In today’s highly competitive, fast-paced business climate, global business expansion has become a critical strategy for diversifying revenue streams, accessing new consumers, testing new products, enhancing brand recognition and tapping into new talent pools.
As the appetite for global business expansion continues to grow, 2022 is expected to clock out as the second-best year on record for global merger and acquisition (M&A) activity. Cross-border deals will likely exceed $4.7 trillion in deal value, according to Bain & Company’s Global M&A Midyear Report.
The payoff for global expansion is potentially huge but navigating unfamiliar markets can be challenging, particularly for the HR department. By partnering with an Employer of Record (EOR), multinational companies (MNCs) can put their global expansion journey on the fast track and enjoy the following five benefits.
Streamlines cross-border payroll
International hiring and global payroll processing can be complicated and time consuming for the HR department, with statutory contributions and payroll requirements varying greatly from one country to the next. Even something seemingly small, such as a foreign currency exchange, can trigger a delay, fee or penalty in the process.
An effective EOR partner saves the HR team in your home country’s headquarters the hassle of dealing with unfamiliar regulations and cultural nuances. The EOR experts can handle everything related to compensating your global workforce, including statutory benefits, voluntary benefits, payroll calculations, tax filings, expense reimbursements, visas, onboarding and offboarding.
Assures full compliance with local laws
Cross-border HR is rife with regulatory compliance hurdles, especially if a company is operating in a jurisdiction with labor and immigration laws that differ greatly from those in the home country. Labor laws are also constantly changing in many places. For example, some countries, like Chile and Norway, recently activated new regulations on remote work.
Failure to comply with any regulation can incur hefty legal fees, threaten brand reputation or result in more serious sanctions. An EOR helps companies avoid these pitfalls, allowing them to pair speed and scalability with robust compliance.
Reduces risk footprint
You don’t have to face the risks of global expansion alone when you have experts at your side to clear the path. Hiring through an EOR reduces your risk footprint, as the EOR handles the liabilities associated with employment-related matters. This eliminates the headaches associated with permanent establishment risks, misclassification, terminations and more.
If your company ever encounters a legal issue related to hiring and employment, the liabilities will be shared by the EOR. The experts they have on their team, often located on-the-ground in the country, can help you sort out the issues and protect your bottom line.
Bolsters IP protection
Global hiring, despite its many rewards, can be risky business for a company’s proprietary assets, also known as intellectual property (IP).
Global teams often work remotely so company data is spread across devices and clouds, with these sometimes not even being owned by the company. The situation is even more complicated for MNCs because each country maintains its own framework for IP, with some jurisdictions having more stringent regulations and others having more relaxed schemes.
Hiring through an EOR can help companies safeguard their IP – whether patents, trademarks, trade secrets, franchises, copyrights or even just innovative business ideas – so they can drive value and unlock a competitive advantage.
Makes global hiring quick and seamless
Partnering with an EOR helps companies hire the best talent for the job, no matter where they are in the world.
When it comes to global business, such as corporate transactions, time is often of the essence. A flexible and nimble EOR hiring model can allow companies to onboard new hires in as little as 24 hours, significantly accelerating the process. By knowing their business is operating compliantly and seamlessly, the company can then focus on the core business-growth activities that fuel the bottom line.
In the end, by using a trusted EOR partner, a growing company enjoys agility, efficiency and peace of mind in global hiring and business expansion.