No two global employment solutions are the same. Not only does the service delivery model differ—for instance, an Employer of Record offers different services than a Professional Employer Organization—but there are also other factors that determine which employment solution is best suited to the organization that is looking to build a global team.
With so many different service providers to choose from, finding the right solution is not always easy. Before making a final choice, organizations should carefully vet any potential service partners. Here is what to look for when choosing a global employment solution.
One of the main questions organizations should raise when selecting a global employment solution is how many countries it actually covers. Depending on their operating model, i.e. owned entities or in-country partners, the country coverage can vary significantly from one provider to the next.
While some providers may offer their services in as many as 170 countries, others may only be operational in 30 jurisdictions. Yet others only cover a specific region like APAC or EMEA. Businesses intending to grow their global team rapidly over the next few years should make sure to choose a global employment solution that covers as many countries as possible—or at least all the countries and regions that feature on the business’s global expansion plan.
Successful global expansion is all about speed. Since expanding into new markets is a costly endeavor, things have to move quickly, including the hiring process. Global employment solutions are designed to allow businesses to enter new markets quickly by reducing the time needed for the legal onboarding of new employees.
However, there are significant differences between providers as to how fast they can actually move in a certain market. Some global employment outsourcing services promise incredibly short onboarding times, but then fail to deliver. Therefore, it’s vital to verify the provider’s claims as to how fast new hires can be onboarded before signing the service contract.
The gig economy is constantly growing and most companies have at least one if not several freelancers and contractors working for them to support their in-house teams. Businesses that decide to hire international employees to build a presence in a new market will probably end up hiring local contractors and freelancers as well.
International freelancers can enhance workflows and support internal teams in many different ways. But working with freelancers and contractors also has its challenges, such as navigating employee misclassification risks. When investing in a global hiring solution, businesses should make sure that the provider they choose can also help them hire and manage international contractors in full compliance.
Global employment solutions are typically based on one of two different operating models. They either work with direct entities or in-country partners. Both approaches have their merits and drawbacks. So businesses should carefully weigh up the pros and cons to see which model works best for them.
For instance, global employment solutions that work with their own entities are often organized in regional hubs that cover several countries. This often results in a lower level of local expertise compared to a provider who works with in-country partners that are specialized in employment and compliance in a specific jurisdiction.
International business expansion comes with many different compliance risks, many of which can become quite costly for the business. When choosing an international employment solution, it’s crucial to check the track record of any potential service providers. Do they have the necessary experience to compliantly handle recruitment, onboarding, and payroll? Can they answer questions on niche topics like labor leasing licenses?
Another aspect to consider is how long they have been in the business. Some organizations that offer global employment services have only just started to set up legal entities in different countries and therefore often still lack the necessary knowledge and connections.
Expanding businesses have different global employment needs and therefore require a varying scope of services. While some businesses only need a compliant way to hire employees abroad without opening an entity, others require the full package ranging from recruiting to global benefits management to multi-country payroll.
Building and managing global teams is challenging enough without having to contract a separate service for all the different aspects linked to global employment compliance and administration. Instead, it’s easier to choose a global employment solution that covers everything.
Global employment solutions typically follow one of two different pricing models. They either charge a fixed price per employee, or they calculate their service fees as a percentage of the employee’s salary.
Since wages and salaries vary between countries and job positions, the second model usually results in less transparency, which makes it more difficult to calculate the actual cost of the solution. Organizations should therefore opt for a provider with a transparent pricing model.
Last but not least, a global employment solution should come with reliable customer support. Payroll or employment compliance issues can arise at any hour of the day. And when they do, it’s critical to react quickly.
Facing a problem and relying on an external service provider to solve it is always frustrating, but even more so if the provider is unavailable. The chosen employment solution should therefore have an efficient customer support team and be available during reasonable hours—also considering different time zones.
The Lano Academy is for informational purposes only and should not be construed as legal advice. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this article.
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