Making Sense of the Global PEO Model

The ongoing business trends toward globalization are affecting how companies work and hire. Overseas hiring provides many benefits to startups and other small and medium-sized businesses.

Competition for talent is one of the strongest drivers of international outsourcing. Outsourcing allows you to hire on an as-needed basis and is a good way to test out a new market.

For most smaller companies, the biggest barrier to international hiring is the sum-total of the unknowns. There are legal and tax considerations plus regulatory compliance differences to navigate. If you are entering a new market that you have no experience in there can be a costly learning curve.

This is why many companies are choosing to partner with an international PEO.

Understanding the PEO Model

A professional employer organization (PEO) is often referred to as a “co-employer.” This is a company that manages HR outsourcing for their client’s employees. The PEO model gives businesses an easier way to hire and manage their employees without setting up an in-house international HR team.

An international PEO manages hiring, onboarding, and providing benefits to international employees. The PEO will be the legal employer of record (EOR) for any international employees.

An employer of record takes on the legal responsibilities involved in employing overseas workers. They will help you manage:

• Payroll
• Taxes
• Health insurance
• HR liabilities
• Employee terminations
• Unemployment requirements

This means if you are doing business globally, your PEO acts on your behalf. They help you avoid tax issues and maintain compliance with local regulations. Your employees will be on the PEO’s payroll, who then handles all your HR functions on the ground.

Working with an international PEO provides a cost-effective way to enter a new market without having to set up a foreign entity. Since the company already has employment capabilities in your target market, you can hire and onboard your employees more quickly.

And partnering with a PEO allows you to significantly reduce your risk. A PEO already has experience with compliance and regulatory issues and can help you make better business decisions.

Getting Started

Years ago, expanding globally wasn’t feasible for many small and medium-sized companies. But thanks to the emergence of international PEOs, global expansion is no longer limited to Fortune 500 firms.

Using an EOR allows companies to hire employees in another country without setting up a legal entity in that country. They take on the legal responsibilities associated with HR, payroll, and employment laws.

Here are a few things to consider before partnering with an international PEO:

• Do they have employment capabilities in your target market?
• Do they have the flexibility to support your business growing into numerous markets?
• Do they have global employment compliance experts?

Clearfront HR provides seamless and affordable international HR outsourcing in over 130 countries. If you have any questions or are interested in learning more, contact us today. We would love to learn more about your business and how we can help.