Global employment outsourcing (GEO) is the process of hiring employees from one or more foreign countries to optimise operations, save costs or gain access to some specialised skill or expertise. In this article, we explore the pros and cons of global employment solutions and their overall impact on the functioning and profitability of your business.
According to 360 Research Reports, the Employer of Record (EOR) market is projected to see significant growth over the coming years. From a total market size of $1.27 billion in 2021, it’s expected to reach $2.95 billion by 2027 – a compound annual growth rate of over 15%.
EOR companies can enable your business to expand its global workforce without setting up legal entities in multiple countries or worrying about local compliance requirements.
Think of global employment outsourcing as an easy, secure and seamless way of hiring international talent. It involves partnering with a third-party EOR provider to delegate responsibilities for managing global payroll, taxes, insurance and employee benefits.
A global EOR outsourcing company can help minimise risks and eliminate the need for setting up local entities in every country where your employees are based. Additionally, it’ll free up time and resources, as your in-house staff can offload the responsibilities of aligning with laws, regulations and compliance requirements in several countries – relying on their expertise and local knowledge.
Global employment outsourcing includes the following steps:
Unlike traditional outsourcing options, where you might delegate specific tasks, an EOR provider takes legal responsibility for your business and its operations in different countries. This can provide an extra layer of security and allow you to scale your business faster.
We outline the key benefits of using global employment outsourcing services for international business expansion.
There are various costs associated with hiring international staff, including onboarding new payroll administrators with experience in global payroll and establishing a legal entity in a foreign country, etc. Partnering with an EOR provider offers a more cost-effective alternative, allowing you to choose and only pay for the services you currently need.
As a result, you can scale your international operations up or down as needed while accessing the best global talent in your industry with minimal hassle.
One of the major benefits of global employment outsourcing is that it can give you quick, seamless access to an international talent pool. Hire the world’s leading experts in your industry, no matter where they’re based. You can also quickly access more cost-effective labour markets in the developing world, helping you scale faster and leverage an agile, dynamic and diverse workforce.
A good GEO provider will stay abreast of the tax regulations, employment standards and labour laws of every country you want to operate in. They employ payroll experts specialising in compliance, ensuring your foreign business operations are legally sound. This expertise helps reduce risks so your business can avoid fines, penalties and reputational damage.
If not handled properly, global employment outsourcing can also have certain drawbacks. Let’s look at a few things to consider and how to overcome barriers to outsourcing.
While a reputed EOR company will work with you to understand your needs and requirements, you’ll lose a certain amount of control. Additionally, there may be some language barriers to navigate and system/process learning to consider.
Differences in time zones, cultural expectations and holiday timings between different countries can impact productivity, if not properly managed. However, a good EOR partner can help you mitigate these problems through flexible work arrangements, effective communication strategies and initiatives to foster cultural awareness.
Many businesses are reluctant to share sensitive payroll information, such as employee bank details, overtime records, tax identification numbers, etc, leading to data security concerns when outsourcing duties.
To ease these fears, find a GEO provider that has implemented robust data security measures, including stringent access controls, multi-factor authentication, end-to-end encryption for data transmission and regular security audits.
Whether hiring international talent or expanding into a new market, navigating foreign labour laws and tax codes can be daunting. Building a global team will become much easier and less stressful if you have a reliable global employment service provider.
To help you make the right choice, we’ve outlined the key factors you should consider when exploring different GEO providers.
The most important question you’ll need to ask when outsourcing EOR is how many countries providers cover. Country coverage can vary significantly between providers, with some covering specific regions such as EMEA or APAC, and others emerging economies or OPEC nations.
If you need to expand rapidly over the next few years, choose a provider with extensive coverage. At TopSource Worldwide, we provide EOR solutions for over 180 countries and operate in every corner of the world. Make sure your chosen provider covers all the countries and regions in your expansion plans.
Check prospective EOR providers’ reputations and track records before you decide to work with them. They should have a thorough understanding of the regulatory environment and HR landscape in the target country where you want to hire workers and expand your business.
Choose a provider with a proven track record of working with businesses similar to yours in terms of size, industry and target regions. Even within the same country, different industries can have their own practices, work culture and regulations. Ask for client testimonials and case studies and, if possible, talk directly with some of their past or current clients.
Asking questions about niche topics (like labour leasing laws, bonus requirements, expatriate taxation, remote work regulations and severance payment laws in your target country) will also help you find providers with the right experience and expertise.
The process of international business expansion can be complex and unpredictable. So, you need a GEO provider that can adapt to the evolving needs of your business, allowing for flexibility and scalability. Here are some aspects to consider:
A business with globally distributed teams will face all the same hiring and payroll challenges as one with a local workforce but with some additional complexities.
With every new geography or jurisdiction, there are new labour and tax laws to be aware of to stay compliant. So, you need your chosen provider should have comprehensive expertise in the following areas:
Choosing a global employment outsourcing provider with expertise in these areas will help you avoid fines and legal issues when expanding into a new country.
Finding the right partner for global employment outsourcing could provide your company with numerous benefits, including global talent access, streamlined international compliance and cost efficiency in payroll operations.
Do your due diligence while assessing their reputation, geographic coverage, expertise and flexibility. Carefully weighing up the pros and cons of each provider will help you minimise the risk of errors and ensure successful international expansion.
TopSource Worldwide is one of the leading GEO/EOR solution providers. Having served more than 1600 clients across 180 countries, we offer unique benefits that make us one of the most trusted providers in the sector.
Here’s what to expect from TopSource’s global employment outsourcing services:
By partnering with us you’ll enjoy error-free compliance with all local regulations. Our experts can also offer cultural insights to help your business navigate diverse work environments.
To learn more about how TopSource Worldwide can help streamline the process of international business expansion, check out our Global Employer of Record Services (EOR) here.