Globalization comes in four main types (economic, political, cultural and technological), and each one changes a specific part of hiring abroad. It's still near a record level, and most employers say they struggle to fill roles, so cross-border hiring keeps growing. Several rule changes across India, the EU and international tax guidance make the legal side harder to manage. A business can employ people abroad through its own entity, an Employer of Record, direct contractors, a Contractor of Record, a payments platform or global payroll. The best fit depends on the size and length of the commitment and on who should carry the legal risk. Gloroots supports all of these routes on one platform, with local expertise in every market it covers.
A product team in Austin finds the best backend engineer it has ever interviewed. She lives in a city where the company has no office, no bank account and no lawyer. The offer letter takes an afternoon to draft. The next six weeks go to everything the letter doesn't answer: which entity employs her, who files her taxes, what her country requires for notice periods, mandatory benefits and holiday pay, and what happens if calling her a contractor turns out to be the wrong label.
That story is globalization at the scale of one hire. Economists and researchers split the broader trend into types, and each type shows up in the hiring process as a concrete decision. This guide defines the types, checks where they stand in 2026, and follows each one to the choices it forces on an employer: where to hire, how to employ people legally, how to pay them correctly, and how to pick a model that fits the business.
Each section below stands on its own, so readers can jump to the part that matches their situation.
What Are the Types of Globalization?
Globalization is a wide term, so the first step is separating its parts.
The main types of globalization are economic, political, cultural and technological. Economic globalization is the cross-border movement of trade, capital and labor. Political globalization is the spread of treaties, shared rules and international institutions. Cultural globalization is the exchange of ideas, media and social norms. Technological globalization is the spread of digital infrastructure that lets work and information cross borders instantly.
The framing has some variety in practice. The International Monetary Fund describes globalization as the growing integration of economies through flows of goods, services and capital, and notes that the term sometimes also covers the movement of workers and the spread of technology. The KOF Globalisation Index, maintained by ETH Zurich, measures three dimensions: economic, social and political. It splits the economic dimension into trade and financial globalization and separates actual flows (de facto) from formal policies (de jure). The revised index uses 43 variables. Many business texts treat technology as its own fourth type, and some add an ecological type as a fifth.
| Type | What crosses borders | How it is tracked | What changes for employers |
|---|---|---|---|
| Economic | Goods, services, capital, workers | Trade volumes, foreign direct investment, KOF trade and financial dimensions | Where companies build teams and which markets they enter |
| Political | Laws, treaties, institutional rules | KOF political dimension, tax treaty guidance | Tax residency, permanent establishment, labor rules, work authorization |
| Cultural | Ideas, media, personal contact | KOF social dimension | Candidate expectations on pay structure, benefits and working norms |
| Technological | Connectivity, platforms, AI tools | ITU connectivity statistics | Remote work, the size of the talent pool, how work is tracked and paid |
Knowing the categories only matters if the underlying trend is still moving. The 2026 data says it is, with some qualifications.
Is Globalization Still Growing in 2026?
Headlines about tariffs and fragmentation have convinced many executives that globalization is reversing. The measurements say something more specific.
The DHL Global Connectedness Report 2026, produced with NYU Stern and published on 19 March 2026, found that globalization held at 25% in 2025, matching the record first reached in 2022. Global goods trade grew faster in 2025 than in any year since 2017, leaving out the pandemic rebound. The KOF Globalisation Index 2025 edition, released in December 2025, found that globalization rose slightly in 2023 across its economic, social and political dimensions. The Netherlands ranked as the most globalized country, with Switzerland second.
Investment shows a more uneven picture. UNCTAD's World Investment Report 2026, as summarized by IISD, put global foreign direct investment at $1.6 trillion in 2025, up 6% after two years of decline. Developed economies gained 11%, while developing economies grew 2% to $901 billion. The 20 largest host economies took in more than 80% of flows, and strategic sectors such as AI infrastructure, semiconductors and energy transition technology made up 44% of greenfield project value, up from 16% in 2020.
