Benefits of Working with a Global Employer of Record (EOR)
International Investment, Global Expansion Opportunities, and HR Risks
Globalization has resulted in significant interconnectivity, which means that businesses themselves can travel and reach new markets like the Silk Road of old. The commercial space is now a globalized network, and companies that raised investments in the last 12 months can and should take advantage of it. The economic effects of a globalized market are amplified because founders and investors can access new opportunities at a greater distance than ever before — their physical location or proximity no longer limits their reach to the consumer.
For tech companies to rise above the competition and become industry leaders, they need to expand into new markets. For startups and scale-ups, global growth can mean gaining access to more customers, increasing their revenue, and boosting their brand visibility globally — not just in one region. Companies with international team members can benefit from a larger talent pool, faster time-to-market, and significant cost savings.
However, as startups and scale-ups grow and their staffs expand, the potential for HR issues and compliance violations increases. Navigating the maze of international laws isn’t easy — even small mistakes can lead to compliance issues down the road.
Those who take the time and effort to mitigate and adequately manage these employment-related risks will ensure that they don’t face a pile of unexpected legal fees — or worse, a severe issue that results in lawsuits, damaged relationships with employees, or regulatory fines. This is especially true for startups and scale-ups taking on remote employees when your company is growing too fast and needs to figure out how to hire overseas.
As technology companies expand globally, they must manage HR risks carefully. There are several ways to enable overseas employment, with different risk tolerance, benefits, and drawbacks. Each company must decide which approach is best for it. We’ll discuss how to mitigate the risks of a multi-location workforce during global expansion.
3 Options for Multi-location International Employment
Businesses establishing a global presence face the challenge of managing and scaling an employee base with no common borders or language. To successfully expand abroad, companies have several options for enabling hiring in international markets.
The most commonly used ways are by doing the following:
- Establishing an overseas entity
- Selecting independent contractors to handle tasks remotely.
- Work with a global EOR (Employer of Record) partner.
Let’s take a closer look at each of the available options.
Risks and Drawbacks of Setting Up a Foreign Entity
Traditionally, setting up a foreign entity has been the most common approach. It requires a significant upfront investment but can be a good option for companies committed to operating in a country for at least five years. It also works well for companies that plan to employ dozens of workers or acquire physical assets in-country. However, the approval process can take months, and recent global events have led many countries to halt approvals for new foreign entities.
As a stand-alone solution, foreign entities still work well for small companies operating in a single country. But they are becoming less common as companies with global ambitions increasingly look to more agile and faster approaches.
Cultural norms, employee expectations, and economic climates can also vary widely from country to country. Yet many companies fail to conduct due diligence before establishing a legal entity in a new locale. The result is that they come unprepared for the HR-related challenges that inevitably arise when expanding into global markets.
Risks and Drawbacks of Working with Independent Contractors
Tech companies are always trying to find cheaper and easier ways to expand their business. Using independent contractors to launch in a new country is one solution. While it sounds like a simple solution, and these workers provide flexibility and cost savings, there are more than a few legal and compliance risks that companies need to consider before leaping. One of the most significant risks is misclassifying contractors, leading to severe penalties. The company must be careful not to fall into this trap.
Penalties are harsher than you might think. If contractors working for your business are actually considered to be permanent employees and are therefore misclassified, labor authorities will consider them to be full-time and backdate payroll taxes onto your business — as well as on the workers themselves. Getting compliant can be difficult — it requires a lot of effort and time, which costs money. It’s better to take a proactive approach by outsourcing to a reliable Global Employer of Record partner.
Benefits of Working with a Global EOR (Employer of Record) Partner: Get Compliance Right
As an entrepreneur and business leader, you have a lot on your plate. But, what you probably don’t have time or expertise to manage is your company’s global employment risks.
From managing multi-location employment and talent risk to mitigating local compliance risk when expanding internationally, outsourcing your global employment management to an Employer of Record Partner can save you time and money while controlling your legal compliance. Why subject yourself to all of the risks and complexities listed below when a global EOR partner can handle them?
