PEO VS OUTSOURCING
According to NAPEO, “A professional employer organization (PEO) provides comprehensive HR solutions for small and mid-size businesses. Payroll, benefits, HR, tax administration, and regulatory compliance assistance are some of the many services PEO companies provide to growing businesses across the country.”
Outsourcing is a long prevalent option in the IT industry or otherwise for employing large number of resources overseas on specific tasks that the company may need short time work force for or with the intent of cutting costs for a long term activity. PEO on the other hand is a business process started with the intent of forming a team overseas. It can be looked at as a stepping stone to understand the market and the people before diving straight into company formation at the new location.
More often than not, the outsourcing centers employ a large number of people on contracts. Depending on the workload they have, the work force gets distributed within the clients. As such, there are times when the resources are working with more than one client teams on their respective projects. As these services are charged hourly/ daily, the workforce tends to lack the dedication towards a certain project. Multiple project handling makes this an activity without a connect with the work or the customer/ employer.
In case of professional employer organization (PEO)/ EOR the resources as required by the client are hired specifically and dedicatedly by the EOR agency for that client. The resource becomes a fulltime employee for the specific client and reports to the client to ensure exclusive and dedicated approach. This helps the client build a work culture similar to their office with the new team abroad and generate cohesiveness in the process.
Transparency and privacy are critical aspects for new companies in tech space that operate teams across the globe. A close contact of the PEO team and the client company is key in nurturing the transparency and ensuring privacy of the novel product/ idea being worked on. The PEO team is a group of people that collaborate with you on a regular basis and work as your own employees sitting out of a different country. In fact, you are a part of every step of the process from hiring the rightly suited team.
A full-time employee also enjoys the benefits and security of job as offered by the EOR agency in place of the short term contract offerings made by the outsourcing agencies.
As an employer of record, the agency assumes employment risks and liability of the hired team. As the primary employer, it also ensures the employee’s training needs and other requirements are addressed duly.
It is safe to say, opting for a PEO agency explores the best of both worlds. It matches affordable costs and relieves you of additional liabilities and compliance hassles and ensures the perks of hiring your own team in a different country without having to form your own legal entity in the unexplored land. It acts as the perfect platform in your exploratory journey of expanding to newer terriotires.
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