The WTO's October 2026 outlook, as reported by Asharq Al-Awsat, raised its 2026 forecast for merchandise trade volume growth to 3.9% from 1.9% in March, and its 2027 forecast to 4.1%. Trade grew 4.2% in 2025. AI-enabling goods such as semiconductors and servers accounted for 47% of merchandise trade growth in the first half of 2026.
One reading of these numbers, offered as the author's own analysis: capital is concentrating in a small set of economies and sectors, while skilled people live in many more places. That gap is part of why employers look across borders for talent even when investment doesn't follow.
The next section looks at how economic globalization turns into a hiring decision.
How Does Economic Globalization Shape Where Companies Hire?
Economic globalization moves capital and commerce across borders, and companies follow with people.
Talent scarcity pushes employers past their home market. ManpowerGroup’s 2026 Talent Shortage survey, published on 26 February 2026 and covering 39,063 employers in 41 countries, found that 72% reported difficulty filling roles, down from 74% the year before. The scarcest skills were AI model and application development (20%), AI literacy (19%) and engineering (19%).
India shows what a talent-led strategy looks like at scale. A TeamLease report, as covered by Storyboard18 in November 2025, counted more than 1,800 global capability centres (GCCs) in India employing about 1.9 million people, with over 220 added between fiscal 2023 and fiscal 2025. A GCC is a company-owned operations or technology center that serves its parent company from another country. Setting one up is a long-term commitment, and many companies reach India through smaller steps first.
The cost of leaving matters as much as the cost of entry. A business testing a market doesn't yet know whether it will stay. A local entity has to be registered before the first hire and wound down under local law if the market doesn't work. An EOR arrangement ends the individual employment under the same local law, with notice and final pay handled by the provider, and no company has to be closed. Gloroots describes this as hiring before incorporating.
Employers comparing routes into a new market can ask Gloroots for the statutory requirements, a realistic timeline and a country-specific price for the market in question. Book a demo to get that in a 30-minute call.
Economic pressure explains where companies want to hire. Technology explains who they can now reach.
How Does Technological Globalization Change Who Companies Can Hire?
Technological globalization removed the main practical barrier to hiring abroad, which was working together.
The International Telecommunication Union estimated in its Facts and Figures 2025 report, released on 17 November 2025, that about 6 billion people use the internet, roughly three-quarters of the world's population. About 2.2 billion remain offline. For a hiring manager, this means a large share of the world's skilled workforce can interview, sign a contract, join a video call and submit an invoice from a home office.
The scarcest skills in the ManpowerGroup data are digital. When AI model development and AI literacy lead the shortage list, geography becomes a weaker filter and skill becomes the stronger one.
Technology moves work faster than law moves employment status, and that creates the central tension of global hiring. A contractor can start the day a contract is signed. Employment classification, tax residency and social security obligations follow rules written for physical workplaces, and those rules vary by country. Platforms that handle contracts, onboarding documents, payroll and payouts in one place exist to close that gap.
Tools make the hire possible. Rules decide whether it is lawful, which is where the political type of globalization comes in.
Which Political and Legal Changes Matter Most to Global Employers Right Now?
Political globalization is the spread of shared rules and treaties, and in 2025 and 2026 several of them changed at once.
OECD guidance on remote work and permanent establishment
On 19 November 2025, the OECD published an update to its Model Tax Convention, the first comprehensive revision since 2017, according to EY. For home-office workers, the updated commentary says a home office generally isn't a place of business of the employer if the individual works there for less than 50% of total working time over 12 months. At 50% or more, a permanent establishment isn't automatic, but the analysis moves to the facts, including whether a commercial reason ties the worker's presence to the business in that country. Employee convenience, talent retention and office cost savings don't count as commercial reasons. Some jurisdictions, including India, don't accept the new tests, and others, such as Israel, Nigeria and Malaysia, apply different criteria. The OECD text is commentary to a model treaty and is applied through bilateral treaties, so local advice still decides each case.
India's four labour codes
India notified the commencement of the substantive provisions of its four labour codes on 21 November 2025. The Code on Wages, the Code on Social Security, the Industrial Relations Code and the Occupational Safety, Health and Working Conditions Code together replaced 29 earlier laws. They standardise the definition of wages, introduce floor wages, create a framework for fixed-term employment and extend social security coverage to gig and platform workers. One law firm summary notes that the Industrial Relations and OSH Codes are fully in force while the Wages and Social Security Codes are partly enforced, so implementation is still phasing in.
