Expanding operations, especially on a global or international level, comes with complex business challenges that demand careful consideration and strategic planning. There are cultural nuances, local labor laws, and regulatory requirements that must be navigated to ensure a smooth and compliant expansion. These can become overwhelming for global employers seeking to venture into new markets.
Fortunately, in this evolving landscape of global business, employers now have a valuable resource at their disposal—the Employer of Record company. Discover how businesses can leverage using an Employer of Record to attain efficiency, especially when dealing with international employees.
What is an Employer of Record?
An Employer of Record (EOR) company acts as the official employer for a group of employees on behalf of a client employer. EOR companies step in as partners, managing critical human resources functions of businesses. For example, they handle payroll, benefits administration, and tax compliance, while relieving businesses of administrative burdens and ensuring compliance with local regulations. Additionally, EOR services typically include hiring employees for various roles like software management, project management, back-office services, and a lot more.
The client company maintains control over the employees’ day-to-day work, while the EOR handles legal and regulatory responsibilities, ensuring compliance with labor laws. This allows businesses to expand globally and hire staff without setting up legal entities or private offices in each location, making it a convenient solution for international workforce management.
Commonly, a global employer looking to hire employees or teams from another country tends to rely on EOR services to expand efficiently. Why? The solutions that EORs provide are convenient for hiring, managing, and compensating employees in countries where a business lacks a legal entity. Moreover, EOR services grant businesses the flexibility to expand internationally with ease, enabling them to access global talent and markets easily.
5 Benefits of Using an Employer of Record (EOR) Service for Employment
Running a company often involves navigating complex employee management tasks. With Employer of Record services, businesses can streamline many of those processes.
1. Employer can reduce cost on business operations
One of the major benefits of using EOR services is it is a way of reducing a company’s operational costs. Achieving compliance, particularly in a global market, oftentimes has foreign costs that businesses do not immediately anticipate.
Recruiting foreign employees comes with unexpected expenses, including establishing a legal entity in the expanding country. Employers will likely hire human resource, financial, and legal teams to help stabilize operations. EORs help manage and potentially reduce these expenses because they can cover these tasks on an employer’s behalf.
Additionally, offshoring a team with an EOR partner allows a business to leverage different countries’ lower living costs; the cost of living in the Philippines, for instance, is half (52.6%) that of the United States, helping you save on salary costs.
Indeed, EOR services provide companies with a cost-effective way to manage global growth, as they can help ensure complete compliance in foreign markets and reduce the risk of potential penalties. In a way, it is a reliable means to regulate and manage these costs.
2. Employer will be compliant with employment legalities
When expanding your business and teams internationally, maintaining legal compliance can be challenging. EOR services help employers navigate the complex legal landscape in international markets. As a legal employer, the EOR service company takes on the responsibility for compliance with local labor laws and regulations. This includes adhering to proper hiring practices, pay rates, working conditions, and employment types.
By ensuring legal compliance, these services mitigate potential legal problems that could disrupt operations or incur costly penalties. Moreover, they help businesses focus on their core tasks while the EOR handles legal complexities. So, whether you are an employer exploring new markets or striving to become more efficient in your current markets, utilizing an EOR service could keep you within the legal bounds, reducing risk, and saving you valuable time and resources.
3. Employer will be at ease during business expansion
The typical route to expanding a business globally is establishing a legal entity in the area first, often in the form of a physical or private office. However, it’s a tedious and lengthy process. Organizations must sift through stacks of legal documentation to register their business in the country before working with their first remote employee.
Navigating international expansion can be a hurdle for many businesses, but using Employer of Record services can ease this process. Businesses keen on tapping into international talents do not always have the needed resources or expertise to hire globally while adhering to every host country’s employment laws.
That is why EORs are seen as a blessing for companies hoping to go international. They handle the employment management intricacies, thus assisting companies to hire globally. EORs have extensive knowledge of a country’s specific hiring laws, and by serving as the official employer of international employees, EORs absolve clients of legal complications surrounding international hiring. They also take care of the employers’ administrative and human resources duties, making global expansion easier than ever before.
