How can a PEO assist you in expanding your business to India?
There are multiple ways by which foreign SMBs can expand their businesses to India and while choosing the most appropriate route could prove to be a daunting task, a great starting point for setting up a branch office of a foreign company in India is by availing the services of an Indian PEO (Professional Employer Organization).
A PEO is an agency which acts as the legal employer in another country on behalf of a foreign company (the actual employer) and enables it to hire employees in that country. In the Indian context, it would essentially help a foreign company establish a business set up in India by hiring employees in India without having to create a legal entity or a permanent establishment. Moreover, while the employee would remain on the PEO’s payroll, he / she would be in direct contact with the actual employer thereby giving the foreign company direct control over a dedicated workforce.
A PEO agency offers cost-effective solutions relating to HR, payroll, benefits and risk management and provides some distinct advantages over the other available routes such as outsourcing, forming a subsidiary or working with freelancers & consultants.
– In case of a subsidiary, the foreign company would need to make sure that the resulting entity meets all the compliance requirements laid out by Indian authorities for which it would definitely need to plug in additional and appropriate resources. Moreover, forming a subsidiary in India with foreign directors is a time consuming and a costly process and if, for some reason, the foreign company decides to wind up its operations in India, it would again have to go through a very costly and time consuming process to dissolve the entity.
– In case of outsourcing, while it would help the foreign company quickly set up its business with the help of highly efficient remote teams based in India, it would have limited control over how the business operations are being monitored and performed as well as over the overall quality and standard of the operations which are critical to building and maintaining brand image. Moreover, outsourcing contracts are typically long term contracts and are sometimes rife with hidden costs which could add to the woes of the foreign company.
– In case of freelancers & consultants, while the foreign company would get the opportunity to work with highly skilled individuals having the required domain expertise, it may not be able to get their undivided attention (as opposed to a dedicated resource) because freelancers and consultants typically work on multiple projects with multiple clients at a time. This in turn could also make it challenging for the foreign company to maintain the overall quality and standard of its Indian operations which it cannot afford to compromise on especially while it’s trying to establish itself in a new territory.
Hiring a PEO agency, on the other hand, would give foreign SMBs the benefits of:
1. Starting business operations in India within days without setting up a legal entity or infusing additional time and resources to ensure compliance with Indian laws.
2. Hiring a dedicated workforce in India and maintaining control over the quality and standard of operations by having direct contact and coordination with its Indian workforce.
3. Extending the company’s work culture and policies to its employees in India as these would be mutually formulated by the foreign company and its PEO agency.
4. ‘Testing the waters’ in the Indian market before getting into the hassles of establishing a legal entity for subsequent business expansion. Even at a time when the entire world is reeling under the effects of a global pandemic which has severely restricted domestic and international travel, going the PEO route is undoubtedly the fastest and one of the most cost-effective options available to foreign companies for expanding their businesses to India and we, at Remunance, have just the right solutions to help them do so.