Enterprises have specific needs when expanding to new markets, like low-risk market entry and testing new opportunities with minimal commitment. In some cases, these organizations may be winding down operations in unprofitable markets, so they struggle to find a way to keep their key employees from that country.
Limited payroll options, high costs of establishing an owned entity, and compliance requirements are just a few of the hurdles that may be standing in the way.
But there’s one simple solution—employer of record (EOR).
In this guide, you’ll learn how working with an EOR can easily solve the five common challenges enterprises face during global expansion, and how Deel effortlessly addresses these challenges.
Rapid market expansion and testing
An employer of record enables enterprises to hire workers on the ground quickly and test new markets with minimum risks, thanks to its expertise in global compliance, streamlined processes, and knowledge of local regulations.
When expanding your operations to a new market, you may face several challenges:
- Regulatory and legal intricacies: Navigating unfamiliar legal frameworks, labor laws, and regulatory requirements can pose significant obstacles and expose your company to legal and financial risks
- Market knowledge: Lack of understanding of local market dynamics, customer preferences, and competition can lead to missteps
- Financial constraints: Initial investments for market entry, such as setting up facilities or establishing a local presence, can strain resources, as registering your own entity can cost hundreds of thousands of dollars including all permits, licenses, etc.
- Talent acquisition: Finding and retaining qualified local talent can be difficult, especially in specialized fields. You may lose great candidates from your pipeline if they need to wait until you’ve set up a legal entity to compliantly hire them
- Time-consuming process: Other than being costly, setting up your own entity can take a long time, sometimes up to a year depending on the complexity of local systems. You may miss valuable opportunities to expand and establish credibility in a new market before your competitors.
EORs have a deep understanding of local markets and broad partner networks that help ensure compliance in the host country.
As a global EOR, Deel provides localized employment contracts in 100+ countries, assuming all legal responsibility for your employees while you manage their day-to-day work. Deel also guarantees your foreign employees all statutory benefits and rights and protects you from employee misclassification and permanent establishment risks.
💡 Read more: Can an Employer of Record Protect Your Company Against Permanent Establishment Risks?
Instead of working for months to register an entity, you can hire and onboard employees and contractors from the global talent pool in a matter of days and for an affordable fee, leveraging new markets before your competitors and avoiding the risk of losing your best talent.
Hire anywhere without worrying about local laws, complex tax systems, or managing international payroll. Focus on finding the perfect match for your team, we’ll take care of the rest.
Finally, Deel assigns a dedicated customer success manager (CSM) to each client, no matter how small. This way, you also gain insight into local best practices, industry knowledge, and have a reliable advisor during your expansion journey.
💡 Learn more: The Benefits of a Dedicated CSM: How Deel Sets You up for Success
Reducing tech spend and admin overhead
An EOR can help consolidate your HR tech stack by allowing you to manage everything in one platform, from hiring and onboarding to payroll management to local compliance and benefits administration, especially if robust automation features are available.
If you use different tech for managing your direct workers and international ones, you may face the following obstacles to seamless processes:
- Incompatible systems: Managing disparate HR and payroll systems across different countries can lead to inefficiencies, especially if there’s a lack of integration, which can result in manual data entry, errors, and wasted time, leading to higher admin overhead
- Inconsistent processes: Variations in HR processes and policies across regions hinder standardization, driving up admin costs
- Scalability challenges: Traditional systems may struggle to handle increased workloads as the company grows globally, necessitating costly upgrades
- Vendor management: Coordinating with multiple vendors for different HR functions can result in higher costs and administrative complexities
- Data silos: Lack of centralized data storage can lead to duplicated efforts, reduced visibility, and increased admin workload
- Compliance burden: Ensuring compliance with diverse labor laws and regulations requires additional administrative efforts
- Audit and governance: Meeting audit requirements and ensuring data accuracy across multiple systems add to admin workload
- Change management: Implementing new systems or upgrades globally requires managing resistance, training, and adaptation
- Hidden costs: Unforeseen expenses, such as system maintenance, upgrades, and licensing fees, contribute to increased tech spend.
A global employer of record like Deel can successfully tackle all these challenges by centralizing your data in our global-first platform with fields tailored to the country where your talent resides. This way, you can easily hire employees from new countries without needing to implement new HR systems to manage them.
Deel also offers a wide range of integrations with other workforce management systems, such as Ashby, BambooHR, and CultureAmp. Not only does this make Deel cost-effective, but also a highly scalable platform, as our HR services were designed to support growing global teams.
Workforce planning for M&As
An employer of record helps enterprises integrate talent after a merger or acquisition by enabling them to keep employees from countries where they don’t have a local entity and provide an equitable employee experience for all workers regardless of location.
