The Irrefutable Benefits of Hiring a PEO

A lot of US and European companies are looking to hire specialized tech talent outside their geographies to meet their needs for technical expertise amid the rapid digitization of businesses. According to a survey, only a small percentage of the US companies feel that the US is the primary place to access the right expertise. In addition to this, Asia is considered a key target market for recruiting tech talent.

One of the major drivers prompting the companies to hire foreign nationals mainly from India is to get access to top skills and a workforce with diverse experience. Some tech companies believe that the skills required for cutting-edge solutions for AI can be found readily in India. Besides accessing the right talent, several product companies move tech teams to India to leverage labor cost arbitrage. Even after paying marginally high salaries to employees in India; the cost of hiring remains only one-fifth of the hiring costs in their home markets.

In addition to this, the US and European countries are inherently short on tech talent. The students who move to these countries for higher education prefer joining large companies/ industry incumbent rather than joining a start-up, mainly citing visa issues. Benefits of hiring a PEO is that it is cost effective and Tech talent in the US is expensive. The smaller companies neither have such extensive budgets nor do they have the resources that can help in the procurement of the H-1B visa, which is essential for a non-US citizen to work in the USA. Since the visa norms in these countries are challenging, many midsize and early-stage firms are considering India for tech talent.

Moreover, due to COVID, work from home has become a norm. This has further stimulated a preference and a definite shift in overseas companies hiring talent beyond their geographical boundaries.

Mid-sized , global technology companies and start-ups are looking to expand their operations to get access to a readily-available pool of technology talent, especially in niche digital areas such as analytics and data science. Despite, a keen interest from foreign companies to acquire foreign talent, entering overseas markets such as India can be challenging for hiring due to the legal and human capital complexities such as hiring directly, managing employee’s onboarding, payroll, leave administration, termination etc. It is interesting to see how these companies are addressing this challenge.

To manage the legal and people complexities, more and more companies are now focusing on partnering with a PEO. Benefits of hiring a PEO is that A Professional Employer Organization (PEO) or International PEO is a company that acts as an employer on behalf of other companies. PEO provides Global employment Services and takes care of administrative tasks related to the hiring of employees. The PEO provides a host of services including drafting employment contracts, managing employees’ expenses, time sheet compliance , onboarding and exit formalities.

As mentioned above, ever since the pandemic, work from home has become a new normal, leading to a surge in hiring people remotely. As setting up entities involves heavy investments, MNCs are more comfortable with the PEO/ERO route. PEO/EOR provides the following advantages:

  • Saving up to 50% of the cost of setting and running business operations in new geography.
  • Scale-up: Post signing the agreement, the first round of onboarding takes 2-3 days and then just a day for any number of employees for the same client.
  • PEO/EOR Promotes flexibility as there is an easy exit.
  • Companies hiring PEO/EOR are not worried by compliance as PEO manages all the tax and legal compliance and regulations.

Using a PEO brings many benefits including, cost efficiency, ease of scaling business operations, time savings, risk mitigation, compliance assurance for the business. AKM Global or Worldwide PEO  is helping companies that do not require to hire a large number of people and companies that do not have extensive budgets to expand in different geographies.

With PEO’s like AKM Global, mid-size enterprises and small companies are seeking to explore new ways of doing business.

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Written by: Tanu Arora (Director BD)

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