You want to take advantage of overseas talent. You find the perfect person. Now what? How do you actually “employ” them?
It can be a bit daunting to enter this process. But others are doing it.
9% of the Philippines' GDP comes from business process outsourcing. Clearly, thousands of companies have figured it out before you have. You can do it, too!
When it comes to managing your company's workforce, two popular options often come into play: Employer of Record (EOR) and Professional Employer Organization (PEO) services.
They are both options that allow you to hire international talent - but understanding the difference between PEO and EOR is crucial.
An Employer of Record (EOR) is a service provider that assumes the legal responsibility for employing and managing a company's workforce.
The EOR provider handles tasks such as payroll, benefits administration, global employment outsourcing, and compliance with employment laws, allowing businesses to outsource these responsibilities while maintaining operational control and flexibility.
Need an analogy?
An EOR is like a travel agent for your global workforce.
They take care of all the logistics, paperwork, and compliance so you can focus on running your business in new countries, just like a travel agent handles all the details of booking flights, hotels, and visas for your vacation.
A Professional Employer Organization (PEO) is a service provider that offers comprehensive HR solutions to businesses.
The remote PEO partner assumes professional employer responsibilities such as payroll processing, benefits administration, and HR management, effectively becoming a co-employer with the client company.
As opposed to a travel agent, a PEO is more like a co-pilot for your company's HR journey.
They work alongside you, sharing the responsibilities and liabilities of being an employer, helping to navigate the complexities of employment laws and regulations, just as a co-pilot assists the pilot in operating an aircraft.
The main distinction between an EOR and a PEO is the nature of the employment relationship.
An EOR acts as the legal employer, assuming all liability and responsibilities, while a PEO enters into a co-employment relationship, where both the PEO and the client company share employer responsibilities.
Another key difference is the scope of services. EORs primarily focus on legal and administrative employer duties, such as payroll, compliance, and benefits administration.
PEOs, on the other hand, offer a wider range of HR services, including recruitment, training, and employee management.
When deciding between an EOR and a PEO, consider factors such as your company's growth plans, compliance requirements, and the level of control you want to maintain over your workforce.
EORs are well-suited for businesses looking to expand globally or hire remote employees, as they handle the complexities of international employment.
PEOs, on the other hand, may be a better fit for companies with a more localized workforce that need comprehensive HR support.
Ultimately, the choice between an EOR and a PEO will depend on your organization's unique needs and priorities.
By understanding the differences and consulting with HR professionals or legal experts, you can make an informed decision that will optimize your workforce management strategy.
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