EU Pay Transparency Directive
EU member states had to transpose the Pay Transparency Directive by 7 June 2026. As of 23 September 2026, a Lockton tracker listed five member states as fully transposed (Greece, Italy, Lithuania, Malta and Slovakia), two as partially transposed (Estonia and Poland) and twenty as not yet transposed. Benefits such as retirement and healthcare count as pay for reporting purposes. Greece applies most employer obligations from 1 November 2026, and Lithuania's reporting obligations start on 1 January 2027. An employer with staff in several EU countries therefore faces a patchwork, not a single start date.
EU Platform Work Directive
Directive (EU) 2024/2831 must be transposed by 2 December 2026. It sets a rebuttable presumption of employment where a digital labour platform exercises a degree of control over the work, and it applies to platforms organising work in the EU wherever they are established. The directive covers platform work, not every contractor relationship. It does show where regulators are heading: classification that turns on how the work is controlled, whatever the contract calls it.
| Development | Date | Main employer impact |
|---|---|---|
| OECD home-office permanent establishment guidance | 19 Nov 2025 | Track remote workers' time abroad against the 50% benchmark |
| India labour codes | 21 Nov 2025 | Review wage definitions, contracts and social security obligations |
| EU Pay Transparency Directive | Deadline 7 Jun 2026 | Expect uneven national rules on pay disclosure and reporting |
| EU Platform Work Directive | Deadline 2 Dec 2026 | Test contractor arrangements against control-based presumptions |
Legal rules set the floor. The cultural type of globalization sets what candidates expect above it.
How Does Cultural Globalization Affect Hiring and Retention?
Cultural globalization spreads ideas and expectations across borders, yet pay and benefits are still judged locally.
The KOF index tracks this as its social dimension, which captures interpersonal, informational and cultural exchange. Candidates in one country see what employers offer in others, and they compare. They also compare against local norms and legal minimums, which differ.
The Philippines offers a clear example. Rank-and-file private-sector employees who have worked at least one month in a calendar year are entitled to a 13th month pay equal to at least one-twelfth of the basic salary they earned that year. The Department of Labor and Employment (DOLE) requires employers to release it by 24 December. A foreign employer using a home-market offer template could omit it without knowing the obligation exists.
Offers built from a single template tend to either break local rules or look weak next to local alternatives. Gloroots advises employers on the benefits local candidates expect, which affects whether an offer gets accepted.
Understanding expectations is one half of the job. The other half is choosing a legal structure for the hire.
What Are the Ways to Hire Talent in Another Country?
A business has six main routes for putting a person to work abroad, and each puts legal responsibility in a different place.
| Model | Who is the legal employer | Typical fit | Who carries compliance | Main trade-off |
|---|---|---|---|---|
| Own local entity | The company's subsidiary | Sustained headcount and local operations | The company | Registration, banking, tax and HR setup before the first hire |
| Employer of Record (EOR) | The EOR | Full-time hires with no entity; market testing | The EOR for employment law, payroll and tax | Monthly fee per employee |
| Direct contractor | No employer; independent worker | Short projects, genuinely independent work | The company, including classification risk | Misclassification exposure |
| Contractor of Record (COR) | Contractor engaged through the provider | Contractors in regulated markets | The provider assesses classification and carries liability | Unsuitable if the role is effectively employment |
| Contractor payments platform | No employer; independent worker | Company-managed contractors that need payout rails | The company | Classification risk stays with the company |
| Global payroll | The company's own entities | Companies that already have entities abroad | The company with a payroll provider | Needs an entity in each country |
A seventh option, the professional employer organization (PEO), exists mainly for the domestic US market. It co-employs a business's existing US workforce and handles payroll, benefits and compliance, while the business keeps control of daily operations. An EOR instead becomes the sole legal employer for workers in a country where the hiring business isn't registered, which is why EORs are the tool for international hiring.