Mergers and acquisitions are complex business processes, even more when done cross-border:
- Human resources alignment: Harmonizing HR policies, compensation structures, and employee benefits for new employees can be intricate when dealing with local employment laws in different countries
- Global compliance: To retain inherited talent, you need to get familiar with the varied legal requirements across new jurisdictions
- Operational integration: Integrating different operational processes, systems, and technologies across borders can be disruptive for your workflows, hindering overall productivity
- Data privacy and security: You need to comply with diverse data protection laws, like GDPR in Europe, and ensure secure data transfer across all your locations
- Time zone differences: Managing operations and communication across different time zones can lead to coordination challenges, especially if there’s little overlap
- Cultural integration: Integrating diverse cultures and fostering a unified company culture is essential for successful post-merger integration and maintaining employee morale.
An EOR can effectively address most of these cross-border transaction challenges. Through its local partners, an EOR can help you build competitive compensation packages and offer localized benefits relevant to local talent, all while staying compliant.
With its advanced technology and centralized platforms for talent management, EORs can also help streamline processes, automate manual tasks, and centralize employee data in a single database for easier access, enhanced data security, and more efficient management.
Deel’s HR tools can also help with cultural integration of the inherited talent and fostering the sense of belonging among new joiners. Deel Engage plugins for Slack allow you to boost employee engagement and encourage workers to connect despite the physical distance.
Spark conversations with a remote team with meeting roulettes, watercooler prompts, and interest groups, all in Slack.
Payroll consolidation across regions
An EOR can offer expertise and compliance in running payroll for international employees, ensuring accurate payouts, deductions, tax filing, and compliant record keeping.
Payroll processing outside of the borders of your own country can come with a number of hurdles:
- Tax compliance: Tax requirements vary by country and you must comply with local regulations in the new countries to avoid fines and legal issues
- Currency and data management: Dealing with multiple currencies, data privacy regulations, and secure data handling adds complexity to payroll operations
- Payroll variation: Managing varying payroll practices, tax calculations, and deductions across regions requires accuracy and consistency
- Integration and systems: Ensuring seamless integration of HR and payroll systems, especially in different time zones, can be technically demanding
- Regulatory changes and compliance risk: Frequent changes in regulations and the risk of non-compliance require continuous monitoring and adaptation
- Provider management and auditing: If working with multiple payroll service providers, you need to ensure accurate reports, compatible data and processes, and frequent audits
- Payroll visibility: Achieving a comprehensive view of global payroll data for reporting and analysis purposes can be challenging if data is scattered across different platforms.
Employers of record can address these challenges for client companies thanks to robust platforms where you can manage your entire payroll in one dashboard. Manual tax calculations are replaced with automation for higher accuracy and your workers automatically receive payslips after each payday.
Deel enables clients not only to pay workers everywhere in one click from one dashboard, but also to run payroll for direct employees, international employees, and independent contractors under one roof, with multiple payment options and currencies supported across the globe.
Deel also offers comprehensive reporting features that allow customers to gain insight into their global payroll to understand their spending and easily spot any errors between payroll cycles.
With 200+ in-house, localized experts and payroll managers, you can be sure that you’ll be notified of any changes in payroll tax regulation in any country you hire from.
Providing an efficient, compliant global payroll system for your team is what Deel does best.
Offering equity and competitive employee benefits
As their legal employer, an EOR can offer your international employees localized benefits and perks that are tailored to their needs, while complying with local laws and regulations regarding statutory benefits, minimum wages, and more.
When hiring globally, enterprises often encounter various obstacles to offering relevant and competitive benefits packages:
- Diverse regulations: Navigating varied equity and benefit regulations and taxation rules in different countries can lead to complexities in structuring plans and challenges in calculating and withholding taxes correctly
- Currency fluctuations: Fluctuations in exchange rates can impact the value of equity awards and the purchasing power of benefits
- Administration complexities: Administering varied equity and benefit plans across regions demands streamlined systems and consistent processes
- Employee mobility: Managing equity plans and benefits for globally mobile employees adds intricacies to plan administration
- Customization and fairness: Offering flexible benefits that cater to individual needs and align with employee expectations and aspirations while ensuring equity across your global team is crucial for engagement and talent retention
- Cost considerations: The cost of providing competitive equity and benefits across diverse countries can strain budgets
- Vendor management: Coordinating with multiple vendors and equity plan management adds complexity to benefit administration.
Partnering with an EOR allows you to offer employee benefits you wouldn’t be able to access without a local presence. Your remote workers will be able to enjoy private health insurance, stock options, wellness perks, and any other benefit your EOR can offer through their partner network.
Your hub for improving your global team's working experience. Get a free resource bundle about global perks and benefits.
Other than enabling the diversity in your compensation packages, EoRs ensure that equity and benefit plans adhere to local employment laws, safeguarding against legal pitfalls.
Deel removes obstacles to global hiring
Deel’s learned from its own experience: with a team of 2,000+ people dispersed across around 100+ countries, we know how frustrating hiring can become when you face the complexities of international employment laws.
But don’t let them stop you from growing your global team.
With Deel’s vast in-house expertise, self-serve and easy-to-use platform, 24/7 in-app support, flat-rate pricing without hidden costs, and incredible flexibility to cater to your business needs, we can help you hire talent in over 150 countries and streamline HR and payroll regardless of location.
Learn why 15,000+ businesses trust us to support their global expansion.
