Hiring the right talent can transform your business. However, companies often limit themselves by only hiring domestically. Consider opening your business up to global talent to bring in a fresh new perspective. Indonesia, for example, has a growing pool of skilled professionals ready for a challenge. Adhering to local Indonesian regulations and laws is essential if you take this route.
An Employer of Record (EOR) offers a simple and straightforward way to hire and pay global talent legally. It provides everything you need to hire, onboard, and manage full-time employees.
This guide will explore Indonesia’s talent pool and how to tap into it effectively.
Why Hire Talent in Indonesia?
Indonesia is home to highly talented professionals, particularly in tech. Southeast Asia as a whole has been experiencing rapid technological advancement in the last few years, and Indonesia is no stranger to this trend.
The cloud computing sector is booming, clean tech is making waves, and the country is on its way to achieving widespread connectivity. Big tech has even taken notice of Indonesia’s progress, with Google Cloud Platform and Amazon Web Services both setting up operations in Jakarta. At the heart of all this innovation are highly skilled Indonesian tech professionals. Indonesia has a massive pool of talent to wade through, as it boasts the largest population in the region.
If you’re in the market for skilled tech professionals, consider hiring from Indonesia. It will save you a considerable amount of money as salaries and employment costs in Indonesia are significantly lower than in North America. This can be an attractive prospect for companies looking to reduce labor costs.
Remote work is becoming increasingly popular in Indonesia, and many workers are familiar with the tools and technologies needed to work effectively from home. This means that remote workers from Indonesia can provide companies with a high degree of flexibility and adaptability.
Lastly, Indonesia's time zone is between the western and eastern regions, making it an ideal location for companies requiring 24-hour coverage. Remote workers from Indonesia can provide support during off-hours in the Americas and Europe, making it easier to provide around-the-clock service to customers.
How Can I Legally Hire an Employee in Indonesia?
Things can get complicated if you want to hire talent in Indonesia on your terms. To hire in Indonesia, businesses must establish an entity based in the country. The process can be a headache and is only worthwhile if you intend to practice business in Indonesia long-term.
EORs offer an easy, straightforward way to hire full-time employees from Indonesia. An EOR, like Borderless, serves as a middleman and facilitates the processes involved in global hiring. EORs already have an entity in place that’s capable of hiring talent, onboarding them, and ensuring local compliance.
What Does an EOR Do?
EORs ensure you maintain strict compliance with local laws and regulations in the countries you hire talent from. They remove the legal roadblocks involved in hiring globally so that you can focus on growing your business. Hiring laws vary considerably worldwide, and while it’s challenging to keep up with constantly changing regulations, it’s critical to comply with them to avoid legal implications. EORs take care of the following processes and ensure they’re fully compliant:
- Work visas and permits
- Employment contracts
- Onboarding
- Tax documentation and filing
- Payroll processing
- Employee benefits
- Intellectual property protection
- Termination
EORs handle all of the tedious administrative tasks associated with these processes. They generate compliant employment contracts, collect tax documentation, file it per local laws, etc.
Employee Insurance and Benefits
Staying competitive is always important, especially in a tight labor market. An EOR will help you stand out from the crowd with a comprehensive benefits package, including generous health and wellness benefits, time off, financial security, and much more. It will ensure you provide your team members with what they’re legally entitled to and help you attract top talent with attractive offerings.
For example, offering Indonesian employees the legally mandated 13th-month salary is critical, referred to as Tunjangan Hari Raya (THR). It’s generally paid one week before the religious holiday observed by an employee. Indonesia is known for its religious diversity; for this reason, the payment date differs from employee to employee and is based on individual preference. Since most of the population is Muslim, the deadline for THR is during the end of Ramadan.
Vacations and Public Holidays
Employees can take up to 12 working days of paid time off (PTO) each year, regardless of whether they work full-time or part-time. PTO accrues at the rate of one day for every 23 days, and after one year of employment, workers become eligible for yearly leave.
Employees in Indonesia are entitled to take the following 15 national holidays off work, with pay:
- January 1: New Year’s Day
- January 22: Chinese New Year
- February 18: Isra Mi’raj
- March 22 - 23: Hindu New Year
- April 7: Good Friday
- May 1: Labor Day
- May 3: Eid Dul Fitri (2 days)
- May 18: Ascension Day of Jesus Christ
- June 1: Pancasila Day
- June 4: Waisak Day
- June 29: Idul Adha
- July 19: Islamic New Year
- August 17: Independence Day
- September 28: Prophet Muhammad's Birthday
- December 26: Christmas Day
Taxes & Social Security Contributions
Unlike the US, there is no employer payroll tax contribution in Indonesia. Employers must contribute to social security in the range of 10.24% to 11.74% of employee salaries.
An EOR, like Borderless, will ensure you remit payroll taxes on time, every time. With the support and expertise of an EOR, social security contributions are simplified, and taxes are filed accurately and compliantly. So you can cut back on busy work and focus on growing your business.
What Are the Advantages of Going Through an EOR in Indonesia?
Working with an EOR comes with a range of benefits.
- Saves time and money
- Minimizes risks and avoids penalties related to non-compliance
- Cuts back on busy work
- Improves retention and talent attraction
- Expands your talent pool
- Keeps your data safe and secure
- Keeps you up to date on hiring trends
These are just some of the ways an EOR can positively impact your business. Sign up with Borderless to explore what an EOR can do for you.
How Do I Choose the Right EOR for Me?
With so many EORs to choose from, it’s important to determine which one suits your individual needs. It’s helpful to keep the following considerations in mind.
- Expertise: Choose an EOR with a history of hiring, onboarding, and managing employees in the countries you want to hire from. Checking this box will help ensure your EOR of choice maintains compliance every step of the way.
- User experience: It’s important to provide your team with an easy-to-use, intuitive EOR platform packed with self-service options. The goal is to integrate it into your team's existing workflow stress-free.
- Support: Turn to EORs with a solid team of experts with a proven track record. Ensure that they’ll be there to lend you support when you need it.
- Security: Keeping your data safe and secure is paramount. This is especially true when working with a globally distributed team, leaving you more vulnerable to cyberattacks. So, choose an EOR that has a robust set of data security standards and protocols.
Borderless: The Employer of Record Your Company Needs
Broaden your horizons by hiring global talent. Use Borderless as your EOR of choice to expand your talent base and get the most out of your global hiring experience. Get in touch and book a demo today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
