Best of Two Worlds? An HR Solution Too Good to Be True

2019-10-03

The HR Solution that gives you the best of both worlds

You're the owner of a growing business, and you have an important decision to make, what will you choose?

There is growing interest from a neighbouring location to what your company has to offer. Your business will benefit greatly from expanding its reach into different locations, but to do so will take some careful considerations.

You would like to expand your business and set up an entity there, but you have one major problem. The location is somewhat foreign to you and you don't know if your current business structure would work in the new location. Basic cost of setting up a new entity there includes:

Entity registration and set-up
Statutory and labour/ employment registrations
Bank set-up and in-country capital requirements
Legal and financial counsel
Payroll processing (cost of internal staff & system cost to manage process)

With all things considered, do you:

Set up an entity anyway, in hopes that things will work out covering the cost;
Give up on the opportunity and avoid the burden tied to setting up a new entity.

So what will it be? To go through with the cost and hassle of setting up a new entity or to miss out on the opportunity altogether?

Luckily what we've just illustrated was a false dilemma, a situation that presents itself with only two solutions when there's at least one additional option.

In fact, in this scenario, the third option is one that gives you the best of both worlds!

The Growing Popularity of PEO Secondment & EoR

Secondment as an HR solution has been growing in popularity in recent years. It’s especially useful for hiring and expanding during times of economic uncertainty.

The word PEO is often used synonymously with EOR (Employer-of-Record) and secondment. For a better understanding of the different phrases and what they entail, refer to our article: HR Leaders Should Know the Difference Between PEO & EOR.

PEO secondment is regarded as a provision of human resource services, whereby salary and staff related costs are recovered to the seconding company. This makes it a flexible source of manpower.

A common way for businesses to use PEO is for fulfilling a temporary workforce demand. PEO secondment helps companies hire the resources they need flexibly and in a short time frame. A key reason companies hire using PEO secondment instead of through usual means is due to headcount limitations.

Hiring freeze is a common strategy organisations use to limit their expenses during times of economic uncertainty, which can be a dilemma for the departments that are still expanding. To meet growing demands without overexerting the workforce, companies may choose to use secondment to hire the extra hands they need. Seeing that it’s not permanent, this would allow companies to hire even when they don’t have the headcount.

Painless Geographic Expansion Through PEO Secondment

So how does PEO secondment help us when it comes to business expansion?

Essentially, what PEO and Employer of Record (EoR) does is legally hiring staff in place of you, that means it absorbs the need of setting up multiple entities.

For those of you who have been following closely, this means by using PEO secondment, you avoid the need to expense for costs listed earlier tied to setting up a new entity. This makes PEO and EoR secondment the best solution for companies looking to test out the market in foriegn location as it not only helps your save on costs but also time required for the legal processing.

Learn how you can easily set up shop through secondment with our article on “How to set up a presence or office in Singapore” or get in touch with one of our representatives to learn more.

Research your vendors
To minimise the headache and frustration, you should be careful to research and partner with a reputable vendor. Whether it’s for secondment services or for HR advisory services, a good HR service provider will help guide you through the steps ensuring your company is protected.

Take note of the various legal responsibilities when transitioning
PEO secondment is flexible in that it can be applied to a numerous number employees. What’s important to note is when you decide to transition employees back into your organisation. Take notes of operational responsibilities including payroll and visa transfers for the employees who apply and are affected by the employment transfer.

Know your company needs
Finding the right HR solution for you starts with knowing what you aim to achieve. Take advantage of what the market has to offer by evaluating each solution to your needs. Catalogue and prioritise key requirements, this will allow you to better determine and negotiate with the vendor when time comes.

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Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, Employer of Record (EOR), recruitment and more! Contact us for more information on how we can help leverage your HR function.

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