PEO and EOR services are a boon to foreign companies looking for Indian talent. And why not? Whether you’re into cloud services, artificial intelligence, automation, cybersecurity, digital marketing, or any other
industry, you can easily find the right talent for your business in India. However, if you’re not an Indian company, hiring an Indian employee could be overwhelming. First, you have to set up a separate legal entity or a subsidiary. Then, you have to understand the complex labor laws to ensure you don’t invite penalties or legal actions.
Professional employment organizations (PEO) and employer of record (EOR) allow you to quickly hire foreign employees without worrying about legal and compliance issues. They even manage the employees from their joining to leaving, allowing you to focus on growing your business.
Let’s understand this in detail.
What Is PEO (Professional Employer Organization) ?
A PEO is an organization that acts as a co-employer to your employees by managing employee-related responsibilities and liabilities. This means PEO services in India allow you to outsource the human resources functions, such as payroll, employee benefits, compensation, taxes, and compliance.
When To Use a PEO?
PEOs offer better and more affordable benefits to your employees, a win-win situation for you, your employees, and the PEO. Furthermore, they ensure that you understand and follow the Indian labor laws to avoid fines (e.g., max 48-hour workweek, equal remuneration to male and female workers engaged in similar tasks, etc.).
That said, you should use a PEO when you:
- Have set up a legal entity in India but don’t want to spend months understanding the complex labor laws.
- Don’t have experts to ensure compliance with necessary laws.
- Want to focus completely on growing your business in India and not deal with government authorities.
- Need an expert (in HR and related laws) to sail through a new market.
What Is an EOR ( Employer of Records) ?
An EOR is a third-party organization that takes care of all the human resource functions, from hiring an employee to terminating. The major difference between a PEO and an EOR is that the former requires you to set up a legal entity in the country of operation. However, with an EOR, you can hire employees worldwide without setting up an entity overseas.
Another difference between a PEO and an EOR is that you don’t enter into a co-employment model with the latter. Instead, the EOR is the registered employer for the worker, eliminating any possibility of employment risks for your company.
When To Use an EOR?
You should use an EOR service provider when you:
- Want to hire Indian employees instantly but don’t want to set up an entity in India.
- Need Indian employees for a limited time or a small project
- Want to test the Indian market before you make a full-fledged investment.
- Don’t want to share employment risks.
Does Co-employment in PEO Really works?
What Can PEO and EOR Do For Your Business?
Although you know what a PEO and EOR can do for your business, here’s a quick recap.
- Find and hire the right employees for your organization in India.
- Ensure their agreement aligns with Indian laws and regulations.
- Manage employee benefits and compensation.
- Make timely payments to your employees.
- Deal with the HR needs of your employees.
- Tax deductions and filing
All you’re left to do is supervise your employees and manage their day-to-day tasks. Here are some more advantages of outsourcing your HR services in India.
How PEO and EOR Can Help Your Business?
Now that you have a fair understanding of what a PEO and EOR are and what they can do for your business, let’s look at some key benefits.
Overcome Regulatory and Legal Hurdles
As discussed above, India has complex labor laws, and when it comes to foreign direct investment (FDI), it can get further complicated. Therefore, meeting these rules can be a significant obstacle, especially if you don’t have experts who have a thorough knowledge of them.
A PEO or EOR organization can ensure you follow the right payroll structure, contribute to provident funds, deduct professional taxes, and make necessary deductions.
They can better manage a foreign entity’s financial and compliance requirements, reducing the risk of fines and penalties. Furthermore, they help improve your brand reputation in the marketplace, attracting good talent and customers.
Save Time and Money
The initial cost of setting up your subsidiary might seem low and feasible, but it can add up in the long run. For instance, there’s regular expenditure on banking, location premises, professional maintenance services, etc.
You will also have to shell out expensive legal and compliance costs to ensure you are meeting the government guidelines.
However, when you work with an Indian PEO service provider, you pay a mutually agreed amount to them while they manage all the HR and tax aspects of your organization.
Hire Good Talent Instantly
This is yet another great advantage of hiring an EOR provider. You can hire the right people for your organization without setting up an entity. In addition, this allows you to test the Indian market before making a full-fledged investment.
It also comes in handy if you’re setting up a legal entity (that can take as long as six months to a year) but don’t want to wait long to hire employees and get the work started.
Looking someone For Your Business Expansion?
Convert Contractors to Full-Time Employees
The Indian freelance community is growing rapidly. As a result, many foreign companies hire independent contractors and freelancers from India. They even hire the best freelancers as full-time employees.
And if it sounds like you, it is worth noting that you’ll need assistance from an EOR provider to convert them into full-time employees.
That’s because you cannot hire employees in India unless you have a legal entity or use an EOR. Besides, since the employee is Indian, you’ll have to deduct and pay them as per the Indian salary structure.
An EOR can do that for you while simultaneously providing all the employee benefits to the workers. This will help you demonstrate how much you value their (freelancer’s) services and your commitment to them.
Protect Intellectual Property (IP)
A reliable PEO and EOR provider like Husys has an IP protection clause built into the contract. This means that all the intellectual property belongs to you, giving you complete control over everything that the employees produce for you.
Moreover, the employees sign an NDA while joining, ensuring your business’s critical information is safe and secure.
Handle Contract Termination and Severance
Termination and severance are complicated. Unfortunately, many employers overlook the payout and unused holidays that can be cashed out. Even if the amount is minimal, it can invite lawsuits.
However, your PEO/EOR provider can manage this entire process seamlessly. This eliminates the risk of legal issues, let alone brand reputation.
Wrapping Up
PEO and EOR service providers are the best choice when expanding your business to India or hiring Indians. They ensure you comply with the local labor laws, reducing the chances of legal issues. Also, they help you save costs and overheads of managing employees. All you are left to do is assign tasks to employees.
So, why not leave things to the experts? Have questions? Shoot in the comments! or write us to reach@husys.com
