Singapore companies often reach a point where local hiring alone cannot provide the talent, capacity, or cost structure they need to grow. Offshoring to Indonesia offers another path: building a dedicated team in a nearby market while keeping business leadership and strategic functions in Singapore.
Indonesia offers a large workforce, expanding digital capabilities, convenient working hours, and close commercial ties with Singapore. Its total labour force reached 154 million people in August 2025, including 146.54 million employed people.
However, successful offshoring is not simply about finding employees with lower salary expectations. Companies must choose the right roles, calculate the complete employment cost, comply with Indonesian employment requirements, and create an employee experience that supports retention.
This guide explains why companies offshore to Indonesia, which roles are suitable, how the available hiring models work, and what employers should consider before building a team.
What Does Offshoring to Indonesia Mean?
Offshoring means moving a role, business function, or operational process to another country.
For example, a Singapore company may build an Indonesian team to manage software development, customer support, finance, digital marketing, design, or administrative operations. These employees work from Indonesia but remain integrated with the company’s regional or global team.
Offshoring is sometimes confused with outsourcing, but they are not necessarily the same.
| Hiring model | What it means |
|---|---|
| Offshoring | Moving particular roles or functions to another country |
| Outsourcing | Engaging another company to deliver a service or business process |
| Remote hiring | Hiring employees who work outside the company’s main office |
| Contractor engagement | Engaging an independent professional for a defined service or project |
| Employer of Record | Hiring through a local legal employer while managing the employee’s daily responsibilities |
An offshore employee can still be a dedicated member of your company. The key difference is where the employee is based and how the employment relationship is structured.
Why Singapore Companies Are Looking to Indonesia
Singapore and Indonesia have established commercial, investment, and talent connections.
According to Singapore’s Economic Development Board, Singapore invested more than US$20 billion in Indonesia in 2024. Trade between the two countries reached US$57.6 billion during the same period.
Batam has also developed into an important link between the two business ecosystems. Nongsa Digital Park was positioned as a digital bridge supporting talent development and collaboration between Singapore and Indonesia.
For Singapore companies, this established relationship makes Indonesia more than a source of lower cost labour. It can serve as a strategic talent base supporting regional operations and long term growth.
1. Access a Large and Diverse Talent Pool
One of the strongest reasons to consider offshoring to Indonesia is the size and diversity of its workforce.
Indonesia’s labour force reached 154 million people in August 2025, up by 1.89 million compared with August 2024. The number of employed people also increased to 146.54 million.
This scale gives employers access to talent across multiple industries, experience levels, and locations.
Jakarta remains the country’s principal business centre, but it is not the only place to recruit. Employers can also explore talent in cities such as Bandung, Surabaya, Yogyakarta, Medan, Makassar, and Batam.
Different locations may offer different talent advantages. Jakarta has a large concentration of corporate, technology, finance, and commercial professionals. Bandung and Yogyakarta are known for their education and technology communities. Surabaya provides access to operations, commerce, and industrial talent. Batam is particularly relevant to Singapore companies because of its location and digital infrastructure.
Nongsa Digital Park in Batam includes technology talent development programmes, hiring initiatives, and information technology infrastructure intended to support the needs of Singapore based companies.
A large workforce does not mean every candidate will be suitable for every offshore role. Employers should still assess:
- Technical competence
- Relevant industry experience
- English communication ability
- Experience working with international teams
- Independent problem solving
- Remote collaboration skills
- Alignment with the company’s working style
Companies that recruit according to these factors can build teams based on capability, not simply salary.
2. Build Capacity at a More Sustainable Cost
Employment costs in Indonesia can be more competitive than in Singapore, particularly for operational, creative, technology, and support functions.
This gives companies an opportunity to expand capacity without increasing costs at the same rate as local headcount. The resulting budget flexibility can be used to hire additional specialists, invest in management, improve employee development, or extend operating hours.
However, comparing base salaries alone can create an inaccurate business case.
The complete cost of employing someone in Indonesia may include:
- Gross monthly salary
- Employer social security contributions
- Religious holiday allowance, commonly called THR
- Income tax administration
- Health or supplementary benefits
- Equipment and software
- Recruitment costs
- Payroll and employment administration
- Office or flexible workspace costs
- Potential termination and severance obligations
Indonesia also applies provincial or local minimum wages rather than one national rate for every employee. Employers must check the wage applicable to the employee’s work location and job arrangement.
A realistic cost comparison should consider the role, seniority, skills, employment location, benefits, and statutory obligations. It should also account for the cost of management and collaboration.
The complete cost will depend on salary, location, statutory contributions, benefits, equipment, and the employment model. Review the Indonesia employment guide when preparing your hiring budget.
3. Work Within Closely Aligned Time Zones
Indonesia offers a significant operational advantage for Singapore companies: convenient working hours.
Jakarta, Bandung, Surabaya, and Yogyakarta operate one hour behind Singapore. Batam is in the same time zone as Jakarta. Other parts of Indonesia may share Singapore’s time zone or operate one hour ahead, depending on their location.
This close alignment supports real time collaboration during the normal business day.
