When expanding into a new market, a business may decide to hire a local employee or send an employee to the country to test out the market. In doing this, an organization has a variety of legal obligations it will need to fulfill.
These obligations vary from country to country, making it difficult for employers to expand internationally quickly and efficiently. With Global Professional Employment Organization (PEO) providers, employers can break into a new market without worrying about maintaining compliance as the PEO does this for them. Here is what a PEO is and the role they play in international employment.
What Is a PEO?
A Global PEO is an entity that delivers employee management services, including payroll, benefits management, and recruitment. A PEO enters into a joint-employment relationship with a business by leasing employees to the business and managing employee-related responsibilities.
This enables businesses to outsource their HR duties, such as employee benefits, compensation, payroll administration, employment taxes and more.
This blog explores what a Global PEO is in more depth, how it works and the benefits of working with one.
How PEOs Help Employ Locally
Hiring remote talent can cost a business thousands of dollars. With a Global PEO, a business can save money and resources to invest in other areas of the organization. To begin, a Global PEO will deliver a report on how much a company should pay to a remote employee in the country they are hiring in.
Alongside providing employee management services and assisting with onboarding employees, a Global PEO provides payroll, benefits and other HR services.
They provide a solution that assists businesses in sourcing, hiring and onboarding talent from another country, all while ensuring the business remains compliant with local legal laws and regulations.
A Global PEO has a team of local employment experts and becomes the legal Employer of Record. This means businesses can break into new markets easier and quicker while also saving on expansion costs. As the Global PEO will take care of risk mitigation, compliance and benefits, the business only needs to focus on other important matters, like growing their business.
With the help of a Global PEO, an organization can move into new, international markets without having to set up a local entity. This ultimately fast-tracks the process and saves the organization money.
How PEOs Help Move Expats
Expanding into new markets comes with a variety of challenges beyond languages, cultural differences and taxes. A PEO ensures a company remains compliant with local hiring laws and gives organizations the confidence to maintain a remote workforce in another country.
A common issue organizations face when expanding into a new market and sending an employee abroad for an extended period of time is payroll. Although it may seem more efficient to send an employee abroad to learn about the new market, this actually brings various challenges with it.
An employee’s length of stay and their time while staying in the host country, as well as the nature of the job, will likely require income and social taxes paid to the local authority. This may be on the employee’s behalf and the company’s.
The reason businesses turn to Global PEOs is because of their expertise. With so much involved in international employment, it can create roadblocks that delay expansion and hiring. With a Global PEO, businesses benefit from their experience so they can complete their expansion and hiring projects on time.
Reports by NAPEO show businesses in a Global PEO arrangement enjoy a variety of benefits, such as growing up to 9% faster, having up to 14% lower turnover and being 50% less likely to go out of business.
Global PEOs currently deliver support to more than 175,000 businesses worldwide and are a crucial component of international expansion. If you are interested in learning more about Global PEOs, click below to access the insights.
Subscribe to our blog
Receive the latest GX blog posts and updates in your inbox.