offshore finance. Hiring a professional for a consultation can lower your cost savings. But the benefits you can gain through successful offshore financing can far outweigh the costs of professional advice.
• Set realistic goals. Offshoring can present a unique set of challenges, like team collaboration, hidden pricing, or a lack of transparency. Getting an offshore finance team up and running can increase your investment costs. If you don’t account for these hurdles, you may be disappointed by your offshoring experience.
• Use a productivity management tool. Tracking your offshore team’s performance is next to impossible without the right technology. Consider a management and productivity tool to help you collaborate with your offshore team and ensure they’re keeping up with your financial goals. These tools can:

• Track working hours
• Provide detailed productivity reports for each employee
• Plan schedules; and
• Process payroll

Hiring an Offshore Finance Team Can Put Your Business on Track for Success

Although an offshore finance team may not be right for every business, hiring an offshore finance team is a flexible option that can be a beneficial move for your business.

When done right, offshoring hiring can be a great tool for:

• Increasing your profitability
• Growing your business; and
• Diversifying your investments