Global Expansion: Top 20 Challenges for Company Founders
- Recruitment in international markets
- Mitigating multi-location employment risks
- Need to establish a foreign entity, requiring significant investment in time, and money along with long-term commitments
- Misclassifying overseas employees as independent contractors could put tech companies at risk of incurring severe foreign penalties
- Managing employee immigration
- Monitoring country-specific employment laws and regulations
- Finding the most cost-efficient ways to pay foreign employees
- Foreign taxation management
- Complying with foreign regulations
- Managing different payroll processes in multiple locations
- Finding expert consultancy in international markets
- Communicating long-distance with clients
- Lack of government support
- Need to navigate the risks of finding a reliable local EOR/PEO partner
- Dealing with hidden costs and non-transparent pricing models
- Lack of adherence to information security standards
- Foreign employment delays and bottlenecks
- Lack of full in-country HR support
- Need to broaden competitive horizons beyond home countries
- Managing hidden business risks when establishing a presence in multiple countries.
How Employer of Record (EOR) Partner Can Solve Major Challenges Founders Face
Startup founders should consider hiring a global EOR Partner since if a business owner isn’t careful with their human resources, they could end up in financial trouble. If you’re not familiar with EOR solutions yet, it’s worth learning how they can help ease some pressures around managing HR risk during global expansion!
The global Employer of Record market size is projected to reach US$ 6604.4 million by 2028, from US$ 4299.1 million in 2021, at a CAGR of 6.8% during 2022-2028.
A comprehensive array of Employer of Record (EOR) services can help manage HR risk in your company’s global expansion journey – whether it is a startup, scale-up, or enterprise-grade company.
The EOR service provider is a legal employer of your international workforce and pays employee taxes, social security, and other benefits on behalf of your company. Additionally, the EOR already has a registered business in the country of interest, meaning your business can expand faster and is more flexible. This can be particularly beneficial when requiring a contingency workforce for meeting business demands.
Employer of Record (EOR) services are crucial for your international expansion strategy. Collaborating with an Employer of Record (EOR) partner allows you to manage global employment risk better and reduce the administrative burden that multi-location employment can create. An experienced and reliable EOR partner can help you keep costs low, maximize productivity, and ensure that your international teams are compliant and adequately compensated.
Typically, this is done by taking over the responsibility of hiring workers from you and paying them directly. Still, an Employer of Record (EOR) partner may also assist with payroll processing, tax withholding, filing, insurance administration, compliance reporting, etc. EOR service providers like Acumen International offer these services to technology businesses looking to expand internationally faster without building out their workforce infrastructure in every location where they operate.
Quick and Easy Foreign Market Entry with a Global Employer of Record Services
Employing international talent can be a real hassle. You have to figure out what immigration documents you need to hire them, which documents the local governments require from you, and how exactly you’re going to fund the hiring of your non-local workers. An Employer of Record (EoR) is a third party entity that can help you manage any of those headaches, including:
- Immigration requirements
- Visa applications
- Extensions of stay
- Work permit sponsorships
- Local labor law compliance.
Streamlined Onboarding, Benefit & Payroll Management
As your company grows, it can be helpful to streamline the process of onboarding new employees. An Employer of Record can help you minimize costs and increase efficiency by creating an easy, streamlined process for new international hires and HR staff. You’ll avoid losing valuable time and money searching for information or documents that could have been collected earlier.
Benefits packages are another area where it can be helpful to streamline the process. Benefits are often complex (especially those mandatory employee benefits that you must provide to your employees in certain countries). Therefore, your EOR partner can make it easy for employees to understand what benefits they are entitled to and avoid having employees feeling confused about their benefits.
Finally, payroll management also needs careful attention when expanding globally. There are various laws worldwide concerning how much tax an employee owes on income earned overseas (this is known as “double taxation”). Streamlining this process with your EOR partner means making sure all payroll records are up-to-date, so there aren’t any errors when calculating taxes owed by employees who work abroad, which could result in penalties being applied.
Local Labor Law Compliance
As you expand your business globally, it is essential to understand each country’s local labor laws and regulations. You must comply with these laws, affecting your employees’ working conditions and rights. If you do not meet these standards, you will be at risk of fines from various government agencies. In addition, if an adverse situation occurs with one or more of your employees due to this breach in compliance, it could have repercussions for your company’s reputation worldwide.
To avoid this fate, founders and company leaders in charge of international operations need to understand the various compliance requirements that come into play during global expansion. The good news is that Acumen International, your Global EOR partner, can help you navigate them across 190 countries.
