How a Direct Employer of Record Drives Agile Global Expansion
Businesses of all sizes are going global. Whether it’s to reach a new customer base or access a broader talent pool, global expansion has numerous benefits. With these benefits, however, comes the complex issues of entering a new market, such as varying local regulations, cultural nuances and the heavy risk of noncompliance with differing employment laws.
For employers eager to tap into new markets, it’s now possible to hire talent beyond your home base. Embracing a work-from-anywhere or remote work model allows employers to benefit from global expansion with no need to establish an entity in a new location.
Partnering with a Direct Employer of Record (EOR) makes hiring in a new market quick and easy, alleviating the complicated legal process typically required of a business seeking to establish an entity overseas. This also eliminates the need for multiple solutions and vendors all at a fraction of the cost of traditional expansion.
Three Key Challenges to Expanding Your Business into New Countries
1. Understanding Local Employment and Tax Laws
When entering a new market or hiring global talent, it’s crucial to fully understand local labor and tax laws to ensure compliance and avoid potential legal issues.
Even the most common employment laws have slight—but critically important—variations from country to country:
The standard workweek in Canada is 40 hours.
In France, a workweek is 35 hours and capped at 48 hours in a single week.
The standard workweek in the UK is 40 hours over five days and may not exceed an average of 48 hours averaged over 17 weeks.
For companies looking to set up operations in a new country, compliance with all local tax and labor laws is non-negotiable and penalties can even include prison time.
2. Considering Global Payment Implications
Having employees in multiple markets can make salary payments and typical administration complicated and tedious.
A few questions that may arise when paying international talent:
What currency will my employee be paid in?
What is the best way to transfer money to a different country?
Will my employee encounter double taxation?
What is the most cost-effective way to send an employee their salary?
3. Navigating the Time and Cost of Global Expansion
Setting up an entity in a new country is time-consuming. On average it takes about 20 weeks, and that doesn’t include hiring and onboarding new talent. It’s also expensive, costing upwards of USD 80,000. That doesn’t consider other initial costs, such as employment registration fees, entity tax compliance, bank setup, in-country capital requirements, local legal and financial advice, as well as recurring expenses such as payroll, benefits and office space. These costs can easily exceed USD 20,000.
It may sound complicated — but a Direct EOR Solution can help
Expanding into new markets doesn’t need to be costly, time-consuming or complicated. The most efficient way to overcome these barriers is by partnering with a Direct EOR to manage the legal, HR, tax and local compliance responsibilities.
A Direct EOR has its own entity in the target market and serves as the legal employer of talent on your behalf. That means it hires its client’s employees in a target country under its local business entity and takes on all the legal risk. As the legal employer, a Direct EOR is responsible for:
Managing visa, immigration and work permit processes.
Running country-compliant payroll and taxes.
Compliantly handling local labor laws and HR requirements.
A Direct EOR can onboard, manage and pay staff on your behalf quickly and cost effectively. For example, on average, an EOR can set up and onboard a client’s employees in a new country in just four to eight weeks, and costs as little as USD 10,000 since they already have an entity in the target market.
With entities in more than 160 countries, a Direct EOR like Atlas eliminates the need for third-party vendors.
Is EOR right for your business sector?
From a household brand to a small non-profit, any company looking to streamline their international hiring can benefit from partnering with an EOR like Atlas—but some specific industries particularly benefit from leveraging EOR:
Tech and IT
When raising capital, many startups mention the desire for global expansion. These companies typically have a new product that must quickly be brought to market. Embracing an EOR remote-first structure to support employees with work-from-anywhere agility allows companies to be nimble and stay competitive.
Oil and gas companies often win limited-term projects in emerging markets. Many of these organizations operate in a country temporarily, so they opt to use an EOR for convenience, cost and time savings.
Top educational institutions are increasingly opening campuses overseas as international students seek a world-class education without leaving home. An EOR provides an ideal foundation for expansion.
Pharma and Healthcare
Pharmaceutical companies opt for an EOR to tap locations with higher densities of experts who have the required research and development skillsets. Their hiring needs are often project-specific, and assignments that start as temporary contract roles can sometimes become permanent. An EOR partner can help navigate the changing employment law requirements as these contracts change.
Set Up Your Organisation for Global Success
Planning your global expansion strategy can be intimidating, especially amid uncertainties and continued economic turmoil.
One of the key takeaways for organizations is to remain flexible and agile. For businesses, that means being able to respond to new opportunities as they occur, wherever they occur. For talent, that means being open to working remotely and flexibly, joining companies that aren’t necessarily located in the place they live.
Operating efficiently, particularly when it comes to expense, is always important when businesses emerge from an economic crisis. With a focus on saving our clients cost, time and local expertise, Atlas Direct EOR allows you to expand with ease.