4. Employer can save time that will benefit employees
When an international employer wants to expand into a foreign market, the amount of time needed to learn new regulations and sort out human resources, or employment management issues can add up quickly. Using Employer of Record services is beneficial in these scenarios, primarily as they save time for businesses since they also serve as the official employer on behalf of their clients. Instead of having to spend countless hours navigating unfamiliar regulations and laws, organizations can focus on refining their core initiatives and leading their teams to success.
Moreover, EORs reduce HR responsibilities for the company’s in-house teams and handle the workload of your staff assigned to employment management. Through delegating these tasks, EORs save time that the business can put towards strategic management and development. This, in turn, lets your teams spend more time on value-adding activities.
5. Employer can protect more the welfare of employees
When seeking to improve employee management and ensuring the welfare of your employees, one cannot overlook the role of EORs. Their solutions are not just about hiring; it is also about protecting your employees. Services of EORs go beyond hiring and encompass strategies that protect employees’ welfare. They ensure your company is adhering to the necessary legal guidelines that safeguard employee rights, and this is particularly relevant when businesses are hiring in foreign jurisdictions.
Using EOR services is not just beneficial for the employees; it is an advantage for the client employers as well, relieving them of stress and paperwork while ensuring thorough, functioning employee management.
Frequently Asked Questions About Using an Employer of Record
Are there any limitations to using Employer of Record services?
Yes, just like with any business model or arrangement, there are limitations to using an EOR. While the EOR model is efficient, it is always a necessity to plan if it will be the best fit for your business.
It is important to remember that while you are outsourcing employment management functions, you’re still responsible for assigning the daily tasks and managing your offshored team. Also, you must be aware that using such a service will require you to surrender some level of control over your employees. This could limit direct control over some processes like human resources activities. However, with proper planning and relationship with an EOR company, this concern should not really be something to worry about.
Additionally, although hiring an EOR company reduces the cost of operations, it can sometimes be costly, especially for small businesses. Of course, partnering with an external provider entails fees leading to increased operational expenses. So, for companies operating with a restricted budget, these extra costs could be a crucial aspect to take into account. That is why it is always a must to plan and analyze the pros and cons before making big business decisions, especially those involving costs.
How does an offshore Employer of Record work internationally?
When your business decides to go global, an offshore Employer of Record can significantly simplify the management of international employees and foreign employment regulations. An EOR is an invaluable asset for international companies, allowing them to quickly extend their operations into new territories.
Instead of struggling with unfamiliar rules and regulations in different countries, your teams can focus on delivering quality and value to your clients. EORs handle all the nitty-gritty of operating in a foreign environment in which they are well-versed. Moreover, they protect your employees’ welfare, providing a safety net that is especially crucial for offshore teams.
So, whether your business is contemplating a move offshore or seeks to streamline an existing international operation, employing an offshore EOR is a smart move towards a successful and seamless global expansion.
How much would businesses need to spend on Employer of Record costs?
The cost of using an Employer of Record might seem intimidating at first, but when you consider the benefits, it is clear to see why many businesses choose to hire one. The initial costs of an EOR can vary depending on the market, but once they are on board, they handle all the payroll duties, which can drastically reduce your costs.
It is worth noting that all markets are different and so, costs may vary. Keep in mind, reducing overall cost of operation is not just about cutting costs, but about reallocating resources effectively. Thus, having an EOR manage HR or administrative tasks continuously frees up crucial resources for other aspects.
Why should I use an EOR for employment purposes?
Why should you use an EOR? Quite simply, the benefits are numerous for both businesses. The primary reason to hire an EOR is to reduce the cost of operations. They can take on the legal compliance needs of your company, saving you time and resources. This means your company can focus on what it does best instead of getting bogged down in legal issues.
