How PEO [Professional Employment Organization] can be beneficial for Startups?

How PEO [Professional Employment Organization] can be beneficial for Startups?

Startups hold a great share in employing a large number of people and addressing their issues, the Indian government has taken few initiatives like tax holidays for 3 years to boost the economy and offer overall support.

Given the challenges in a competitive environment, startups struggle to combat work pressure and the chances of failing doubles. Research shows that the growth of a startup can’t be completely ascertained within its 4 years of operations; there are many factors that affect the whole process. Additionally, HR remains the most important asset to any business because even a single inadequate human capital or workforce can act as an impediment on its strategies.

While many startups are not open to the concept of outsourcing or investing in the human resource department, PEOs provide a number of services to help startups achieve their targets.Usually, PEO (Professional Employment Organization) becomes a co-employer and charges 50% less than HROs.

According to NAPEO (National Association of Professional Employer Organizations), if a startup starts working with a PEO, the chances of getting out of market can be decreased by 40-60% in the first few years and the startup can also carve a niche in the field of their expertise.

The few points below list the benefits that a PEO can provide to a company in its initial days:

  1. Hire The Best & Not The Rest

    Every startup and big firm desires to hire the best talent to ensure that their business develops and leads by 10X. But the catch is that most of the startups hire the wrong talent and later repent spending on the same procedure. According to experts, companies spend high amounts and time in finding out the right talent. Partnering with a PEO, a company can spend half of the amount and attract the best employees that they would be questing for!

    A PEO streamlines the hiring process like a pro and uses their own resources to post job advertisements, screen the profiles, conduct interviews and offer the job roles as required.

    Simultaneously, the company can concentrate on developing and building their business.

  2. Employee Retention

    No company would ever want to lose a quality employee because getting the same talent is difficult. Employees look for other options when faced with irregular pay cycles, lack of employee benefits or employer employee relations, insecure job situations or absence of work life balance. To retain skilled employees, it is critical for a company to provide required benefits and a good working environment.

    An expert or experienced professional in this field can help your company retain its biggest assets – skilled manpower at a very minimal cost.

  3. Managing Payrolls

    It is difficult for a lay person to understand the concept of payroll. Therefore, companies hire PEO or outsource the service to professionals to perform complex tasks like payroll, taxation, deductions and contributions, effortlessly. Startups’ founders prefer using payroll software to solve not only challenging and complex issues but provide exact data. Many PEOs use their own payroll software to calculate their clients’ salary structures and other processes.

    A PEO eases the process by accomplishing the task within a minimum time frame quite unlike the less experienced professionals who can take a longer time to finish the same.

  4. Statutory and Legal Compliance

    There are various federal, state, and local laws which are mandatory for businesses to follow. Additionally, non-adherence to any of these can lead to dire consequences like penalties or even worse. Appointing permanent employees as contractors and delivering wrong salary break-ups can lead to incurring huge costs. This is the reason why startups or companies stay updated on current policies or hire a PEO to tackle all the legal matters.

  5. Employee Benefits

    Many startups avoid providing employee benefits like retirement plans, insurance and food coupons foreseeing high costs. However, it is such perks that attract the employees to stay with the company for a long period.

    According to researchers, a large number of employees leave their jobs due to long working hours, absence of employee benefits or lack of employee-employer relations.

    To be in an advantageous position, many startups hire professional employer organizations as they provide the best cost effective retirement plans, insurance, and other plans.

Bottom Line

Hiring the services of a PEO is beneficial for any startup, either small or big as it helps companies to save their crucial time of setting up their enterprise. You can connect experts like us at or call us on +91 72040 12636 in case if you got struck in understanding or setting up the policy’s structures in your business expansion.

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