Why An Employer Of Record Is Key To Helping Businesses To Expand Overseas

MANY growing and ambitious businesses will strive for global expansion at some point in their growth trajectory.

To succeed you will need to expand into new markets, grow your business presence, increase margins, and enhance your overall business operations.

And one of the key solutions that employers can add to their arsenal is the use of an Employer of Record (EoR), which helps to simplify hiring and paying an employee in a new state or country.

By using an EoR, businesses can free up time and resources and shield themselves from compliance and legal risk.

One of the leading experts in this field is Steve Malley, Global Director of EoR at HSP Group.

Here, Malley explains why an EoR should be an essential part of any global expansion strategy – and sets out how the HSP group helps its clients to utilize its benefits.


What is an EOR?

An EoR is a third-party organization that acts as the full legal employer of an employee while they do work for another company. An EoR assumes employment responsibilities, legal risks, and compliance responsibilities. It hires employees, executes payroll, administrates benefits and manages other HR functions on your behalf.

An EoR can greatly simplify hiring and paying an employee in a new state or location. By using an EoR, businesses can free up time and resources and shield themselves from compliance and legal risks.


Why is it important?

Serving as a swift-to-implement and risk-mitigating strategy, EoR facilitates businesses in accessing a new talent pool across different countries or regions, eliminating the necessity for establishing a complete legal entity. When executed accurately, this approach carries no potential for contravening local employment or tax regulations.

Navigating unfamiliar employment and tax laws in foreign jurisdictions can expose businesses to substantial risks. However, EoR acts as a protective shield, ensuring full compliance with local regulations. With EoR, companies can confidently operate within the legal framework, minimizing the potential for costly penalties or legal entanglements.

It’s also worth mentioning that especially for start-up businesses, EoR solutions allow businesses to set up in different markets with a leaner financial footprint.

Right off the bat, there’s so many benefits to EoR, but you must make sure you have the right provider onboard to help you achieve these.


What to consider when picking an EOR provider:

The industry has been inundated with service providers that have been coming to market with their own version of the truth, and so decision makers are flooded with information.

Whilst this can be a great thing, allowing you to evaluate all these opinions, such as some people advising on whether it should be direct or non-direct EoR, or lengths of time to employ people in certain countries, it can overcomplicate the process.

Therefore, business owners should aim to find an experienced provider that can not only ensure the minimum requirements such as compliance, but also simplify the process.

Businesses should also consider the transparency of the provider, its knowledge and expertise of different markets, its global mobility, and workforce solutions.


How HSP has created a model to effectively deliver EOR solutions:

HSP has four main offerings as part of our overall EoR solutions:

HSP EoR Offerings
EoR Evaluation – a HSP consulting project to help a customer evaluate if EoR is the right or the wrong answer for them, given their objectives and other available solutions in the market.
Solutioned EoR – HSP ‘white-labeling’ 1 of 3 EoR partners that have been selected through a lengthy RFP exercise.  We will have personas for buyers and EoR providers to better align which EoR provider the work is sourced with based on the buyer profile.
Supported EoR – a ‘managed service’ HSP offering, whereby we sit between the end customer and the EoR provider to ensure the customer has a fully optimized experience.
EoR Graduate – HSP assists a customer with establishing/running their own infrastructure and moving away from the EoR model.  This likely includes some version of setting up an entity, managing registrations, assisting with setting up a bank account, managing payroll, and statutory accounting and tax.


To find out more about HSP Group and how it can assist with global expansion, particularly through the use of EoR solutions, visit the website today at https://www.hsp.com/eor