PEO services are getting more common. And why not? Professional Employer Organization (PEO) services providers enable businesses to expand into international markets quickly while saving money and efforts in recruiting and managing local talents.
As per research, the average cost savings from using a PEO is $1,775 per year per employee. Besides, the exponential growth of the PEO industry from 2022 to 2027 indicates that it has a profitable, positive long-term outlook.
But how do PEOs work, and why are PEOs essential in the business expansion? Let’s look at that in detail.
How Do PEO Services Work?
A professional employer organization works in a co-employment model. They help you find the right talent for your organization, pay them wages on your behalf, and offer other benefits (e.g., health insurance, pension, etc.).
PEO services also ensure compliance with the local employment laws in your area of operation. In addition, you get complete control over the employees and manage their day-to-day activities.
Why Are PEO Services Important?
The primary advantage of hiring PEO services is that you do not have to create a legal entity for your business in the country. Also, you won’t have to worry about the complicated and ever-changing local labor laws.
That said, let’s dig deeper into why you should choose PEO services when expanding your business internationally.
Saves Time
Employing a full-time, in-house team could be highly time-consuming for businesses entering new markets. For instance, to hire employees in India, you’ll first need to register your business in the country. Then, conduct recruitment drives to find the right talent for your organisation.
However, with PEO services, these tasks get streamlined. They eliminate the need for registering your business in India and help find skilled employees as per your requirements.
That’s not it. A professional employer organisation also saves time in payroll processing, employee management, and administration tasks.
Reduces Operational Costs
PEOs often work with multiple companies and employ thousands of employees. Therefore, they have advantageous agreements with insurers and great bargaining power. As a result, they can offer employees the most favourable benefits at a low cost.
Also, PEOs reduce costs to process your payroll and other accounting costs. They can quickly and accurately handle payroll calculations, including leaves and overtime.
Moreover, they reduce the risk of potential lawsuits. For instance, employee-related lawsuits like wrongful dismissal or discrimination might cost you millions of dollars in fines and hurt your reputation. With a PEO, you won’t have to worry about it as they’re the official employer.
Provides Much Needed Flexibility for Growth
One of the most underrated benefits of PEO services is the flexibility they offer. You can hire, reassign, or terminate employees as per your requirements at short notice. Besides, if you feel an employee is not productive enough or generating value for your business, you can ask the PEO to assign someone else.
Partnering with a PEO also future-proofs your employment needs in the long run. For example, if you are planning to create a new department in your company, you can quickly hire employees with the help of a PEO. And if you feel that the plan is not going as expected, you can terminate them without any repercussions.
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Ensures Compliance
Since employment laws change often, you must understand and implement those changes in the countries you’re doing business in.
Since PEOs are familiar with local employment rules and regulations, they ensure compliance with local labor laws. They also ensure that you follow the necessary policies to protect your business from legal problems.
PEO services advise you on employee management best practices and notify you of regulatory updates. For instance, in India, employers cannot make their employees work for more than 48 hours per week unless mutually agreed. Also, if an employee is asked to work on national holidays, they’re entitled to comp off within 90 days.
By following these best practices, you can enhance your brand reputation as an employer and prevent getting fined by authorities.
Helps Find Better Talent
Recruitment experts in PEOs know where to find the right talent for your business. They also have a good idea of the average compensation for the position you’re looking to fill. This helps you find and add talented employees to your team.
Moreover, this process becomes more affordable when PEOs do the work for you than when you do this alone.
PEOs can also provide insights into your workforce to help you plan long-term strategies. For example, they can answer critical questions like:
- How much do you pay specific employees, and how does it compare to the market?
- What are the right skillsets for current vacancies?
- Which departments need more employees?
This information will help you optimise your strategies to increase employee satisfaction and minimise turnover.
Minimises Risk
Since you will be working with local employment experts, your business has no employment risk. Moreover, you won’t have to worry about making expensive payroll mistakes or attracting fines due to non-compliance.
Moreover, because the PEO is the official employer of record, it can take all the employee-related liabilities. This gives you the much-needed peace of mind that you need to concentrate on business expansion.
Bridges Cultural Gaps
When expanding your business into new environments, you’ll need people with exceptional soft skills. They will help you build new relationships with customers in the country and ensure client satisfaction.
Also, you’ll encounter cultural and language differences in every region you expand your business to. Thus, it is important to hire local employees who can provide deep insights into the market and help close more deals.
Hiring overseas staff through an international PEO will enable you to meet your new clients in the way they’re accustomed to. This shows you respect their traditions, increasing the chances of conversions. This also helps you break into the market faster and stay for longer.
Finding the Right PEO For Your Business
PEOs can make it easier to expand your business into new markets. However, not all PEOs offer the same services or the same quality. Therefore, it is important to hire strategically.
Here are some questions to ask the PEO before hiring them.
What services do you offer?
Every professional employer organisation has variable costs for its services. Therefore, it is essential to understand what you will be paying for.
Many PEOs offer HR consulting services which give you access to specialists who guide you with the best practices. They also help you understand local employment laws and ensure you always comply with them. Other PEOs offer a more inclusive package that includes recruitment and benefits management.
Irrespective of what kind of services you pick, it should align with your business expansion goals.
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Do you have experience working in our industry?
Since you’ll have to hire local talent when expanding business to a different country, you should consider choosing a PEO with experience in your industry. This will help you understand the local market better and ensure your pay is in line with industry standards.
Do you offer regular training programs?
Leading PEOs provide regular training and development programs to their client’s employees, which helps maximise their potential and efficiency. The development opportunities also show you care about your employees’ careers.
So, when expanding your business overseas, it is a good idea to hire a PEO that offers ongoing training to employees. Also, don’t forget to ask what type of resources they provide to employees.
Who will be the point of contact?
When hiring a PEO, you need to understand their offerings and how they handle your account. You need to stay in touch with the HR professionals working for your business. Also, clarify the protocols for contacting the consultants before you choose the PEO to eliminate any surprises at the last moment. with Husys you get a dedicated PEO Associate to handle your complete account keep 100% Compliant.
What kind of technology do you provide?
When partnering with a PEO, you get access to their HR platform to manage various aspects of your human resources. Ask which technology or software they use and if you can preview it. This will enable you to determine if the tool can be integrated with your existing technology ecosystem.
Wrapping Up
PEO services are critical to business expansion as they help reduce operational costs and speed up your entry to new markets. With PEOs, you can easily hire talented experts while they take care of payroll, compensation, and other benefits. PEOs also ensure compliance with employment laws and pay taxes on the employee’s behalf, enabling you to focus solely on your business expansion plan.
If you are looking to expand your business and got confused to choose a right partner who can fit your business goals do write us to reach@husys.com or reach us at +91 7204012636
1 thought on “Do you think Choosing PEO Service is a critical decision in the business expansion?”
Thank you for sharing this amazing blog