For many businesses, using a global Professional Employer Organization (PEO) to outsource human resources is hugely beneficial. There may be a need to manage a broad spectrum of core HR tasks externally for a variety of reasons. With the help of a global PEO, organizations of any size can maintain a consistent, reliable service that ensures compliance with employment regulations while improving employee satisfaction through HR outsourcing.
This can be of great benefit for businesses of all sizes, and with a variety of visions for the future looking to branch out internationally without the complications of regional regulations. A global PEO can provide much needed support in maintaining the HR and administrative side of your business overseas allowing businesses to explore new endeavors without the restriction of borders and regulations.
Take a look through our guide to find out more about what a global PEO is, how it works and what benefits it can provide.
What is a global PEO?
A global PEO company — also known as an Employer of Record (EOR) or Global Employment Organization (GEO) — offers comprehensive human resource outsourcing to assist companies in managing employees and operations without the need for extraneous internal departments. Global PEOs perform various employee administration tasks, such as payroll and tax, on behalf of a business for international operations.
Generally speaking, global PEOs cover multiple areas that fall under human resources. This includes:
- HR administration to bring new employees into the business swiftly and efficiently, handling regulations, leave, pensions and other HR processes with a single point of contact.
- Payroll administration to ensure your employees get paid accurately and regularly while adhering to specific local, regional and country compliance requirements.
- Tax administration for both your unique business and employee needs.
The services provided by a global PEO are broad ranging and varied. Depending on what you want to outsource or receive help with, you can adjust the level of support you’ll receive, and this will be incorporated into your service agreement. This agreement details the specific services that the PEO will provide, which is especially important since so many of the services can be combined and used to varying degrees. You could, for instance, engage a PEO to handle payroll processing and employment tax, while managing your corporation tax in-house.
It’s important at this stage to also differentiate a global PEO from a domestic PEO, which only works within its country or region of operation. Domestic PEOs are commonly used by small businesses to expand within their original country and, while they handle many of the HR and administrative tasks associated with such expansion, they do not provide the expertise of a global PEO for branching out into foreign markets.
Domestic PEOs use co-employment agreements to “share” ownership of employment contracts. This means that the client company and the PEO co-employ workers, with some responsibilities falling to each entity. Generally, the PEO processes all payments, taxes and liabilities, while the labor and compliance liabilities will still be enforced on the company’s local entity.
Conversely, a global PEO implements an Employer of Record agreement, which makes them responsible for all compliance, tax, payroll and employment benefits in the country of interest. This helps companies get established in a target country through the PEO’s expert knowledge of different countries’ regulations and procedures.
How does a global PEO work?
Global PEOs are specialists in understanding the nuances of employment in different countries around the world, making them the ideal solution for businesses looking to expand globally. The global PEO handles in-country recruitment through knowledge of local market environments, utilizing employment experts in the target country to manage the hiring process of international employees.
The PEO will hire, onboard, pay, and take care of staff on behalf of the company. This is how they become the legal EOR. As the global PEO is responsible for all compliance and risk mitigation, employee finances and benefits, this reduces the number of liabilities the company has to deal with. Companies can save up to 92% on international expansion costs through the use of a global PEO because it negates the requirement to set up an official business entity and have further staff running “back office” operations.
The benefits of using a global PEO
For almost every organization looking to expand into international markets, the global PEO model can be of great benefit to employers and employees alike. Here is our list of the main benefits global PEO services bring to an organization’s human resources management:
1. Reduced HR overheads
HR administration is time-consuming and costly, especially when trying to build up a back office in another country. Using a global PEO for seamless employment management allows you to scale up your business in a cost-effective way by removing the need to establish physical operations — including personnel — in your target country. It also keeps your internal HR team focused on activities with a better return on investment (ROI).
2. Employment compliance and risk mitigation
Global PEOs will set up compliant employment contracts for employees and can assist and advise you on how to employ staff in compliance with local laws and regulations, as well as local customs. This can be an exceptionally useful source of information when trying to understand different types of paid leave, regional salary benchmarking and the employee benefit entitlements or expectations of various locations.
3. Simpler payroll
With a global PEO managing your payroll, you can avoid having to navigate through the bureaucratic hoops of different target countries and the need to convert currencies for salaries and other payments. Entrusting this complex task to experts at a global PEO will reduce the risk of non-compliance when dealing with unfamiliar territories, where the rules and regulations can be different and complicated to follow.
4. Uncomplicated taxes
In addition to handling payroll, global PEOs can manage any tax requirements for each of the countries you want to expand into, with a high level of experience and understanding. This can include withholding, calculating, and remitting payroll taxes and contributions to the relevant authorities. The PEO will ensure everything is covered and compliant with labor laws for each country, as well as being optimized to ensure you’re not paying any more than you need to.
5. Boosting employee benefits
Employees in different countries are likely to be entitled to different benefits, which can become challenging to stay on top of. Global PEOs ensure your employees are getting the benefits they’re legally entitled to in their region. This can include anything from healthcare and pension plans to child care assistance and leave or sickness allowances.
As global PEOs partner with some of the biggest and best employee benefits providers, they can offer and manage high quality, highly customizable packages in each country of operations — and usually at far better rates, thanks to their "bulk discount” bundling of benefits. Not only does this take a lot of the workload off internal HR, but it helps your company attract top talent from anywhere in the world by offering very competitive employment packages.
All in all, engaging a global PEO provides a wide range of benefits to cover multiple HR services when expanding into different countries or looking for talent on an international scale. Many of the tasks involved can be time-consuming, complex and costly without the help of specialists. A global PEO can significantly reduce bureaucratic rigmarole, sorting out the primary logistics of international employment for you, so you can focus on growing your business and engaging new employees.
Global PEO services with Global Expansion
When it comes to finding the right global PEO service provider, it’s important to choose one that has the experience and expertise to understand your organization’s needs and goals. Not only that, but having a strong ethos based on people-focused HR services will ensure your employees are taken care of, while you take care of the business.
With decades of experience in providing global PEO services to clients of all sizes, Global Expansion has built an expansive network of HR experts that spans across 214 countries and territories to provide the most fluid PEO service possible. Our carefully designed combination of state-of-the-art automated software solutions and expert human knowledge is tried and tested to assure against any compliance issues, keeping your business running smoothly while you focus on your goals for the future.
If you’d like to learn more about Global Expansion and what a global PEO can do for your business, please click below to read more.