Employee Benefit and Insurance Management
As you expand your business from one country to another, you’ll want to ensure your employees are taken care of. You won’t be able to manage everything by yourself, so you need to have an Employer of Record (EOR) partner who can help with employee benefits management.
Your EOR Partner partner should be able to assist with:
Offering health insurance is crucial in international expansion because it helps ensure employee retention and reduces absenteeism.
This type of insurance provides financial protection for the family of a deceased employee. It can also provide financial support when someone is disabled by illness or injury.
Disability coverage pays out benefits when an employee becomes disabled due to an injury sustained while working at their job site (or while traveling on business). This coverage helps protect against lost income if an employee cannot work due to an illness or accident that prevents them from performing their duties as usual at work — even if they’re still employed with the company!
Handling Employment Contracts, Terminations, and Compensation
There are many benefits to outsourcing your company’s foreign employment management, payroll processing, and other HR-related activities to an Employer of Record. When you entrust these core responsibilities to a professional EOR, you can expect more remarkable accuracy and precision in these crucial areas of your business. Meanwhile, your in-house team can focus on other aspects of the business. Acumen International Global EOR can help you navigate those details.
While you may have a standardized employee contract, it’s essential to understand what steps should be taken when hiring abroad. Are there special employment laws? What about holiday pay or sick leave requirements? Acumen International Global EOR can help navigate those details.
If an employee is terminated from their position with your organization abroad, it could lead to legal complications. It’s crucial for both parties involved to fully understand how these situations are handled under local laws so they can avoid issues down the road.
Companies’ compensation programs vary depending on where they operate — including compensation benefits such as health insurance plans and retirement contributions (if any). Some countries don’t require employers to provide these benefits at all! Be sure everyone knows what options exist before deciding what kind of compensation programs should be offered while expanding internationally.
What Acumen International Global EOR Can Bring to the Table
Headquartered in London, UK, Acumen International, a Global Employer of Record (EOR) and Professional Employer Organization (PEO) service provider, was founded in 2001. The company gives mid-sized and enterprise companies the power and flexibility to grow internationally with streamlined and simplified global labor expansion.
Acumen International helps solve the frustrations faced by founders and leaders of technology companies looking to expand globally quickly but cannot or do not want to take on the liability, costs, burden of direct employer status, or other risks associated with operating in individual countries. International employers can also take advantage of our global resources to test a new market quickly before establishing a local legal entity.
Comprehensive EOR Packages and Budget-friendly Rates
With affordable packages and budget-friendly rates, Acumen International can offer secure, efficient global HR services to manage Global Payroll, HR & Benefits Administrations for businesses that need international talent but don’t have the resources or skills to handle it themselves.
Our full-service management solutions — from legal talent employment to benefits management, from compliance to payroll and taxation — are tailored around each client’s specific needs.
Acumen International’s unique and integrated approach allows us to offer a comprehensive array of EOR functions, including:
- Processing Immigration requirements
- Visa applications & extensions
- Work permit sponsorships
- Streamline onboarding, benefits, payroll, PTO
- Local labor law compliance
- Audit-proof compliance requirements
- Employee benefit management
- Handling employment contracts, terminations, and compensation
- Processing medical insurances and benefits
- Payroll, including year-end tax statements
- Relocation services & housing
- Benefit management
- Special needs or requirements
- Multi-country employment without limitations
- Handling contract worker and ex-pat workforce management
- Compliant employment or termination within 72 hours.
Let Acumen Global EOR Handle the Employment, Tax, and Compliance Aspects of Your Global Expansion
As you can see, Global EOR is an option for business owners who want to expand their operations internationally. It’s a revolutionary way to internationalize your business without setting up a new entity, hiring local employees in each country where you have operations, or worrying about the legal and regulatory complexities of operating in multiple jurisdictions.
Acumen Global EOR can help you by taking away some of the burdens of your busy schedule and the risks involved. Rest easy knowing that everything is taken care of. Global hiring is no more a hassle! With Acumen Global Employer of Record, you can employ, manage, and pay your employees in over 190 countries. No entity is needed, start international operations with no delay.
To find out more about how Global Employer of Record can help your organization grow into new markets, contact Acumen International today to discuss how we can help you achieve your goals.