Hiring global talent has its advantages: access to a wide talent pool, 24*7 productivity, multiple language support with a diverse workforce, cost benefits, and more.
But it also comes with its own challenges: understanding employment laws in every country to hire from, legalities, tax, pension and more.
It's not just about understanding the laws, but also about understanding the people. Alison Long, Chief People Officer at Till Payments, led the growth of the company's workforce across five countries. She said one major factor while hiring in a new country was understanding what benefits the candidates in that country expect. For example, they found health insurance was a really important benefit for US talent, but Australian candidates will not leave out an opportunity if health insurance is not covered.
It's indeed a lot of work, but there is a shortcut. Have you considered working with a global employer of record (EOR)?
What is a Global EOR?
A Global EOR helps you hire employees in foreign countries without setting up a legal entity in that location. The EOR hires on your behalf and becomes an employer on paper, owning up to all legal liabilities. They also take on administrative tasks like payroll management, benefits, contracts and other HR duties.
An EOR is a great choice when you are:
1. Expanding Globally:
EORs help you onboard employees in a new location without a huge list of prerequisites: legal entity in that country, understanding local laws, employees and more.
2. Testing a New Market:
Not every location might be a good fit. Finding the right talent and ease of doing business in that location are both important.
Is it easy to do business in a new country?
Let's take an example. Singapore recently had a rental hike of up to 40%. This change will increase the operating cost for businesses. As expected, many foreign firms are planning to move out if provided with no relief. It obviously won't be an easy decision for firms who took the pain of setting up legal entities in Singapore.
EORs become your limited-time trial before taking a long-term subscription.
3. Converting International Freelancers to Full-Time Employees:
Paul Arnesen, an International HR specialist, says many candidates won't prefer to be freelancers and figure out their taxes with no employment benefits. If there is a worker you wish to retain long-term, you can convert those freelancers to full-time employees using EORs.
Can You Hire Independent Contractors Through an Employer of Record?
Yes, employer of record services can be availed for hiring independent contractors and full-time employees. You can hire contractors locally as well as from foreign countries. You will be charged per contractor per month. The EOR can help you frame fixed-fee, hourly or milestone-based contracts per your requirements.
When Should You Use a Global Employer of Record?
Every country has different employment rules, varying tax structures and employee benefits. An international EOR helps you hire across borders compliantly.
If a US-based organisation wants to expand its horizons in Asian markets but does not wish to establish a separate entity, it can rely on a global employer of record. They assume the role of a legal employer, while you can focus on the strategies for remote team management. The business etiquette, culture and language in Asian countries are different from that in the US and having local expertise can help navigate these challenges of global employment outsourcing. Right from framing customised contracts to managing payments in local currencies, an experienced EOR can guide you through every step of international hiring.
Here are some instances when you can benefit from using a global employer of record:
- Not finding the right skilled talent in your location
- You are short on time and want to fasten the recruitment process
- You wish to explore newer markets and diversify your workforce
- You have found the right candidate but need help with visa and work permit documentation
- To receive ongoing HR support for payroll and benefits management
Partnering with a global employer of record assures you an extra layer of compliance with local laws and regulations.
5 Benefits of Working With Global EORs
1. Expands the Talent Pool
Jakob Knutzen, Co-Founder and CEO at Butter, found two major benefits of expansion in 8 countries:
1. Talent is not limited to 10 kilometres from the office area
2. People from diverse backgrounds helped them build a more robust and less biased product
Using EORs for global employment outsourcing gives you access to a wide talent pool and removes location dependence.
2. Faster Expansion
Not only do EORs increase your reach, but they also speed it up. By cutting down all the steps to establish a local team, you can now hire in new countries faster than you imagined.
3. Time and Cost Savings
EORs save you both time and money for establishing a legal entity and local team. Also, doing business in a new country comes with a learning curve where you spend some initial time figuring out the local rules for compliance. EOR takes the burden of staying compliant off your shoulders.
4. Reduces Liability and Helps With Compliance
EORs have a strong grip on local laws in a particular country. While it doesn't guarantee compliance, it reduces the risks.
EOR also becomes an employer on paper, so you shift the legal burden to them. A major legal risk is misclassification (wrongly classifying employees as contractors). The US government is already increasing budgets to check if companies are misclassifying workers. Nike, a major sporting goods company, could be fined over $530 million for misclassification.