Additionally, if your company is looking to expand, an EOR makes this process simpler. They navigate the complexities of international law, smoothing the path for your business to grow. Worried about your employees’ welfare? An EOR also shoulders this responsibility, safeguarding your employees’ rights and benefits. The cost of hiring an EOR can often be offset by the savings your company will make in other areas, making it a financially smart move for many companies.
How do I choose the right EOR company?
When selecting an EOR company, it’s crucial to consider several factors that can have a substantial impact on your business operations. First, consider the provider’s experience and expertise in employment management solutions. Look for a company with a proven track record and extensive experience in the specific countries or regions where you plan to expand or hire employees. Second, assess the EOR company’s security measures and technology infrastructure to ensure the safety of your employees’ sensitive information.
Additionally, consider the EOR’s pricing structure and transparency. A transparent and flexible pricing model will enable you to make informed financial decisions and avoid unexpected expenses. Finally, consider the cultural fit of the EOR company. Choose an EOR company that aligns with your company’s values and cultural preferences to foster a strong and productive working relationship.
By carefully evaluating these factors, you can select the right EOR company that will provide reliable, compliant, and seamless HR solutions, enabling your business to expand and thrive in new markets.
Delegate and Collaborate for Employment Management Success
For companies looking to expand globally, an EOR service becomes an invaluable ally for businesses. The process of entering a new country often involves navigating complex legal and regulatory requirements related to employment and compliance. EORs possess specialized expertise in handling these employment management intricacies, staying up-to-date with labor laws and regulations in different locations.
By leveraging an EOR, businesses can efficiently establish a presence in new countries without the need to set up legal entities, significantly reducing entry barriers and time-to-market. This expedites global expansion plans and enables organizations to seize international opportunities swiftly.
Overall, partnering with a record employer company not only enhances HR efficiency and compliance but also empowers businesses to focus on their core objectives, foster innovation, and respond effectively to market demands, setting the stage for sustained success and growth.
Finding an Employer of Record in the Philippines
For businesses looking to expand into the Philippines or hire employees in the location without establishing a legal entity, finding an Employer of Record in the Philippines will make things much simpler. By partnering with the right EOR company, businesses can tap into the local talent pool, while having the guarantee that they follow Philippine labor regulations.
Aside from compliance, the EOR company working on your behalf will also help handle HR functions to seamlessly execute employment management without the complexity of establishing a legal organization. Through this arrangement, businesses are given the ability to focus on their primary goals.
Why the Philippines? The country has been one of the top destinations for offshoring and there are compelling reasons for this.
Educated and highly skilled professionals
The Philippines is known to have several talents looking for job opportunities. For example, many professionals look for careers related to the fields of information technology, customer service, and various back-office functions. Moreover, the country’s strong emphasis on education and proficiency in English makes it an ideal choice for businesses seeking fluent English-speaking talent for their offshore operations.
Low employment cost
The Philippines offers a significant cost advantage for global companies seeking offshore talent. With the Philippine peso’s lower exchange rate against the US dollar, labor costs in the country are comparatively lower than in many Western nations. This allows global companies to access excellent talents at a more affordable rate, of course, without compromising on quality. This cost advantage is particularly beneficial for startups, small and medium-sized enterprises, and multinational corporations seeking to optimize their operations while remaining competitive in the global market.
Benefit of having government support
The Philippines’ government recognizes the BPO sector as a major driver of economic growth. Thus, there are government regulations created as support to this industry. Not only that this presents a beneficial opportunity for businesses seeking to tap into the country’s thriving sector, but it also helps many Filipinos find jobs in corporate or private office.
By leveraging the expertise of EORs, businesses can overcome the challenges associated with global expansion, ensuring a smoother and more successful journey into new markets while remaining compliant and focused on their core mission.
If you’re searching for quality, cost-efficient, and professional EOR services that could function on your behalf, we at One CoreDev IT (CORE) can step in for your business. Through our employer of record solutions, we can provide you with a strong support team that offers nothing but the best for clients, providing top-quality services and excellent partnership.