Going Global: Using Data Analysis to Expand Talent Sourcing to New Locations

As we move deeper into 2024, the labor market remains ultra-competitive. In Europe, for example, unemployment rates throughout much of the region are historically low, while in the United States nearly 500,000 jobs were added in March and April combined according to the latest U.S. Bureau of Labor Statistics report.

Magnit data also shows a QoQ uptick in hourly pay rate, with average wages increasing 2.6% in Q1 2024 when adjusted for seasonality. From a job category perspective, marketing/business development, creative, IT/technology, and accounting/finance all hired at a higher pay rate on average in Q1 2024 than Q4 2023.

A tight labor market like this with rising wages requires creativity in sourcing. One approach organizations can take is to expand their talent search to new regions or countries, identifying previously untapped locations where the supply of skills they are looking for is high relative to hiring demand. Let’s look at a few scenarios where this might be helpful.

Example 1: UK-Based Company Expanding Talent Search to Other European Locations

In Europe, “software engineer” is currently one of highest-demand job titles, and hiring demand in the greater London area is very competitive. So, how might a UK-based company approach this situation? Leveraging a mix of data, including real-time rate information, supply and demand intel, and more can help reveal potential options.

In this example, an analysis of Magnit data as of Q1 2024 surfaces the following insights:

• Although most of the supply for software engineers is in the greater London Area due to very high population, hiring demand there is very high, allowing only 34.3 candidates per job opening. At an average pay of £41.58 per hour for an intermediate-level worker (three to five years’ experience), it’s also an expensive location to hire in.
  
• Prague’s metropolitan area has one-eighth the population of London, but a higher professional-to-job-posting ratio, with 37 candidates per job opening — an 8% increase in candidates compared to London. At an average pay of £15.76 per hour for the same intermediate-level worker, Prague is less than half the cost of London.
• The Frankfurt Rhine-Main and Helsinki metropolitan areas are even better in terms of supply and demand, at 49.6 and 57.4 candidates per job opening, respectively. At an average pay of £32.04 per hour, Frankfurt is more expensive than Prague but still cheaper than London.
• The Copenhagen metropolitan area has a population size similar to Frankfurt but very low hiring demand. There are 64.6 candidates per job opening, nearly double London and the highest ratio in Europe. At an average pay of £43.98 USD per hour, however, it’s more expensive than London.

Assuming talent quality remains consistent across all locations and this role is permitted to be remote, then, Magnit data suggests organizations should consider expanding their search to the Prague metro area.

Example 2: U.S.-Based Company Expanding Talent Search to EMEA

Now let’s consider an example of a U.S.-based company that’s traditionally limited its talent search within the 50 states. Let’s say this organization is looking for a customer service representative, which is one of the highest-demand job titles in the United States.

Again, we’ll be using an intermediate-level worker (3-5 years’ experience) as a baseline comparison, with an average national pay rate of $17.79 per hour. Examining the latest pay intelligence and other key data points, Magnit analysis reveals the following in regard to how this company might want to expand its search:

• Although most of the international supply for customer service representatives is in the metro Manila, Philippines area due to high professional availability, competition in job postings there is also high, allowing only 11 candidates per job opening. At an average pay rate of $2.36 per hour, it’s a fraction of the cost of the U.S. national average.
  
• The greater London area in the UK has a significantly higher candidate per job posting ratio at 119, but at an average pay rate of $17.05 per hour the opportunity for cost savings are minimal.
• The greater Madrid, Spain metro area has less available professionals but also less competition at 160 candidates per job opening. At an average pay rate of $9.91 per hour, it’s about half the cost of the London and U.S. national averages.
• Focusing on cost, the greater Delhi, India area has a large professional pool (second to Manila) and moderate competition at 130 candidates per job opening. At an average pay rate of $2 per hour, it’s one of the most cost-effective locations to source talent.
• The greater Hyderabad area in India has a lower professional pool than the greater Delhi area, but low cost and less competition at 145 candidates per job posting. At an average pay rate of $2 per hour, it’s equal to the greater Delhi area in terms of cost savings.

In this scenario, Magnit data suggests organizations should consider expanding their search to the greater Hyderabad area. Keep in mind, though, that as organizations expand their talent search wider and wider, there may be ramifications on worker quality, so it’s important to fully understand the nuances of each talent pool and have strong infrastructure and training programs in place.

One final note: Both the roles covered here are potential candidates for automation. Given today’s talent supply chain shortages, organizations should consider leveraging automation wherever possible to drive cost savings and free up skilled workers for more strategic roles.

Benefits of Expanding the Talent Pool

While it may seem intimidating to venture into new sourcing locations, clinging to traditional approaches could unnecessarily limit talent access and prove damaging in today’s competitive labor market. By conducting data-driven analysis for critical roles to reveal previously untapped opportunities, organizations can reap a host of benefits, including:

• Wider range of talent: With technology changing faster than ever, new in-demand skills are emerging, and expanding talent access can enhance your ability to fill these gaps.
  
• Increased cost savings: New locations can often open up opportunities to source the skills your organization needs at lower pay rates – without a drop in talent quality.
• Reduced time to fill: More options mean you can accelerate the time it takes to hire, minimizing productivity loss and fostering a better candidate experience.

To help realize these benefits, consider partnering with a third-party expert that can scope out expansion projects and determine the best analysis for each unique hiring situation.

Other Considerations for Global Expansion

While real-time pay and talent intelligence are critical to expanding into new sourcing locations, growing a contingent workforce globally requires addressing a wide range of considerations and complexities. A variety of resources are needed to execute this transition successfully, including but not limited to:

• Compliance Expertise: Legal experts to help navigate different employment rules, laws and regulations in each country to mitigate risk of misclassification and related penalties. (Read Magnit’s latest regulatory newsletter.)
  
• Operational Support: A quality Managed Service Provider (MSP) to evaluate and manage suppliers when expanding to new markets, as well as designing a program that’s both agile enough to meet in-country needs and rigorous enough to meet higher-level oversight needs of the wider organization.
• Leading-Edge Technology: A top-tier Vendor Management System (VMS) that helps power global workforce visibility and provides flexibility to configure languages, currencies and processes when venturing into new countries.
• Five-Star Data & Strategy: In addition to real-time global rate data that’s accurate, unbiased and comprehensive, local experts to help validate data and trends in each locale and advise on turning this intelligence into action.
• Seamless IT Support and Billing: Infrastructure to support an outstanding worker experience – tailored to specific geographies and cultures -- from hiring and training to offboarding and redeployment.

For much more on the topic, please check out these resources:

• “5 Key Considerations for Growing Your Contingent Workforce Worldwide”: Expert strategies you can use to expand your contingent workforce to different countries and continents.
  
• Spring/Summer 2024 Europe Labour Market Report: The latest on European economic and workforce trends, plus deep dives on UK/Ireland, Germany, Switzerland, the Netherlands and Sweden.
• Magnit Pay Intel Demo: Take our self-guided product tour and see how you can use data to optimize your talent strategy.

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.