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An Employer of Record simplifies global expansion by acting as the legal employer of your workforce in foreign countries, allowing you to tap into new markets in a matter of days. This means you’re able to hire international talent more quickly and compliantly.
But how does EOR work, and how can you leverage it for your company? Honestly, there is no one-size-fits-all solution for business, so the first step to building your international strategy is understanding this option thoroughly.
How does EOR work?: here are the 6 steps
In this comprehensive guide, we’ll walk you through the 6-step process of working with global EOR services, from choosing the right partner to scaling your operations globally.
Step 1: Set your expansion goals
The first action to expansion is defining your goals and aligning them to global collaboration. Start by drawing what roles you are looking to fill, how many employees you are planning to hire, and what is the timeline for this expansion.
Do not focus only on cost-saving when hiring international employees. It’s vital to understand how your company fits into local cultural practices. So, conduct market research upfront and set your expectations accordingly to improve the chances of success.
Step 2: Understand what an EOR can do for you
An Employer of Record is a third-party organization that hires and pays employees on your behalf in a foreign country. The EOR assumes all legal responsibilities, including payroll, taxes, benefits, and compliance with local labor laws. This allows your business to operate in a new country without setting up a legal entity.
Choosing a partner with multi-market capabilities simplifies operations and allows for proactive talent management before a market is even officially launched.
Step 3: Sign a contract with the EOR
To find the best fit for your business, consider the following factors:
- Does the EOR operate in your target countries?
- Does the EOR have experience in your industry?
- Does the EOR have a strong understanding of local labor laws and tax regulations?
- How does the EOR offer a user-friendly platform and dedicated support?
- What do other clients say about their services?
Once you’ve selected an EOR, the agreement must outline the responsibilities of both parties. The contract should include the scope of services, pricing, and duration of the partnership. You can start with a basic essentials contract and expand to more service coverage as the partnership brings in results.
Step 4: Recruit global professionals
Hiring remote employees is linked to faster recruitment processes according to Forbes, but many companies fear not reaching the right candidates. So, to find the best talent, the EOR will first work on a strategical job description and then post the job opening on relevant job boards, as well as access its local network.
The EOR can source and screen candidates, and schedule interviews with the hiring company. Once the hiring company has identified a candidate that they are interested in hiring, the employer of record can help with offer negotiation and placement.
Step 5: Onboard your new employees
With contracts in place, it’s time to onboard your employees. The EOR will handle the entire hiring process, including drafting employment contracts compliant with local laws and setting up benefits and payroll.
All of the EOR assistance will ensure tax compliance and proper management of work permits and visas when applicable. You’ll only need to provide the EOR with details about the employees.
Step 6: Monitor progress and scale operations
It’s important to monitor progress and stay informed about your workforce’s status to achieve a steady growth. Usually, a global EOR will provide you with recurrent reports on payroll, tax filings, compliance updates, and even employee performance.
Their multi-market reach can also help you find the best strategies for expanding your operations in a similar region.
Why choose an EOR for your global expansion?
Now that you understand more about employer of record solutions, you know some of its advantages for businesses looking to expand globally, rather than recruiting directly.
From simplifying compliance to reducing costs, an EOR provides a hassle-free solution for managing your international workforce.
Here are some additional reasons to consider an EOR:
- Speed: Enter new markets in a matter of days or weeks.
- Flexibility: Hire employees in multiple countries without establishing local entities.
- Risk mitigation: Ensure compliance with local laws and avoid costly penalties.
- Cost efficiency: Save on the expenses associated with maintaining a legal entity and find the most cost-efficient hiring destinations.
- Visas and immigration: Get assistance with work permit applications and compliance with immigration laws.
- Cultural Alignment: Bridge the Gap Between Global Teams
- Local expertise: Leverage in-depth knowledge of regional markets, including labor laws, tax systems, Market trends, and local talent pools.
