Global growth can be complicated from a human resources perspective. Payroll, benefits, hiring and compliance all look different in different countries—and making sense of it all can be overwhelming.
But this is one instance in which you can push the easy button.
International HR outsourcing simplifies your world while improving your performance. Growing global companies can partner with experts who already know the ins and outs of managing a global workforce.
Interest piqued? Read on.
What is international HR outsourcing?
Outsourcing international human resources means creating a partnership with a third-party firm where some or all of the company’s human resource functions are handled externally.
These partnerships may include an employer of record (EOR) or professional employment organization (PEO) to share some or all of the duties and liabilities of human resource management around the world.
What HR services can be outsourced?
No two human resources outsourcing solutions look the same. Some companies pick and choose which functions to outsource, and some prefer to take the entire department and hand it over to someone else. Your outsourcing options include:
- Workforce administration
- Recruitment and hiring
- Employee relocation
- Incentive programs
- Benefits administration
Although payroll is probably the most commonly outsourced HR activity, companies can also outsource functions like data management, compliance training and benefits programs. If you have an established process, it’s probably a good candidate.
What are the benefits of outsourcing HR?
The most obvious benefit of outsourcing international HR functions is taking advantage of the experience and expertise of your HR partner. But beyond having a hand to hold, the popularity of outsourcing comes with many more perks.
Jack up your efficiency
Much of the HR world is process-driven. Your company probably already has good processes in place for payroll, onboarding, benefits administration, workplace safety and other programs. This is the meat and potatoes of human resource management.
But most in-house personnel spend their time in meetings and on administrative tasks—leaving little time for the things that actually support global growth (sound familiar?). More than one-third of HR employees spend half of their day on clerical tasks. And some spend much more.
And despite spending so much time on the administrative side of human resources, your in-house HR staff probably lacks the experience and expertise in your target international markets to avoid potentially costly compliance mistakes.
With an outsourced HR partner, you can confidently offload a whole bunch of that clerical work to focus on your bread and butter—and rest assured your critical tasks will be completed correctly.
What does your human resources program look like to your employees? Is it easy to figure out whom they should contact if there are questions about payroll? Benefits? Taking a leave of absence?
If your people can’t figure out how to use your systems or processes, everyone in the organization suffers. Underutilized benefits programs can hemorrhage money and breed frustration—which increases turnover. Complicated systems create a big headache for employees, supervisors and human resource staff when they try to get anything done.
Imagine how much worse it can get when your workforce is spread around the globe.
International HR outsourcing can provide a single point of contact for your employees, so it’s always a breeze to update tax forms or change insurance beneficiaries, for example.
It’s the first reason most companies look to outsource international HR functions—and it’s one of the biggest benefits of outsourcing international HR operations.
Local experience and expertise.
A third-party HR firm can provide the regional expertise you need to fill knowledge gaps in managing human capital across your international business.
How can HR outsourcing reduce costs?
As your company grows, your human resource needs change. You can address these changes by hiring more high-level human resource staff or by outsourcing.
Hiring in-house is almost always the more expensive—and more permanent—option, thanks to the cost of providing benefits and paying salaries and taxes. Did you know that the average salary for new HR graduates is $54,010? And with a new graduate, we’re not talking high-level…
With outsourced HR, your company doesn’t have to maintain as many staff members. You can save money on salaries, benefits packages and physical workspace simply by having less in-house.
Outsourcing international HR allows you to stay within budget and carefully measure the return on investment. Third-party providers are often eager to provide all kinds of detailed reporting to prove their value to your company.
Another key benefit to outsourcing is the flexibility to choose short or long-term arrangements, which allows your company to grow its way into new markets—without a large upfront investment in HR.
Use the money you save from outsourcing your international HR operations to reduce your overall costs or reallocate it to more strategic (and exciting!) HR initiatives—like recruiting and retaining top talent.
Choosing the right partner for outsourcing global HR
Outsourcing international HR can make a lot of business sense, but how do you know which HR outsourcing company is the best for you? It largely depends on your business needs.
If you're looking to fully remove the burden of HR and payroll compliance and administration, an employer of record (EOR) could be the right choice. This outsourcing partner assumes all legal responsibility for your international employees by employing them on your behalf (talk about pushing the easy button).
But not all EOR providers are created equal. Here’s what to look for when choosing an EOR:
- Track record
It should go without saying that experience is a critical qualifier. The main reason that most companies choose to outsource international HR is to benefit from someone else’s experience. Consider the geographies the company operates in, the types of client companies they support and how long they’ve been in business.
But experience alone is not enough. Take a hard look at your prospective partner’s track record. Choose an international HR outsourcing company that is not just doing it, but doing it well, and can prove it.
Ultimately, the right EOR should provide the service you need to supercharge efficiency, communication and compliance across regions—making your life easier and allowing you to focus on the strategic projects that light your fire.