4 Reasons why Employer of Record is the global expansion trend to watch

4 Reasons Why Employer Of Record Is The Global Expansion Trend To Watch

Article by Rosalind Smith , PR and Communications Manager at Mauve Group
Jul 05, 2022
Today, business is global. Organisations are increasingly moving beyond their existing marketplaces in search of increased profits, lower overheads, a wider talent pool and to pursue new consumer markets. With the most globally connected and technologically savvy workforce yet at our fingertips, there are unbounded opportunities for organisations to source top talent on the international stage.  

Employer of Record is helping to make the global vision a reality for organisations around the world. Although still relatively little known as a concept, analysts have estimated that the global EoR services market size is accelerating towards a value of more than $1bn by 2024.

The Employer of Record solution supports organisations by compliantly employing their workers in countries where their own local entity is lacking. An Employer of Record service absorbs the necessary local employment responsibilities and HR tasks, such as providing compliant contracts and managing payrolls, allowing businesses to focus on the day-to-day management of workers.

But what exactly is driving the boom in this global concept, and how is it helping companies to expand?

We explored four key reasons why the Employer of Record is the expansion trend to watch in 2022 and beyond.

1. It simplifies global hiring and removes local labor law restrictions

Any global business considering overseas expansion needs the right people in place to make the project a success – and often this means hiring locally. Employees are the most vital resource to a company, and how they are utilised can make or break an expansion project. Companies could opt to assign expatriates to the new country or hire local nationals who know their market inside out.

With variations in local labour and fiscal laws, global employment can be complex, and penalties can be huge when actioned incorrectly. Google last year came under fire for failing to correctly pay their contingent workforce in the UK, Europe and Asia – a move that could have substantial financial repercussions.

Using a global employment service ensures that all international staff are working and being paid legally in-country. When it comes to global employment or entering new international markets, employee compliance is key. Professional employment services are giving companies the peace of mind that all local regulations are being properly upheld, leaving them to focus on the logistics of expansion.

2. It’s an alternative to setting up a legal entity 

Global expansion is a big step, and the past few years have shown us that the business environment is anything but predictable. It is understandable that companies might want to try a target location for size initially before committing their resources in the long term.

Employer of Record is giving businesses a presence in new locations without having to go through the timescales and financial burden of setting up their own entity. The mechanism is also useful if the project is fixed term.

Once they have a handle on the success of that market for their product or service, they may then wish to set up locally.  The employees can be transferred over from the Employer of Record when the company is operational and able to employ.

3. It fills skills gaps 

Organisations increasingly do their business online and therefore engage workers that have the finest skills for the greatest financial value, regardless of their geo-location. Economies with advancing age demographics or vital needs to fill shortage occupations are also likely to look externally for workers.

An Employer of Record solution allows the company to hire beyond their existing base – in effect, they can go wherever the talent is. It can also support legal migration for work purposes, by sponsoring visas and work permits into the country of work.

4. It allows businesses of any size or location to globalise and become a global employer  

The way in which we “tag” organisations as belonging to a specific country is changing in the face of globalisation. The rise of incubating platforms backed by investors is exposing startups to international financial backing.  

Even smaller businesses no longer need to remain within the confines of their own marketplaces for business development or talent scouting. A company with just one or two international employees may not need to set up an entity.

Instead, they can engage the workers through an Employer of Record – allowing them to imitate a multi-national mindset without the in-house infrastructure.

Still on the fence about using the services of an Employer of Record? We can assure you the benefits and opportunities it can provide well outweigh the risks. If you are looking to recruit talent from anywhere in the world, but are not sure when or how to do so, explore Centuro Connect and contact one of our team.                                                                                                                                                                                                                                

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