Cross border hiring is becoming easier, partially thanks to more companies choosing to build remote global teams through an Employer of Record (EOR). The use of EOR services is anticipated to grow at a steady but solid compound annual growth rate (CAGR) of 6.9% through 2028, according to data recently released by market research firm Valuates.
While hiring through an EOR can facilitate global expansion plans, not all companies are familiar with how the arrangement works, and getting started may not always be so simple. For example, sometimes a company may believe they need a professional employment organization (PEO) when they actually need an EOR.
The following questions can help determine whether an EOR is the right partner for building a cross border team.
What level of local expertise and global hiring experience does the EOR have?
Cross border hiring can be complicated, requiring an understanding of the hiring business’s interests as well as the target country’s HR landscape and regulatory environment. An effective EOR will have a proven track record of global hiring experience as well as a thorough understanding of the target country’s business culture and local laws. For example, the EOR should be able to explain the role bonus requirements and severance payment laws play in the country and how these may impact your cross-border hiring plans.
When done correctly, the EOR will be able to hire on your behalf while you avoid the compliance liabilities of operating an in-country business such as permanent establishment and additional taxes.
Will the hiring company receive support in their time zone and first language?
When an EOR has a global internal team, they are able to service a client (the hiring company) in their time zone. This way, inquiries can be handled quickly. While the worker is being managed in another country where a different language may be prevalent, it’s also important for the hiring company to receive support in their first language.
Will the hired workers (client employees) have access to support in their time zone and in their first language?
The hired worker (often called a ‘client employee’ in the EOR arrangement) may have questions about payroll, benefits or taxation. To ensure timeliness and clarity, it’s necessary these questions are fielded by the EOR in the worker’s time zone and in their first language.
Has the EOR worked with organizations similar to the hiring company before?
The EOR should have experience hiring workers in the target country, as well as a track record of working with organizations similar in size and industry to yours. For example, if an EOR has only worked with very large companies before, they may not be used to providing the one-on-one personal touch points a small or medium size enterprise (SME) or startup may require. Likewise, a specific industry in a country may have its own work culture, practices or even regulations.
How does the EOR secure client data?
Countries are increasingly adopting data protection frameworks, such as the General Data Protection Regulation (GDPR) in the European Union (EU), so it’s critical the EOR is familiar with securing client data. Not only will this expertise help safeguard your data overseas, but it will ensure compliance with local laws and also protect your workforce.
Does the EOR have an easy-to-use platform?
It’s helpful to qualify the platforms that will be used by both the hiring company as well as by the hired workers. An effective platform will provide quick and easy payroll processing, shareable reports, invoices, real-time notifications, a centralized document hub and a customizable dashboard interface that streamlines communication.
How will the EOR onboard and communicate with the new hires?
As part of onboarding, the EOR should be able to explain how they conclude locally compliant employment contracts and bring new hires onto the platform so they understand how the EOR arrangement will work.
The process for handling hiring requirements (background checks, health checks, drug tests, etc.) should be qualified as there are often local regulations around these items. It’s also helpful to understand how the EOR will regularly communicate with workers and field any inquiries they have. For example, in China, companies often use WeChat (WeiXin) for business communication and many Chinese workers are used to having HR support via WeChat.
An effective onboarding process lays the groundwork for your global expansion plans and sets your new hires up for success!
Check out our ‘What is an EOR?’ guide or contact us to talk with an international HR expert about whether an EOR solution is right for your company.