Choosing between the routes starts with understanding the EOR, since it is the one most companies meet first.
What Is an Employer of Record and How Does It Work?
An employer of record (EOR) is a third-party company that becomes the legal employer of a worker in a country where the hiring business has no entity. The EOR issues the local employment contract, runs payroll, withholds and files taxes, and administers statutory benefits. The hiring company directs the daily work.
How does an EOR differ from a PEO?
A PEO is a co-employer. Both the client company and the PEO appear in the employment agreement, and both can be named in legal disputes. An EOR is the legal employer and typically the only employer named in the contract. In practice, PEOs serve domestic US workforces and EORs serve international hiring, seasonal staff and fast scaling.
How does an EOR hire work step by step?
At Gloroots, the process has four steps:
- The hiring company shares the role, country and package, and Gloroots confirms requirements and a start date.
- Gloroots' legal team drafts a local employment contract for the company to review and the employee to e-sign.
- The employee uploads required documents through a personal portal, with no email chains.
- Payroll goes live, with salary paid in local currency on local pay dates and a single invoice to the client.
Gloroots onboards hires in 3 to 5 working days. Hires who need a work permit take longer, because immigration processing runs on government timelines.
Not every worker should be an employee, though. The next section covers the line between contractor and employee.
When Does a Contractor Become an Employee in the Eyes of the Law?
Engaging a contractor looks like the fastest way to start work abroad, and in many cases it is, until the arrangement stops looking independent.
Classification rules differ by country, but they tend to ask similar questions: who controls how, when and where the work is done, whether the worker is integrated into the business, and whether the worker depends on one client. The EU Platform Work Directive illustrates the direction of travel by presuming employment where control exists and shifting the burden of proof to the platform. India’s labour codes add a fixed-term employment category and extend social security to gig and platform workers.
Contractors typically don't receive statutory protections such as notice periods, which is one reason candidates in some markets prefer employment. A contractor who is relocated to another country, or who begins working full time under a company's direction, may also need a work permit that a contractor relationship can't support.
Three paths exist for a business in this position. The company can keep the contractor relationship and manage classification itself. It can use a Contractor of Record, where Gloroots assesses the engagement, owns the classification decision and carries the contractor compliance liability, at $99 per contractor per month. Or it can convert the contractor to EOR employment when the role outgrows contractor status.
Employers that run contractors across several countries can ask Gloroots to review whether each arrangement still fits. Talk to a global employment specialist before the next renewal date.
Once the structure is right, the remaining question is how people actually get paid.
How Do Businesses Pay Employees and Contractors in Different Countries?
Cross-border pay runs on two separate systems, and mixing them up causes most payment errors.
Employees go through payroll. Payroll converts gross pay into net pay after income tax withholding and employee contributions, adds employer contributions and statutory extras such as the Philippines’ 13th month pay, and pays on local pay dates. The employer files local returns. An EOR runs this under its own local registration.
Contractors go through invoices. The contractor submits an invoice, the client approves it and the payment is sent. No withholding or statutory benefits apply in the same way, though tax documentation requirements and local rules still do. A contractor payments platform handles contracts, invoice tracking, audit records and bulk payouts, so one funding transaction reaches many contractors in many countries.
Digital asset treasuries add a conversion step. Some companies, especially in web3, hold their funds in crypto assets while contractors need local currency in a bank account. Gloroots converts crypto to local currency through off-ramping, typically within 2 to 24 hours of funding. The US passed the GENIUS Act in July 2025, creating the first federal framework for payment stablecoins. The worker still receives local currency, and local tax and payroll rules still apply, so employers confirm treatment with local counsel.
Pay mechanics lead directly to the budget question.
How Much Does It Cost to Hire Someone in Another Country?
The total cost of a cross-border hire has five parts, and provider fees are usually the smallest.
- Gross salary agreed with the worker.
- Employer statutory contributions, such as social security, pension and insurance, which vary by country.
- Mandatory benefits and statutory pay, such as the 13th month pay in the Philippines.
- The provider's fee.
- One-off costs, such as work permits, relocation and equipment.