Teams can hold planning meetings, review work, respond to customers, and resolve issues without requiring employees to work late at night. Managers can also provide faster feedback and maintain regular contact with offshore employees.
Close working hours can improve:
- Employee onboarding
- Daily communication
- Project coordination
- Customer response times
- Issue resolution
- Performance management
- Team inclusion
Time zone alignment alone does not guarantee effective collaboration. Companies should still establish clear communication practices.
For example, managers should define which conversations require meetings, which updates should be documented, and how employees should raise urgent issues. Offshore employees should also have access to the same important company information as colleagues in the main office.
When the communication structure is clear, a Singapore and Indonesia team can operate almost like colleagues working in neighbouring offices.
4. Access Growing Digital and Business Capabilities
Indonesia’s digital economy has created new opportunities for professionals to develop skills in technology, ecommerce, marketing, customer experience, financial services, and online operations.
The World Bank reports that 73 percent of Indonesians are online. It also found that Indonesian work involving the internet was associated with higher hourly earnings, reflecting the growing value of digital skills in the labour market.
The World Bank has also identified digital infrastructure and digital skills as important contributors to productivity and better quality employment in Indonesia.
For employers, this creates opportunities to recruit for roles such as:
| Business function | Example roles |
|---|---|
| Technology | Software engineer, quality assurance engineer, data analyst, product specialist |
| Marketing | Content writer, performance marketer, search specialist, campaign executive |
| Creative | Graphic designer, video editor, illustrator, user interface designer |
| Finance | Accountant, finance analyst, accounts payable specialist |
| Customer experience | Customer support specialist, implementation specialist, customer success executive |
| Sales | Sales development representative, account executive, sales operations specialist |
| Operations | Operations associate, project coordinator, administrative specialist |
| Human resources | Recruiter, talent sourcer, payroll administrator |
Not every role should automatically be moved offshore. Positions requiring constant physical interaction in Singapore, local licences, or extensive access to sensitive information may require a different arrangement.
Companies should evaluate whether a role has:
- Clear responsibilities
- Measurable outcomes
- Suitable digital workflows
- Documented processes
- Managers who can lead distributed employees
- Systems that support secure remote access
The most successful offshore roles are usually those with clear ownership and outcomes, rather than roles built around constant physical supervision.
Access Indonesian talent while managing recruitment, contracts, payroll, BPJS, tax, onboarding, and ongoing employment support through Glints TalentHub.
5. Stay Close to Your Offshore Team
Indonesia’s proximity makes it easier for Singapore companies to maintain a meaningful relationship with their offshore employees.
Batam is particularly accessible and has been developed as a location for technology, creative work, digital infrastructure, and collaboration between Singapore and Indonesia. Singapore’s Economic Development Board describes Nongsa Digital Park as an ecosystem supporting technology talent and the needs of Singapore based companies.
This proximity can support:
- In person onboarding
- Quarterly team meetings
- Training and employee development
- Leadership visits
- Company events
- Cross office planning sessions
The advantage is not limited to travel. Singapore and Indonesia also have extensive commercial connections, which can make the working environment more familiar than an offshore arrangement involving a distant market.
Nevertheless, employers should not rely on proximity alone. Indonesian employees still need intentional communication, fair career opportunities, and inclusion in company decisions.
An offshore team should be treated as part of the organisation, not as a separate group used only to complete lower value work.
What Are the Challenges of Offshoring to Indonesia?
Offshoring can create strong business value, but it also introduces responsibilities that should be planned from the beginning.
Employment compliance
Indonesian employment relationships are governed by local rules covering employment agreements, working hours, overtime, leave, social security, termination, and compensation.
The country recognises different employment arrangements, including fixed term agreements and indefinite employment. Fixed term agreements are subject to specific requirements and should be documented correctly. Indonesian guidance states that a fixed term agreement should be made in writing and use the Indonesian language and Latin alphabet.
Foreign employers should not assume that a Singapore employment contract can simply be used for an employee working permanently in Indonesia.
Payroll and statutory contributions
Employers may need to administer:
- PPh 21 employee income tax
- BPJS Kesehatan
- BPJS Ketenagakerjaan
- Overtime payments
- THR
- Leave balances
- Payroll records and reporting
Errors in payroll calculation or statutory submissions can create financial, legal, and employee relations risks. Glints’ Indonesia payroll compliance guide provides further information on these obligations.
Employee classification
Engaging a person as an independent contractor may appear simpler, but the arrangement must reflect genuine independence.
If the individual works under company control, follows regular employee hours, uses company systems, and performs an ongoing role within the organisation, the arrangement may resemble employment.
Companies should assess the actual working relationship rather than relying only on the title written in the contract.
Communication and culture
Even neighbouring markets can have different expectations around feedback, hierarchy, communication, and decision making.
Managers should create space for employees to ask questions, challenge assumptions, and raise concerns. Clear documentation is especially important because employees may be less likely to interrupt a meeting or openly disagree with a senior leader.
Retention
Employees who feel disconnected from the main company may be more likely to leave.
