According to the Wells Fargo International Business indicator, a staggering 87% of U.S. companies are in favor of international expansion for long-term business growth. However, even though globally expanding a business may be a growing trend in the U.S., a lot of businesses still lack the knowledge and resources to successfully grow abroad.
This is where Professional Employer Organizations (PEOs) come in. Companies that aren’t familiar with global markets and regulations are at risk of compliance issues that can lead to negative legal ramifications. To avoid such problems, businesses looking to expand overseas are increasingly partnering with International PEOs to mitigate international risks.
What is a PEO?
So what exactly is a PEO? PEOs help businesses expand internationally by providing various services that may include HR support, payroll administration, guidance with employment law compliance, navigating taxation laws, securing work visas, back office outsourcing, and company formations.
As of today, there are numerous PEO options for businesses to choose from. However, business owners must be aware of the significant differences in the varying offers of numerous PEO providers. For example, some PEO providers specialize in local services, while others are known for having a global foothold. In the United States, PEOs are known for “co-employment” models. This basically means that the PEO provider is liable for compliance with employment laws, as well as payroll compliance. As for other countries, specifically in Europe, the co-employment model isn’t applicable. Some European countries, such as Switzerland or France, haven’t legalized such a model yet.
There are numerous PEO providers that are quick to refer to themselves as global PEOs, only because of the many similarities they have with global PEO providers. A PEO provider can simply reference a PEO model to make potential buyers believe in their capabilities and services. It is because of this that many companies are swayed into partnering with PEO providers without checking both their local and global PEO services first. This is why it’s important to learn how to find global PEO providers that can truly deliver the services you require.
How to Find the Right PEO Partner
When it comes to looking for international market partners, finding the right PEO provider may be one of the most complex tasks a business owner could undertake. In evaluating international PEO providers, business owners must be mindful of the specific provider’s expertise in drafting compliant employment agreements, structuring benefits, working through market norms, and being prepared for unexpected pitfalls in local working conditions.
Finding a PEO provider with such expertise can significantly help any business mitigate the risks that come with global expansion. Moreover, such PEO providers can properly advise businesses on specific issues within each country they specialize in.
Businesses owners should also make sure that the PEO provider they choose offers services that perfectly fit their particular global expansion needs. When it comes to international expansion, businesses must clearly define and specify their long-term goals. This makes it easier to present the businesses plans to PEO providers, so that the providers can determine whether or not they can help the business achieve its goals.
For example, a business with a goal of creating a giant global footprint by expanding into several markets abroad would have to choose a PEO partner that specializes in the countries they plan to operate in.
A business owner should never attempt to enter unfamiliar markets without being aware of the risks and obligations that can greatly affect the success of the company’s financial security in a foreign land. Instead, business owners should utilize the expertise of international PEO providers to effectively maintain compliant operations when getting into new markets abroad.
To ensure you find the right PEO partner, you should keep in mind PEO services like HR benefits, functions payroll, employee onboarding, and compliance. These kinds of PEO services will come in handy when it comes to achieving your global growth goals. Doing so will not only allow business owners to manage international risks, but will also allow you to focus on driving the business forward.
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Andrew Walker has been working in the professional employer organization industry for the past 7 years. He runs Bradfordjacobs.com‘s business strategy, focusing on helping small to medium-sized businesses expand globally.
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