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Global PEO: Solution for Agile Overseas Hiring

Editor's Note: Take a look at our featured best practice, Agile Talent Acquisition Strategy (33-slide PowerPoint presentation). Recruitment is facing an unprecedented challenge as organizations undergo rapid Transformations. Despite the recognition that the credibility of the function relies on its capacity to swiftly adapt to evolving organization needs, recruiting is currently struggling to keep up with the pace. With an [read more]

Also, if you are interested in becoming an expert on Human Resource Management (HRM), take a look at Flevy's Human Resource Management (HRM) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

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Are you looking to introduce your business to new markets in a foreign country? Well, then chances are you’ve already contemplated establishing a legal entity in the country. Also, you might be in the process of recruiting a workforce to help your company find its footing abroad.

But creating a legal entity in a new country isn’t a walk in the park. The process is complex and slow. It involves a ton of documentation, as well as compliance requirements too. Moreover, finding, vetting, and recruiting top talent in a foreign country can be a herculean task.

A global PEO (professional employer organization) is the solution to all these problems. They can help your company quickly establish a strong presence in foreign markets. Also, they eliminate the need for you to handle various administrative tasks, such as regulatory compliance, employee payroll, etc.

In this blog, we’ll delve deeper into the world of global PEO and understand its benefits for your company. Let’s get started.

Global PEO: A Closer Look

A global PEO or professional employer organization is a company that recruits and manages employees on behalf of other businesses. That means you can work with a global PEO to hire talent in a foreign country.

A global PEO is also referred to as a global EoR (employer of record) or GEO (global employment organization).

Apart from recruitment, an international PEO offers several other services, such as:

  •     Payroll
  •     Insurance and benefits
  •     Legal compliance
  •     Tax filing

Typically, a PEO operates by establishing a presence in the local markets in various countries. They serve as the employer of record (EoR) for employees recruited in a foreign country. Or they might work with in-country partners across the globe to simplify workforce management for their clients.

As the demand for a globally distributed workforce grows, you can expect a surge in the available options for international PEOs. In fact, the PEO industry in the U.S. has witnessed a growth of more than 5% in the last five years. That means it’s easier than ever for companies to recruit talent overseas and break into foreign markets.

However, there are a number of things to consider when choosing a global PEO, including pricing plans and data privacy. Also, you need to find out how long you’re allowed to hire through a global PEO in a particular country. Similarly, you need to ensure that they have a strong presence in the country where you want to recruit.

For instance, if you were looking for an Australian PEO service or provider, you’d have to find an organization that’s well-versed with Australian labor laws and tax codes. Also, they must have a clear idea of the standard benefits and salary benchmarks for various industries in the Australian market.

The complex process of choosing a global EoR often makes businesses skeptical about working with them. Check out the benefits of hiring through a global PEO to understand whether it’s the right fit for your needs.

Excellent Time and Cost Savings

It’s the most obvious benefit of outsourcing overseas recruitment to a PEO. In the absence of a global EoR, you’d have to establish a legal entity in the foreign country before commencing operations. It could take months before the new office is ready, and you’re permitted to conduct business in the country.

Also, the burden of hiring new employees and running background checks would fall on your in-house HR professionals. It could quickly escalate recruitment costs. Also, obtaining business permits and setting up a new office will further amplify expenses.

A global PEO eliminates all these hassles by managing employee recruitment, payroll, taxes, and benefits. You can remotely recruit a workforce and start operating in new markets within a few days or weeks.

It’s particularly important when you want to test the waters in a foreign country before setting up shop. If things work in your favor, you can always create a legal entity in the country and transfer the PEO’s employees to your company’s payroll.

Improved Compliance

As a business owner or employer, it isn’t feasible for you to be familiar with labor laws, salary benchmarks, overtime charges, and tax codes in various countries. However, non-compliance with any of these legal regulations could land your company in serious trouble.

When you work through a global PEO, they act as the employer of record for talent in the foreign country. They ensure that your company meets all the salary, benefits, and tax regulations stipulated by the local labor laws.

Guaranteed Scalability

The low-risk and cost-effective framework of a global PEO help your company scale operations at ease. You can expand your business and recruit new employees without worrying about escalating costs. Also, it facilitates the hiring of remote employees. That makes a global PEO integral to every modern organization with a hybrid workforce.

Final Thoughts

Every entrepreneur dreams of expanding their business operations across the globe. An experienced and reliable international PEO can be your trusted partner on the journey. They’ll help you easily hire talent in foreign countries while adhering to all legal regulations. Make sure you find a global PEO that understands your needs and has a local presence in the country you wish to expand to.

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The purpose of Human Resources (HR) is to ensure our organization achieves success through our people. Without the right people in place—at all levels of the organization—we will never be able to execute our Strategy effectively.

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About Shane Avron

Shane Avron is a freelance writer, specializing in business, general management, enterprise software, and digital technologies. In addition to Flevy, Shane's articles have appeared in Huffington Post, Forbes Magazine, among other business journals.

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