An EOR owns up to all these risks by helping you comply with local laws.
5. Increased Flexibility
Lastly, a major and not-so-tangible benefit of collaborating with EORs is: flexibility and room to experiment.
Explore a new market with ease.
A particular location isn’t a good fit anymore? Move out easily.
Found the right candidates in a country you have never hired nor have an office? Onboard them.
EOR opens new doors for experiments without going brick-and-mortar.
Employer of record vs. Global employer of record
No significant difference exists between an employer of record and a global employer of record. While an employer of record can help you hire people from the same country you are based within, when you expand your search across international borders, you need a global employer of record with a scale of operations in multiple countries.
A global EOR handles the complexities of employing workers in multiple countries at a time. It can simplify the process for multinational companies by offering a single point of contact for managing global payroll, benefits and compliance.
7 Factors to Consider When Choosing a Global EOR
1. Local expertise
Does the EOR have knowledge of the countries you wish to expand in? A partner inexperienced in that country increases the risk of non-compliance with local laws.
2. What's Covered
What services does the EOR provide: Background checks, contracts, payroll, compliance, benefits, administrative tasks.
3. Intellectual Property (IP) Protection
What legal safeguards does the EOR provide for the safety of your IP? As EORs become legal employers, are they adding enough legal clauses in the contracts with employees to protect your IP?
4. Data Protection
How does the EOR protect data? EORs have access to the most sensitive employee data as they process payroll. Are they complying with global standards like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA)?
5. Transparent Pricing
Is the pricing and scope of services straightforward? Look for what services are covered.
6. Customer Support
Does the EOR have easily accessible customer service for handling any queries?
7. Past Testimonials
Has the EOR have worked with companies with similar goals and in similar markets?
Choose Rapid EOR for Expansion in India
India remains the top choice for expanding teams, especially tech talent. With deep expertise in India, Rapid EOR can unlock this talent pool by providing:
Hiring Support: Rapid's integrated service marketplace gets you in touch with professionals who can find you the best talent.
Easier Onboarding: Rapid works with third-party vendors for background checks, helps you with contracts customised for local laws/requirements and reduces onboarding time from 6 to 9 months to 5 minutes.
Benefits: Rapid offers three medical insurance plans, and you can choose what works best for your company.
Flexible Workspace Solutions: Rapid also empowers you to rent office spaces and have in-house teams.
Implementing Organisational Culture: You can define necessary policies for your Indian workforce specifically, like benefits policy, leave guidelines, etc. You can also create a customised holiday calendar. Lastly, you get all this with additional savings. Rapid exempts non-salary payments, like office space rentals and equipment, from GST charges resulting in savings of nearly 18%.
Schedule a demo call today to expand your workforce in India.
1. Is an EOR the same as a PEO?
Both Professional Employer Organization (PEO) and Employer of Record (EOR) can help you hire global talent. But the main difference is a PEO requires you to have a local entity, whereas an EOR doesn't. As EORs let you hire without a local entity in the country, they become legal employers having more control over employees. On the other hand, PEOs act as co-employers, giving you still more control over the workforce.
2. Is an EOR like a staffing or recruitment agency?
A staffing agency is only helpful in recruiting employees, whereas an Employer of Record (EOR) can own the entire employee lifecycle: hiring, onboarding, legalities and regular HR administrative tasks.
3. Is an employer of record (EOR) legal?
An employer of record (EOR) is legal, but different countries have different rules on hiring via EORs. For instance, Germany limits EORs to having employment contracts for up to 18 months only.
4. Can I use the employer of record service to hire a single employee?
While EOR services are often associated with hiring and managing team members, you can definitely use the service for individual hires. Whether you want to hire a full-time employee or an independent contractor, you can utilise EOR services.
5. Does EOR handle tax filing?
Yes, EOR platforms do offer services for handling employer taxes and deductions. They may partner with local service providers to manage the taxation and filing requirements. They assure compliance with tax regulations in the country you’re hiring.
6. How much time does it take to hire with EOR services?
The hiring time depends on a company’s requirements. It can take upto 2-3 weeks or a month to find the right candidate. But once you’ve finalised a candidate, with experienced EOR like Rapid, the onboarding time is reduced to minutes. With Rapid, your new hires will be part of the team on day 1!