Employers should provide offshore employees with:
- Clear career paths
- Regular performance conversations
- Learning opportunities
- Appropriate compensation reviews
- Access to company information
- Recognition for their work
- Direct interaction with leaders and colleagues
A competitive salary may attract talent, but the overall employee experience determines whether people stay.
How Can a Singapore Company Hire Employees in Indonesia?
Companies generally have three main options.
1. Establish an Indonesian Legal Entity
A company can establish its own local entity and employ workers directly.
This model may suit organisations planning a substantial and permanent presence in Indonesia. It gives the company direct control over local employment, payroll, and business operations.
However, entity establishment requires time, investment, administration, and local knowledge. The company becomes responsible for registrations, employment contracts, payroll, tax, BPJS, record keeping, and employment compliance.
For a small initial team, this level of infrastructure may be disproportionate to the company’s immediate needs.
2. Engage Independent Contractors
Contractors can be suitable for defined projects or genuinely independent services.
This model may work when the professional controls how the work is completed, serves multiple clients, and is responsible for their own business operations.
It is less suitable when the company requires an individual to work as a regular employee under continuous supervision. Misclassification can expose both parties to tax, benefit, and employment disputes.
3. Use an Employer of Record
An Employer of Record, or EOR, employs workers in Indonesia through its local legal entity.
The EOR generally manages:
- Locally compliant employment contracts
- Employee onboarding
- Payroll processing
- Income tax withholding
- BPJS registration and contributions
- Statutory benefits
- Leave administration
- Employment documentation
- Compliant offboarding support
The client company manages the employee’s daily work, performance expectations, and business priorities.
This model can help a company enter Indonesia without immediately establishing its own entity. It can be particularly useful when testing the market, hiring a small team, or expanding quickly.
An EOR does not remove every responsibility from the client. The company must still provide a safe and professional working environment, manage the employee fairly, and avoid instructions that conflict with local law. The value of an EOR is that it provides local employment infrastructure and expertise.
How to Build a Successful Offshore Team in Indonesia
A structured implementation process can reduce hiring and compliance risks.
Step 1: Define the business objective
Start with the reason for building the team.
Your objective may be to access a scarce skill, extend operating capacity, improve customer coverage, or support regional expansion. This objective should determine which roles are hired and how performance is measured.
Step 2: Select suitable roles
Choose roles with clear responsibilities and measurable outputs.
Document what the employee will own, which decisions they can make, which systems they will use, and how their work connects to the wider team.
Step 3: Calculate the complete employment cost
Include salary, statutory contributions, THR, tax administration, benefits, equipment, recruitment, and employment management.
Compare the complete cost with hiring in Singapore, not only the advertised salary.
Step 4: Choose the right hiring model
Consider the expected team size, duration, management needs, compliance risk, and long term market plans.
A contractor may suit a short independent project. An EOR may suit an initial employee team. A legal entity may be appropriate once the local operation reaches sufficient scale.
Step 5: Recruit for skills and working style
Assess technical ability, communication, initiative, and experience working in distributed teams.
Use structured interviews and practical assessments that reflect the work the candidate will actually perform.
Step 6: Prepare compliant employment arrangements
Confirm the correct contract type, compensation, working hours, statutory benefits, payroll setup, intellectual property terms, and termination requirements.
Employment documents should be reviewed for Indonesian compliance before the employee begins work.
Step 7: Create a structured onboarding programme
Give employees access to systems, documentation, team members, and clear expectations from the first day.
Assign an onboarding contact and schedule regular check ins throughout the first three months.
Step 8: Integrate the team
Include Indonesian employees in company meetings, planning sessions, recognition programmes, and development opportunities.
Avoid creating a structure where offshore employees receive tasks without understanding the wider business objective.
Step 9: Review performance and employee experience
Track business results, quality, retention, engagement, and management effectiveness.
If performance is below expectations, determine whether the issue comes from recruitment, unclear processes, insufficient management, or the employment model itself.
Is Offshoring to Indonesia Right for Your Business?
Indonesia may be a strong offshore hiring location if your company:
- Needs access to a larger talent market
- Wants to build capacity at a sustainable cost
- Values close working hours with Singapore
- Can manage employees across locations
- Has roles with clear and measurable outcomes
- Is prepared to comply with Indonesian employment rules
- Wants to establish a long term regional talent strategy
It may be less suitable if the roles require constant physical presence in Singapore, your processes are not documented, or your managers are not prepared to lead a distributed team.
The strongest offshore strategies combine commercial efficiency with a positive employee experience. Companies that recruit carefully, comply with local requirements, and integrate Indonesian employees into the organisation are more likely to achieve sustainable results.
Build Your Offshore Team in Indonesia with Glints TalentHub
Building an offshore team can involve separate recruitment agencies, payroll vendors, legal advisers, and employment providers. That fragmented structure can slow hiring and make accountability unclear.
Glints TalentHub connects talent acquisition and employment management through one solution. You can source Indonesian professionals and manage compliant contracts, payroll, statutory contributions, onboarding, and ongoing HR administration with support from local experts.
Whether you are hiring your first employee in Indonesia or expanding an existing regional team, you can choose a model that matches your current scale without losing sight of future growth.
Talk to a Glints TalentHub hiring expert about building your team in Indonesia.