Provider fees for Gloroots are published with no hidden administrative charges:
| Service | Price | What it covers |
|---|---|---|
| Employer of Record | From $199 per employee per month | Local contract, payroll, tax filings, statutory benefits, offboarding |
| Contractor of Record | $99 per contractor per month | Classification, local contract, compliance liability |
| Contractor Payments | $29 per contractor per month | Contracts, invoicing, bulk payouts |
These fees exclude salary and employer statutory contributions.
Anyone comparing providers can ask about deposits, termination fees, onboarding charges, minimum contract terms, payment fees and what the quoted price leaves out. Hidden costs are a recurring worry in buyer questions about EORs, and a written answer to each item is the quickest way to compare quotes fairly.
Cost depends partly on the country, and the country with the most inbound interest from global employers deserves its own look.
What Should Employers Know About Hiring in India?
India combines a very large technical workforce with a legal framework that changed in late 2025, which makes it one of the most common destinations for global hiring.
The GCC numbers show the scale: more than 1,800 centres and about 1.9 million employees. A company that isn't ready for a captive center can hire in India without a local entity through an EOR, which becomes the employer, runs payroll and handles statutory registrations.
Three points shape an India hire. The labour codes took effect on 21 November 2025, with phased implementation, so contracts and wage structures built on older law deserve review. India doesn’t accept the OECD’s 2025 home-office tests for permanent establishment, so tax exposure for foreign companies with staff there depends on local rules. And contractors in India who work full time under direction face the same classification questions as anywhere else, which is why companies with large contractor bases often convert them to employees or move them to a Contractor of Record structure.
Gloroots supports hiring in India through EOR, COR and Contractor Payments on one platform.
Country detail is useful, but most buyers start from their own situation, not a country, which the next section addresses.
Which Hiring Model Fits Which Situation?
People searching for global hiring help usually arrive with one of a handful of situations. The table maps each to a starting point.
| Situation | Likely route | Why |
|---|---|---|
| One strong candidate in a country with no company presence | EOR | Gloroots becomes the legal employer, so the hire can start without an entity |
| Testing a new market before committing | EOR | Employment can end under local law without closing a company |
| Dozens of contractors paid from the US or EU | Contractor Payments or COR | Payout rails and invoice tracking, with COR when classification risk is the concern |
| A contractor who now works full time under direction | Convert to EOR | Moves the worker onto compliant employment with statutory benefits |
| Moving an existing employee to another country | EOR with immigration support | The employer needs a local employment contract and a permit route |
| Funds held in crypto, workers paid in local currency | Contractor Payments with off-ramping | Converts digital assets to local currency for payout |
| Many employees in one country over a long horizon | Own entity | Fixed setup costs spread across a larger headcount |
A company that starts with an EOR can still set up an entity later and transfer its employees, so the first choice doesn't have to be permanent.
Choosing a provider carries its own risks, and a short list of questions helps screen them.
What Questions Should Buyers Ask a Global Employment Provider?
The strongest buyer questions come from the role of the person asking.
A finance lead asks about cost transparency.
- What does the monthly invoice include and exclude?
- Are there deposits, termination fees or onboarding charges?
- How are payments sent, and in which currency does each worker receive pay?
A head of People asks about compliance and experience.
- Who drafts the local contract, and is it reviewed by in-country legal specialists?
- How are statutory benefits, leave and termination handled for each country?
- What support is available when an employee has a payroll question at night or on a weekend?
A founder asks about speed and exit.
- How many working days does onboarding take, and what slows it down?
- What does it cost to end an employment if the market doesn't work?
- Can contractors be converted to employees later?
A legal lead asks about risk.
- Who carries misclassification liability?
- Who owns intellectual property created by the worker?
- Where does the provider's liability end?
Gloroots offers 24/7 human support from global employment specialists for payroll, compliance, onboarding and employee needs. Employers can talk to Gloroots with any of these questions before signing.
Beyond individual hires, a few broader shifts are worth planning around.
What Does the Next Phase of Globalization Mean for Employers?
This section is the author's analysis of the data above.
