Benefits of PEO For International Expansion
International expansion has a wide variety of benefits for just about any company, from being able to reach out to new customers to insulating themselves from market issues in their original country. However, like any business proposition, there’s going to be an element of risk. International expansion going wrong has damaged or even sank some companies, and it’s largely due to some of the following reasons:
- Misreading the new audience
- Neglecting your original client base
- Failing to follow regulations in your new market
The final issue can be particularly damaging due to not only dealing with fines but the fallout that comes with having broken tax or hiring laws abroad. A PEO solution is one of your best options to avoid this problem.
What Is A Global PEO Solution?
At the core, a global PEO (a Professional Employer Organization) is a company designed to serve as an outsourcing firm for companies looking to do business abroad. What this essentially entails is that rather than hiring individuals directly and dispersing them to international locations, the PEO will take care of a lot of these elements. These can range from:
- Regulatory compliance
Note, the PEO will still follow the instructions of the company that enlists them, and ultimately, those that use the PEO will have final say over decisions like employee termination. A global PEO solution simply serves as an intermediary that acts locally on the client’s behalf. This solution is widely used by international companies to onboard and payroll a remote workforce – highly skilled talent or local sales managers.
How is this the case? In order to do business in another country, most international regulations require you to either incorporate or establish a legal entity. These processes can be long, expensive, and in some cases, difficult to obtain. By using a PEO service, you can bypass this step while still remaining compliant with local laws and regulations.
PEO solutions are generally used by companies that have already decided to expand internationally through a local team, or perhaps a local team headed by an expat worker. Hand-in-hand with this is figuring out a way to deploy these team members, as well as how to properly arrange/manage them.
Risks And Concerns Of Hiring A Remote Workforce
As mentioned earlier, any business decision comes with risk, and the same applies to a remote workforce. Some potential risks include:
- Misclassifying full-time workers as independent contractors
- Failing to adhere to labor laws in terms of benefits/tax responsibility
- IP accidentally being attributed to a single worker versus your company
- Trade secrets being spread by your international team
With a lot of these issues, your ignorance of law serves as a little excuse. It’s essential for you to have a means to regulate the employment relationship, even if they are in a different country from you. This is why a full global HR infrastructure needs to be in place before you start hiring. In essence, a PEO employment service is insulated against a lot of the problems with a workforce. Using this business model not only keeps you from problems like misclassification but also avoids you losing a client base by having such mistakes/penalties going public. In addition, it allows companies to start back-bone operations in a new market with a small headcount and ‘test’ the market before incorporating in the country.
What You Get With A Global PEO Service
So, with this in mind, what exactly are some of the benefits that you get in terms of using a global PEO service? The most obvious one, as we covered before, is the fact that it mitigates a lot of the existing risks with a remote workforce. Having a service as a partner that specializes in tackling international compliance and hiring regulations means less stress and work for you. Along with this, being able to quickly adapt to different regulations makes it far more feasible to expand to multiple markets at once. This applies whether you’re looking to move to multiple countries in a single region or across several regions.
There are other benefits that shouldn’t be ignored, either. For example, using a PEO service helps you upscale your product line at a quicker rate, since you don’t have to go through as much red tape. In turn, this lets you add more clients to your portfolio, which supports the bottom line. Along with this, being able to develop quickly internationally and avoid any penalties or sanctions helps preserve the international image of your business.
When looking for the ideal global PEO program to take advantage of all these benefits, you’d be hard-pressed to find a better match than Acumen International. Our services can support your international business expansion in over 190 major global markets. We’re ready to help you develop your workforce and image in the new markets.
Reach out to us today for more information.