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Article

5 min read

How Startup Founders Can Reduce Burn Rate With a Global Mobility Strategy

Global mobility

Author

Jemima Owen-Jones

Published

March 01, 2024

Last Update

July 04, 2024

Table of Contents

What is a global mobility strategy?

How a global mobility program can reduce burn rate

Support your global mobility strategy with Deel

Key takeaways
  1. A global mobility strategy enables startups to source talent from low-cost areas and reduce operational costs, thereby protecting their bottom line.
  2. Startups can also lower their burn rate by leveraging remote work and location flexibility to improve company culture. With higher levels of employee well-being, they can spend less on recruitment, retention, and engagement initiatives.
  3. Using a global HR and payroll provider can help you capitalize on the cost benefits of a global mobility strategy. You can easily hire, pay, and manage dispersed teams while ensuring compliance with international laws.

A global mobility strategy can help startups reduce their burn rate and remain resilient during tough economic times. By taking advantage of emerging talent pools and more affordable regions, you can lower costs and allocate resources more effectively.

However, implementing a global mobility strategy can be challenging for startups. With limited tools and resources, it’s difficult to navigate complex international laws, visa processes, and foreign tax systems. 

Our article discusses how to launch a successful mobility strategy with a global HR platform like Deel. We explore all the ways you can leverage a mobile workforce to reduce your burn rate while overcoming the obstacles many startups face.

What is a global mobility strategy?

A global mobility strategy (also known as ‘talent mobility strategy’) refers to a company’s approach to managing employee relocations. Typically, the strategy involves establishing policies and procedures aimed at supporting a mobile workforce.

“Employee relocations” can encompass a wide variety of travel and movement. For example, organizations could support anything from short-term trips to digital nomads and whole family relocations. 

The main advantages of a global mobility strategy are to source top talent and drive international expansion. As you hire abroad, you can benefit from local expertise and diverse perspectives. You can also establish a presence in new markets and capitalize on opportunities there.

People-first companies use global mobility to prioritize the needs of their workforce. By fostering a culture of flexibility and growth, you can create a supportive environment where employees are excited to work.

Now, global mobility has become the default for startups—56% of leaders say they don’t even have a physical location. That means developing a robust global mobility strategy is essential to remain competitive.

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How a global mobility program can reduce burn rate

Implemented well, a global mobility strategy can help you lower costs, optimize your existing resources, and promote business sustainability. When lack of funds is consistently among the top reasons for startup failure, it could make or break your business.

In this section, we’ll explore all the financial benefits of global mobility and how to make the most of them.

Relocation to cost-effective areas

When we talk about a mobile workforce, we also mean management. Setting up your business in a country with a lower cost of doing business and favorable tax conditions can help you maintain a low burn rate.

As a startup, you’re in a good position to move. You’re likely operating on a small scale with a lean team and few physical assets. You’re also unlikely to have established strong ties to a specific country.

While researching low-cost economies, you can consider metrics like:

  • Typical operational expenses
  • Tax incentives for foreign startups
  • Access to banking and financial services
  • Transfer pricing between jurisdictions
  • Supply chain routes
  • Internet connectivity
  • The location of key stakeholders

The issue is that startups operating on a small scale often struggle with establishing a legal entity abroad. Setting up a business in a new country often comes with hefty fees. There’s also usually a lot of foreign legislature to cover, concerning taxes and employment law.

Outsourcing HR and payroll processes to an Employer of Record (EOR) helps you to avoid many of these pitfalls. You can operate under one of Deel’s entities while you set up in your new country. We have a team of localized legal and accounting experts who can assist you with the relocation process.

Access to affordable talent markets

As you increase your startup’s headcount, it’s best to recruit from low-cost countries where salaries are less competitive. You can pay localized salaries and stay within your hiring budget but acquire the skills you need.

Cost of labor is a key factor in market research. Although some areas are inexpensive, the average wages may not reflect salary expectations for certain roles. For example, Mexico has a relatively low cost of living but its tech industry offers pay competitive with global rates.

Mobility teams can use the Deel Salary Insight tool to check the median salaries for different roles in areas of interest. 

Be sure to adjust pay in line with currency fluctuations and changing salary expectations to hold onto talent. Experts from our global hiring summit say emerging markets grow up to twice as fast as mature ones. It’s essential to stay continuously updated with trends to avoid falling behind competitors and losing your best workers to them.

With Deel, you don’t have to limit your recruiting efforts to specific locations. Our EOR enables you to hire from over 110 countries worldwide. 

Planhat sourced talent from over 14 countries through Deel.

Deel gives us access to hiring people in a compliant way, anywhere. Those are people that we wouldn’t have been able to hire without Deel, as we wouldn’t be able to open an entity in every country where we wanted to hire someone. It also enables us to be close to our customers, they are all over the world, so we need to be there too.

