When planning an international expansion, the sheer variety of acronyms employed can be intimidating: PEO, EOR, GEO, ASO, BPO…the list goes on. Here we explain what Global Employment Outsourcing and Global Employment Organizations (GEOs) are, how they work, and how they can differ from Professional Employment Organization (PEO) services.
What is Global Employment Outsourcing?
Many functions of an enterprise can be outsourced: That is, the enterprise contracts with a third party to carry out a particular function or operation. A common example of outsourcing is Business Process Outsourcing (BPO) such as the outsourcing of accounting, IT, human resources, or payroll. It might also include the outsourcing of front-office functions such as customer relations or sales.
It is increasingly common for European and North American enterprises to outsource functions to Asia. Learn more about the benefits of outsourcing here.
Global Employment Outsourcing (GEO) means the international outsourcing of the ‘employer function’. The firm that carries out GEO is often referred to as a ‘Global Employment Organization’ (also, confusingly, known as a ‘GEO’). When expanding into another country, instead of employing staff directly in that country, you can engage a specialist GEO services firm to become the ‘employer of record’ (EOR) for your workforce. This means that, while employees still report to your firm on a day-to-day level, the GEO services firm takes on all the legal and compliance responsibilities of the employer. This includes withholding payroll taxes, administering benefits, and payroll.
A crucial element of your international human resources (HR) strategy needs to be a decision on which processes and functions to outsource.
How is GEO Any Different from PEO?
Professional Employer Organizations (PEOs) provide a similar service to GEO services firms. A Professional Employer Organization can also act as the EOR for staff. However, in some countries, such as the United States, PEOs operate on a ‘co-employment’ model. That is, both the client company and the third party take on some level of legal responsibility for employees. This means, for example, if a PEO fails to perform its legal duties in the United States, the client company may still be found liable. Sometimes, these PEOs are referred to as ‘domestic PEOs’.
In short, all GEO involves PEOs, but not all PEOs use GEO.
GEO services firms are often referred to as ‘global PEOs’ or ‘international PEOs’. A global PEO, as well as acting as the EOR for your staff, often provides a range of related global expansion services including:
- Global mobility. Many global PEOs can help you arrange visas and sort immigration issues for you in another country;
- Recruitment. As well as employing your workforce, many global PEOs can also run the recruitment process for you in another country: That is, they use traditional outlets as well as their own networks to provide you with a shortlist of candidates for final sign off;
- Entity set up. You may decide that you need to set up a local legal entity in the country of expansion (such as a subsidiary company). A global PEO can save you time and money with the establishment process.
- Employee onboarding. Global PEOs often onboard your workers in a new country to ensure they are able to serve your enterprise as quickly as possible.
For enterprises that seek to ‘go it alone’, and don’t need the support of a global PEO. It is also possible to engage a global PEO for global expansion consulting services.
What Are the Benefits of Engaging a GEO?
Why should a company engage a GEO services, or international PEO firm, for its international expansion? Benefits of GEO services include:
- Time Savings. Engaging GEO services means that your business can focus on core revenue-generating activities while a specialist firm performs payroll and other employer-related tasks;
- Cost Savings. GEO firms perform a range of tasks in a new country more quickly than your enterprise would likely be able to. In addition, engaging a GEO firm can avoid the expensive task of setting up a local entity/subsidiary company in the target country;
- Flexibility. GEO firms are usually able to scale employee numbers up and down as business needs change more effectively than if you were to employ the workers directly;
- Compliance Assurance. The GEO firm ensures that your overseas operation is fully compliant with local laws;
- Risk Protection. In addition to reducing compliance risks, engaging GEO services means reducing operational risks through miscalculating payroll, taxes, or employee benefits;
- Better Recruitment Options. GEO firms can usually tap into a local network for recruitment that would otherwise be unavailable to you;
- Access to More Attractive Benefit Packages. As GEO firms operate across many countries, through economies of scale, they can often access more attractive benefit packages for your employees than you would be able to source on you own.
For more information on the benefits of GEO/international PEO services check out 8 PEO Benefits That Will Help Your Business Expand Quickly, Compliantly, and Reliably.
Global Employment Outsourcing (GEO) services, also known as global PEO services, are often the right option for an international expansion. GEO firms are able to provide a package of services to comprehensively support an overseas expansion of your company. In addition to acting as the ‘employer of record’ for your workforce, they often provide other services including global mobility, recruitment, and entity (company) establishment support.
New Horizons Global Partners provides the full suite of GEO services. By engaging GEO services, you can ensure that your international expansion is cost-effective, flexible, and compliant. This leaves you to focus on growing your core business through your international expansion.