With the advancement of technology and remote working environments, global expansion has become a hot topic. As organizations determine the best path for growth, they often consider using a global Employer of Record (EoR) service. This enables businesses to test new markets and hire international employees without creating local entities themselves.
Evaluating an EOR Provider
What You Need to Know
Making the Right Decision for your Business
An EoR (also referred to as a global PEO) manages the legal and compliance infrastructure by acting as the legal employer for a client. This enables them to handle all workforce management tasks, including payroll, accounting, and compliance requirements. And although an EoR provider handles many of the backend services, the client is free to control and manage the employees on their daily initiatives. As a major EoR provider with one of the largest global footprints, we get a lot of questions from clients regarding how to evaluate an EoR provider. So we’ve put together a list of common questions and concerns to help you determine if an EoR is the right fit for your business.
Quality comes from experience and expertise in local markets across the globe. Some businesses may be presented with an Aggregator model, which is an EoR provider that joins with an independent in-country partner (ICP) in every country it serves. The client works with the provider, which coordinates with the ICP.
This can lead to a breakdown in communication and overall control over quality. If an ICP has high turnover with employees, the training and support is directly impacted. Because they are a separate entity, they control hiring, onboarding, training, and more, without the review or approval from the partnering EoR.
As a wholly owned infrastructure, Global Upside creates its own legal entities within the countries clients want to operate in. This ensures a high level of experience in the local markets, which establishes high standards of quality. This also enables the provider to develop custom solutions and more timely results as needed.
A global provider like Global Upside can also procure benefits and offer them to the entire employee base across the world. Whereas an ICP may or may not be able to offer enhanced supplemental benefits, which means employees are limited by what the ICP provides. A global structure provides more flexibility and buying power. So it’s important to remember that volume matters in this situation when you’re considering how to evaluate an EoR provider.
The value of data accuracy resides in the segregation of the preparer of data versus the reviewer of data. This is why a multi-level system only has perceived value, instead of actual value. Larger companies that ensure data accuracy in-house have built up the means and ability to review data with consistent and reliable processes. Global Upside, for instance, has a supervisory layer built throughout the global infrastructure to create a high-quality output.
Some aggregator EoRs argue that outside agencies need to be utilized in order to ensure data accuracy. But think about all the biggest global companies in the U.S., such as Google. If Google had 10,000 employees working in the accounting department, does that mean they are doing their accounting wrong if another supervisory employee double checks the data? No.
In addition to supervisory layers being built in to global EoR providers, they also have certifications and data privacy measures in place. It’s important that your reviewers of data have expertise within the country where the data is coming from. If not, they reviewers may not be aware of changes in local laws and regulations. So when considering how to evaluate an EoR provider, it’s necessary to have an experienced professional that understands the foreign country as they ensure data accuracy.
The phrase “practice makes perfect” illustrates the principles of consistency and experience. When companies decide to use an aggregator model (to leverage ICPs), they sometimes have more flexibility when it comes to hiring five different employees with five different providers. However, there are several concerns regarding ICPs when considering how to evaluate an EoR provider.
First of all, the client cannot choose their ICP. It is decided for them by the aggregator EoR. So if an aggregator selects an ICP, their proverbial eggs are all in that basket. If that particular ICP fails, they don’t have the ability or control to correct the issues that arise.
For example, if you transition employees to another provider, you will have to pay severance and other costs as a result. Whereas in a wholly owned infrastructure model, companies have access to broader exposure and greater experience to capitalize and build on.
So based on that information, the real question is… why would you want to go through the process of vetting and evaluating multiple different ICPs? It would save time and increase the overall quality to simply hire one provider to manage everything.
How Does the EoR Provide IP Protection?
When a company signs a contract with an EoR provider, all of their intellectual property is protected regardless of the countries they operate in. Even when a business uses local entities of the EoR, they are subsidiaries of the parent company they signed the contract with. Within the contract, businesses can ensure that any IP developed by employees may accrue to the local entity, which then passes through to the parent company, and therefore to the end client.
The simple answer is yes. EoRs like Global Upside employ experts to help clients in over 170 countries. This can be a major benefit because, regardless of the circumstances, we handle everything from hiring to retirement. Out team of experts are certified in many areas such as payroll or HR to ensure we have the expertise to manage a client’s unique situation.
A company can leverage these experts to scale much faster because they won’t need to coordinate through multiple ICPs. Having one point of contact eliminates communication barriers and streamlines productivity. This is one of the many benefits when considering how to evaluate an EoR provider.
Compensation and benefits for employees can be a more complicated matter. As you evaluate an EoR provider, make sure they have the knowledge and experience to implement various contracts for different employee functions.
For example, a sales member might have a commission structure in their contract. Or a marketing or R&D employee could have bonus structures in place. This is why a “one size fits all” approach doesn’t work.
Businesses will need to ensure their EoR or PEO provider has the expertise to understand and implement these contracts, in addition to managing general compensation and benefits.
A global provider like Global Upside can also procure benefits and offer them to the entire employee base across the world. Whereas an ICP may or may not be able to offer enhanced supplemental benefits, which means employees are limited by what the ICP provides. A global structure provides more flexibility and buying power. So it’s important to remember that volume matters in this situation.
We understand the pitfalls and issues that come from using an aggregator model. We have the largest global footprint with legal entities established in over 170 countries. This means you have ultimate control over how quickly and properly your specific issues and concerned will be responded to and resolved.
Companies today are spending disproportionate amounts of time and resources on compliance and keeping pace with day-to-day human resources, payroll, accounting, tax, legal, and compliance challenges.
At Global Upside, we are shifting the balance. Our integrated services, delivered via a single point of contact, help simplify your day-to-day operations and keep you compliant in 170+ countries so you can focus on innovation and growth.
If you would like to learn more about how to evaluate an EoR provider or have any questions about operating globally, contact us today.