I understand that if those companies were to hire people outside the US as FTE it would require them to establish a presence in that country. But why not hire remote outside the US as contractors?
I am lucky to be hired as a contractor by a US company living outside of US. The process is very straightforward forward. I signed a contract and I send my invoice every month, along with a US bank account where they can deposit my salary (myself I use Payoneer, as I don’t have a US bank account). It ends up being a less bureaucratic process for the company, not more.
In my case I am treated as a FTE (a permanent employee, part of team, part of the decisions, the whole thing), only happens that my contract is of a contractor. I don’t have any benefits, but, in my case, the salary arbitrage to the cost of living in my city more that compensates that.
I would like to know why those company that hire “remote US only” are not open to that. Which risks/cost I am not seeing?
* in the US, being a "contractor" is a specific legal status with requirements around independent work and so on; misclassifying full-time employees as contractors can trigger litigation from various tax authorities. Your country may have additional thoughts on the matter - and see above, solving this means lots of lawyer bills.
There’s a lot of voodoo too you have to figure out. Lots goes unspoken about how exactly you do these things people are too afraid to write down given legal liabilities. Or it’s just assumed to be common knowledge that nobody has to explain. Sadly you have to find someone “in the know” who can sort of nod and wink at you what to do. An example of this is setting up a bank account when you can’t easily show up in person…
It took my last company about a year to setup a UK subsidiary. It took 3-6 months to do the same in Germany. It occupied some of the smartest people in HR and operations, distracting them from other priorities.
Why not a contractor?
Well yes, this is obviously the easiest solution. But it’s dangerous if you intend to treat them as employees. The IRS in the US gives you some guidance[1]. Contractor route can mean they have to spend months without a contract, that they can’t participate in any equity arrangements, you can’t provide benefits like vacation. It might not be very appealing to many…
1. Lack of understanding: They don't need to setup a foreign presence in your country, they don't need to do special tax efforts. The only thing they need from you is a contract and W8BEN or the right IRS tax form.
2. Fear: We gonna hire this guy from "Nice beaches on that place.."
"Do they have reliable internet?"
"what if he rans away with our money?" This is a normal and humane reaction. When people complaint about this stereotypical thinking I like to ask them: "When I say Italy what you think first?" And same answers usually appear. My suggestion is to focus on companies that accept as the ones that not accept now will do as labor shortage increases.