Just like businesses, global expansion strategies are varied; each organization that entertains the idea of expanding globally has its own unique reasons for doing so. For many, establishing new revenue streams are a top priority, as well as gaining a competitive advantage within their industry—and access to a global talent pool is key for finding the brightest talent to execute these strategies.
With countless other considerations, however, sourcing and onboarding these employees can prove challenging. Moreover, hiring employees may take considerable time, stalling the expansion process. For this reason alone, many expanding businesses choose to partner with an International PEO (Professional Employer Organization) that can help establish their presence and hire employees faster than with traditional entity setup—but International PEO offers more than just global talent acquisition.
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How International PEO Works
Traditionally, global expansion meant setting up an entity in each new location, a process that requires valuable time and can stretch budgets. While entity establishment is certainly a smart decision under the right circumstances, it has the potential to limit an organization’s flexibility. International PEO allows companies to operate in new markets without the long-term commitment that comes with establishing an entity, allowing organizations to test markets before deciding on a permanent presence.
At its core, International PEO is a global expansion solution that allows businesses to hire in new international markets without creating a new “company” within that country. In some locations, it is also an effective way of handling the administration of employee contracts between three entities: the employing company, the administrative company, and the employee.
International PEO is seen for many as a viable alternative to entity establishment. It allows businesses to get up and running in new international markets not only within 48 hours but at a savings of up to 60% when compared to the more traditional entity setup.
An International PEO becomes an organization’s employer of record, allowing it to hire on the company’s behalf. It also handles legal and financial issues (think: income tax, employer social security contributions, and more). Overall, an International PEO helps guarantee that the employment relationship between the company and its new global workforce is compliant with all local laws and regulations. It’s a way that affords fast and flexible expansion, but also allows businesses to easily leave their new country if need be.
How an International PEO Can Help Mitigate Risk
Employment laws and regulations vary from country to country—sometimes wildly so. International PEO helps mitigate risks if businesses lack the infrastructure necessary to foresee potential risks due to political, economic, or geographical conditions. Businesses may be exposed to significant legal risks and ramifications during expansion; an International PEO, on the other hand, will help make sure that doesn’t happen.
Case in point: the duty of care obligations. Every country requires a company to create a safe working environment for its employees. However, countries vary on what a “safe environment” looks like. By teaming up with an International PEO that has a presence and history in the country into which a business is expanding, it can ensure that the necessary human resources processes are in place to keep employees safe, allowing organizations to operate compliantly.
Why Choosing the Right Partner Matters
One of the most important considerations for organizations to entertain is that while an International PEO can help dramatically increase the speed and agility at which it is able to expand, its success ultimately depends on finding the right global expansion partner.
Biz Latin Hub has helped hundreds of clients expand into LATAM—and helped them reach their global growth potential. If you’d like experienced, trusted leadership to help the best position your organization in your target market, reach out to Biz Latin Hub today. Whether you’re eyeing one country or exploring Pacific and Atlantic coasts, we can help you break into your LATAM market quickly and compliantly.
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.