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Hiring through EOR: 4 key advantages you should know

Hiring international employees can be fraught with hidden costs and surprising complexities. An EOR can make things much easier.

Partly as a result of the pandemic the trend for companies to hire international employees has surged over the past four years. Improvements in digital economies and the rise of remote working are breaking down barriers. With workforces now capable of communicating face to face via video links companies are taking the opportunity to access wider talent pools and spread their net globally.

Hiring through EOR services

However, hiring international employees brings with it a host of logistical, legal and financial complexities. Without local knowledge, it’s all too easy to fall foul of regulations in your chosen countries.

To address that challenge, more and more people are turning to Employer of Record (EOR) companies. An EOR is a local company that will serve as the legal employer for all your workers based in a certain country.

They become the legal employers and assume all the legal responsibilities and liabilities that entail. They handle all the details of employment such as managing payroll paying taxes and ensuring employees receive their full entitlements to benefits such as time off and sick pay.

You, meanwhile, pay the EOR a set fee that covers the wages of the employee and the services rendered. It’s a simple, cost-effective way to ensure you meet all your obligations with foreign employees and avoid any unintended compliance issues.

Here are four key advantages that make this an increasingly lucrative option for businesses.

1. Faster hiring process 

Speed is everything in this world. With business moving at a frantic pace, you need to be able to adapt quickly to any market demands. That means recruiting the people you need when you need them.

Without the benefit of a local entity, though, it can be difficult to move as quickly as you need. Hiring people takes time, and effort and comes with risk. You have to source people with the skills you need and run an interview process. Even then, there’s always the risk that your new employees won’t work out – a risk that is heightened if you lack local knowledge in your market of choice.

An Employer of Record, though, has that local knowledge. They are a dedicated HR company whose sole focus is serving as an employer for companies. They proactively

engage with the market, which means they can find people with the talent required much more quickly.

They can provide strategic advice on your hiring processes and present you with screened individuals who match the skills you’re looking for. They will often have a database of people with relevant skills who they can turn to when needed.

As such the hiring process can be much quicker and effective. You’ll spend less time screening out unsuitable candidates, and there’s also a better chance of finding people with the skills you need.

2. Focus on your core business

EORs take on the administrative and legal obligations of managing employees. That means they provide all the functions of an HR department, as well as taking on the risk. Their team will source the employees, manage the onboarding process, manage their payroll, and ensure taxes are paid and that the terms of employment meet labor laws.

Their team will handle the day-to-day management of employment such as processing payroll, managing annual leave, and employee benefits. In the event of problems, they can also handle the disciplinary process.

They do all this with the benefit of a trained team of HR specialists with specialist knowledge in the industry. They can provide advice on all regulatory changes and ensure you’re meeting all your obligations.

Without that specialist legal advice, companies can easily make errors which can lead to costly fines and unwelcome scrutiny from the regulators.

With the EOR taking care of the legal and admin side of employment, your team is freed up to focus on your core business. You’ll spend less time focusing on the nickel and dime tasks of amin and more time on the profitable duties of growing your business and expanding your footprint in the country.

3. Save on the cost of setting up a local entity

One of the most commonly cited advantages is the ability to work with an EOR without having a legal entity. Other options such as a Professional Employers Organization (PEO) or an Agent of Record (EOR) require a legal entity to get started.

Previously the most common way of working would have been to establish a foreign subsidiary in your country of choice. This takes time, and money and involves a huge amount of work to comply with all the regulatory requirements. Unless you’re looking to maintain a long-term, in-depth presence in the country setting up a legal entity in the country can make it very difficult to achieve a positive return on investment.

An EOR removes that need. They serve as an intermediary taking on full employment responsibility for your workers. They are the legal employers of the person. You simply have to pay their fee and benefit from their expertise without having the immense trouble of serving up a legal entity.

As such the cost savings can be considerable. If you’re just starting in a country or dipping your toes into the water, this can be a low-risk and cost-effective way to handle your foreign workforce.

4. Access to the larger talent pool

A major reason for hiring people from foreign countries can be to optimize your labor costs and expand your talent pool.

Digital technology has enabled companies to broaden their horizons, not just with the markets they sell to, but also with the people they work with. While previously a company might have been restricted to workers in their immediate locality or country, now they can look beyond their borders while still experiencing a seamless collaborative experience.

For example, if you want to access the best designers in the world, you can choose from professionals in any country. Tools such as video conferencing and instant messaging make it possible to communicate with people almost as if they were in the room.

The only problem is finding those professionals. An EOR can provide strategic assistance and guidance. With the benefit of their local knowledge, they can help you source the best people from that country. It streamlines the search process enabling you to get up and running with your new employees as soon as possible.

Hiring through EOR services in South Africa

Demand for EOR services in South Africa is growing rapidly. The country’s economy is upwardly mobile and outward-facing. It is attracting investment from foreign countries looking to outsource operations, hire freelancers and expand into the market.

In all these instances, an EOR makes sense. Without the need to set up a legal entity, it’s much more cost-effective and harnesses the specialist local knowledge of trained experts. It’s highly flexible allowing companies to scale operations up or down as they wish. For those looking to explore the value of outsourcing, it represents a great first step.

If you want to know more about hiring through an EOR, download our guide today.




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