Rule changes are bunching up. Four separate changes fall between 19 November 2025 and 2 December 2026: the OECD update, India’s labour codes, the EU Pay Transparency Directive and the EU Platform Work Directive. Employers with workers in several jurisdictions have four sets of rules to review within about thirteen months.
Skills now matter more than location. AI development and AI literacy top the 2026 shortage list. A company that can only hire where it has an entity limits itself to the local supply of exactly the skills in shortest supply.
Capital concentrates while talent spreads. UNCTAD’s data shows investment centred on a small group of economies and sectors. Workers with in-demand skills live well beyond them, and employers can reach those workers without building a local presence.
Hire first, incorporate later. Sequencing is changing. Instead of setting up an entity and then recruiting, companies can employ people through an EOR, learn the market, and decide on an entity once headcount and revenue justify it.
The final section answers the most common questions in one place.
FAQs About Types of Globalization and Global Hiring
What are the four types of globalization?
The four types are economic, political, cultural and technological globalization. Economic covers trade, capital and labor flows. Political covers treaties and shared institutions. Cultural covers the exchange of ideas and norms. Technological covers the digital infrastructure that lets work cross borders. Some frameworks add an ecological type, and the KOF index uses three dimensions: economic, social and political.
How does globalization affect hiring?
Globalization widens the talent pool by making cross-border work technically easy, while legal rules still treat each country separately. Employers gain access to skills they can't find locally, and they take on obligations in each country around employment contracts, tax, social security and benefits. An employer of record or a contractor platform manages those obligations without a local entity.
Can a company hire employees in another country without a legal entity?
Yes. An employer of record becomes the legal employer in the country, issues the local contract, runs payroll and files taxes, while the hiring company directs the daily work. Gloroots does this in 150+ countries and onboards hires in 3 to 5 working days. Hires who need a work permit take longer because of government processing.
What is the difference between an EOR and a PEO?
A PEO co-employs a company's existing workforce, mainly in the US, and both parties appear in the employment agreement. An EOR is the legal employer of workers in a country where the hiring company has no entity and is typically the only employer named in the contract.
What is the difference between a contractor and an employee?
A contractor is an independent worker who controls how the work is done and isn't integrated into the client's business. An employee works under the employer's direction and receives statutory protections such as notice periods and benefits. The tests vary by country and often focus on control, which is why misclassification is a recurring risk.
What is a Contractor of Record?
A Contractor of Record (COR) engages and manages contractors on a company's behalf. Gloroots assesses the engagement, owns the classification decision and carries the contractor compliance liability. The price is $99 per contractor per month. A COR suits contractors in regulated markets, and it stops being the right tool when the role is really employment.
How much does an EOR cost?
Gloroots' EOR starts at $199 per employee per month. That fee excludes salary and employer statutory contributions, which vary by country. Buyers comparing quotes should ask about deposits, termination fees, onboarding charges and minimum terms.
Can remote workers create a permanent establishment for a company?
They can, depending on the facts and the countries involved. The OECD’s 2025 commentary says a home office generally isn't a place of business if the worker spends under 50% of working time there over 12 months. At 50% or more, the analysis turns on whether a commercial reason links the worker's presence to the business. Some countries, including India, don't accept the OECD tests, so local advice applies.
How can businesses pay international contractors?
Contractors are paid against invoices, usually through a payments platform that tracks contracts, invoices and payouts and sends money in local currency. Gloroots' Contractor Payments costs $29 per contractor per month and supports bulk payouts and crypto-to-local-currency off-ramping, typically within 2 to 24 hours of funding.
When should a company set up its own entity instead of using an EOR?
Companies usually consider an entity when they have a sustained headcount in one country and local operations that justify the registration, banking, tax and HR setup. Until then, an EOR carries the employment responsibilities with no company to register or close. Employees can be moved to the new entity later.
Ready to hire, employ and pay talent in another country?
Gloroots is a global employment platform from Global Roots Inc. that offers Employer of Record, Contractor of Record and Contractor Payments in 150+ countries, with 24/7 human support. Employers can book a demo to get the statutory requirements, a realistic timeline and a country-specific price for the next market, whether or not they go ahead.