Sanna Westman,

Head of People, Planhat

Lower operational costs

Shifting from an in-person to a remote working model means you’ll require less office space. With fewer expenses like rent and utility bills, you can keep your operating costs low and reallocate funds to critical areas of the business. You could save up to $11,000 (USD) per worker per year by just going hybrid.

Early-stage startups can spend less of their seed money on setting up. For example, you won’t have to pay deposits and installation fees.

One pitfall some startups face is ensuring workers have suitable working conditions and equipment on a tight budget. According to a recent survey, 82% of people work from home, and 63% of them don’t have a dedicated office space. They can’t perform their jobs to the best of their ability unless you can offer them a generous remote work stipend.

Startups can support remote work on their limited means by using third-party services to fill the gaps. For example, Deel offers the following features:

  • Equipment provisioning: Deel allows you to send candidates a catalog of pre-approved office equipment so they can choose what they need while sticking to your budget. We then handle everything from shipping to reassignment via Hofy
  • Coworking spaces: Through our partnership with WeWork, we can offer employees access to workspaces in over 600 locations worldwide, from South Africa to China
  • Global workforce management: We’ve launched a series of Deel Plug-Ins aimed at managing and engaging dispersed teams. For example, our HR platform includes a time tracker and an announcement tool

Startups can make significant savings—Deel customer, Voiceflow freed up around $10,000  using our equipment provisioning.

It’s best practice to clarify all remote work processes so managers and employees know what’s expected of them. Check out our work from anywhere, equipment provisioning, and employee attendance to get started with your global mobility policies.

Higher recruitment, retention, and productivity rates

Implementing a work from anywhere policy can enable you to attract, retain, and engage an international workforce. This policy not only gives you access to a wider talent pool but also caters to the growing preference for remote work and location flexibility. You can use it to enhance team member’s quality of life and ensure they have a positive employee experience.

Startups can save costs across a variety of areas:

  • Recruitment: A global mobility program can give your startup a stronger brand that attracts more candidates, which means you can invest less in recruitment activities. As studies show, job seekers are less inclined toward startups, it can also help you gain an edge
  • Compensation: Some candidates may be willing to accept a lower salary in exchange for remote work and location flexibility
  • Turnover: If your team is satisfied, they’re more likely to stay and spare you the cost of replacing them. A Gallup report estimates this can cost up to two times a worker’s annual salary
  • Labor: Happy employees are more likely to be productive, which means you become more efficient and run leaner teams. Studies indicate teams can increase their output by up to 18%

An EOR allows you to deliver on your promise of location flexibility. Your startup is unlikely to have the tools and resources to manage visas, payroll, and compliance across different jurisdictions yet. Outsourcing these operations to an EOR means you can streamline relocations and business travel without straining your budget.

🌎 Deel Immigration checks eligibility, handles visa applications, and helps workers get set up in their new country. We ensure contracts and payments are compliant with local laws—and assume all liability if issues arise.

Candidates can monitor their progress via the Deel platform and upload supporting documents. After visa approval, they can automatically start onboarding.

Explore the different work visas that Deel Immigration supports.

Enhanced agility and resilience

Mobile talent management enables you to adapt to changes and deal with setbacks more effectively. As a result, you’ll incur fewer expenses and reduce your burn rate.

Hiring across borders allows you to explore new markets, expand your customer base, and diversify your income. If you lose revenue from one location, you’ll still have other streams to fall back on.

An international team can also help you capitalize on opportunities. Foreign employees have insights into their local markets and can help you navigate them. For example, they might be able to tell you that a supplier comes with a lot of hidden costs.

You can benefit from a variety of perspectives which means you’ll be more likely to find innovative approaches and solutions to issues. Research by Great Place to Work shows that diverse workforces are among the highest-performing.

However, you have to invest time and money into establishing a presence abroad to benefit from these cost savings. Your startup may not have the capital required or be able to absorb the costs if international assignments don’t deliver a return on investment.

Permanent establishment is a major concern as you’ll be subject to double taxation. Hiring and paying foreign teams can trigger liabilities. Startups may also struggle to navigate complex tax and labor laws that have fines for noncompliance.

Using an EOR provider like Deel eliminates these risks. We can hire, onboard, and pay employees quickly but without triggering any tax liabilities. Our team of local experts ensures compliance with international regulations and updates you about any changes that affect your business.

Deel’s Global Payroll allows you to pay workers spread across geographies. Our payroll automation technology ensures that the entire team gets paid accurately and on time. We support over 100 countries and 20 different currencies, so you’re never restricted by location.

✨ Discover how Deel helped startup SOCi overhaul and scale their payroll process.

Support your global mobility strategy with Deel

Global mobility can help your business thrive from day one. That’s why it’s important to have a detailed strategy to clarify everything from remote work policies to international hiring processes.

A global HR and payroll provider can support startups during their early stages and beyond. Deel can help you access emerging talent pools and explore new markets through our hiring, payroll, and compliance features. 

Interested in how Deel can support your startup? Book a meeting to get your questions answered.

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