A Definitive Guide for
Employment Outsourcing

Hiring new staff is the lifeblood of any functioning and expanding business. However, this task often comes with excessive costs, time expenditures of core in-house staff, and troubling legal complexities. The situation gets even worse in the context of international hiring, as one company can hardly make sense of labor laws and taxation issues across all jurisdictions of interest.

A great solution that adds flexibility to the hiring process is employment outsourcing. This option enables effective hiring in line with your changing staffing needs without heavy investment in the in-house HR staff. Let’s study this concept in detail to understand how it may aid your business operations.

What Is Global Employment Outsourcing?

A simple definition of global employment outsourcing would be as follows: it’s a hiring model in which you delegate all staffing-related tasks to a third-party provider. The company fulfils all pre-negotiated tasks and manages the full cycle of employee management procedures on your behalf. You are the staff’s official employer and bear all legal and financial obligations, but don’t interfere with the staffing routines.

As we’ve just articulated, this hiring model is not that different from regular outsourcing. Its only specific trait is that you outsource only staffing tasks, not business processes. Therefore, you are the HR provider’s contractual partner, and all staff they find and onboard officially work for you. Yet, it’s the outsourcing party’s responsibility to ensure that all procedures are compliant, timely, legal, and accurate.

What Services Do International Employment Outsourcing Companies Provide?

As a rule, you may expect broad service coverage from your international employment outsourcing provider. Many companies work on flexible terms and allow the client to select the scope of needed services. Thus, you may delegate the following tasks to your provider:

• Global payroll
• Compliance management
• Local legal counsel
• Employee benefit management
• Risk and insurance management
• Tax deductions and filings
• Contract management
• Onboarding and training
• New candidate screening
• Immigration and visa/work permit processing

These and many other HR-related tasks may be negotiated and included in your contract with the staffing service provider. If you’re unsure about the scope of needed services, you may negotiate further contract expansion during the work process.

Key Differences Between Outsourced Staffing Services and Using an EOR

When discussing the staff outsourcing practice, one should also mention the Employer of Record (EOR) variety of such a service. While staff outsourcing doesn’t presuppose any delegation of legal responsibility to the outsourcing provider, an EOR service enables legal and compliant hiring across the globe by providing the service of their local legal entity. Therefore, when working with an EOR company, you are not the staff’s official employer; the EOR acts as their official hirer while they perform work duties for you.

Let’s recap the main differences between a staff outsourcing company and EOR:

• Legal employer. The EOR acts as your international staff’s legal employer, while a staff outsourcing agency doesn’t employ your staff. It only locates and manages staff officially registered in your company.
• Legal entity. When you enter a new labor market and hire a staff outsourcing agency, you need to establish a legal entity in the target location for legal and compliant hiring. EOR has legal entities in multiple jurisdictions, so you don’t need to bother with this step.
• Payroll and compliance. As a rule, staffing agencies don’t handle these tasks (the only exception is a full-service employment outsourcing option). The EOR provider does it all for you.
• Recruitment. Typically, EOR providers don’t handle this task, though some may offer it as an extra service. The main scope of EOR’s responsibility is ensuring the legal and compliant hiring of your international staff in the jurisdictions of their legal presence. Staff outsourcing agencies handle recruitment; actually, it is their primary area of specialization.

Therefore, hiring an EOR is more suitable for businesses that have already selected new staff but need to ensure their compliance with hiring and proper management under local labor laws. Staff outsourcing companies’ services are valuable for businesses wishing to delegate recruitment and onboarding functions to third-party providers and have a legal presence in the countries where they hire staff.

To illustrate the benefit of outsourcing hiring process and HR procedures, let’s consider a couple of examples.

• #1 Recruitment, Onboarding, and Hiring
  Growing companies often face the bottleneck of staff expansion, and staff outsourcing companies can help in this process. They may partner with business owners to formulate a precise job posting and develop an effective HR strategy for candidate screening. They can also help with a standard onboarding algorithm to simplify and streamline all staffing processes.
• #2 Compensation Management
  SMEs can benefit from the compensation and benefit benchmarking service that staff outsourcing companies provide. Experts analyze the structure of benefits and compensation in the client’s industry to make a salary offer competitive and appealing to top talent. These analytical insights also enable an individual approach to staff performance evaluation and incentivization that is in line with the set business criteria and resources.
• #3 Daily HR Functions 
  Staff management is a complex area with much routine paperwork. HR managers need to keep records and file compliance documents, like labor law compliance forms, payroll, HR policies, etc. When a business outsources these daily functions, in-house staff may receive up to 18% of productive time savings for critical business activities.

What Are the Key Benefits of Outsourcing Global Employment?

It’s a good idea to outsource hiring for many reasons. Here is a list of the key advantages you’re sure to experience by partnering with an experienced employment outsourcing agency.

• Cost and time savings 
  Your business will reap many benefits from having an adequately qualified, skilled, and experienced HR specialist on board. Yet, hiring one full-time may not always be reasonable, and the time and cost of finding and training one may be too high. This way, engaging an outsourced staffing expert is much cheaper, quicker, and more flexible for all types of businesses, saving you time on recruitment, onboarding, and candidate screening procedures.
• Access to global HR talent 
  Once you start looking for an HR specialist to hire for your team, you might be surprised to notice a lack of available talent of this kind in your area. Truly qualified individuals may cost a fortune, but do you really need such an HR star on a full-time basis and for a full-time salary? In most cases, you will need only part-time staffing services to close emerging gaps. So, a staff outsourcing solution is much more optimal.
• Focus on core tasks and strategy 
  HR tasks take time and effort, so they create an avoidable operational burden on your in-house staff. Therefore, hiring an external provider of staffing solutions frees your team from distractions from core business processes.

Challenges of Staff Outsourcing

Still, it’s worth noting that outsourcing of staffing is not a magic wand suitable for all business situations. For the sake of fairness, we should discuss a couple of drawbacks you may encounter when using third-party HR services.

• Data transfer issues 
  Keeping important business functions in-house is a guarantee of internal business knowledge and consistency of business operations. However, as soon as you outsource functions like payroll, compliance, or record-keeping, you risk losing access to well-established procedures in case of shifting from one employment outsourcing provider to another.
• Poor collaboration with in-house staff 
  It is essential to keep communication between outsourced and in-house staff continuous and effective. A lack of such connections may leave both sides demotivated and disintegrated, thus affecting staff performance and business outcomes.
• Data privacy 
  There is always a risk of critical data loss or sensitive business asset breach in case external service providers have access to critical business data and systems. Therefore, you should keep proper control over access tiers and sign well-articulated NDAs with service providers to protect your business interests.

These troubles may not happen to you, but it’s better to be aware and prepared for them. This way, you will manage to avoid financial and legal complications whenever things go wrong with your staffing provider.

How to Find the Best Employment Outsourcing Company?

1. Transparent pricing 
   The staff outsourcing company should have a clear pricing policy that you can follow. It’s worth entering a contractual relationship only after you’re absolutely sure about the price of the service and all the extra charges you may incur.
2. Domain-specific expertise 
   Some staffing companies may focus on tech talent, while others are skilled at hiring real estate staff. You should work with a company with a clear specialization and a proven track record with clients in your business niche.
3. Solid reputation 
   Working with a company without considering its reviews is like buying a pig in a poke. Thus, it’s always worth checking client testimonials and cases on the provider’s website. All this information is publicly accessible in the modern era of publicity, so a bit of due diligence will always be of help.
4. Location and office hours 
   When you’re looking for an outsourced provider, geography matters much less than with in-house staff. However, you should still consider the convenience of work contacts and efficiency of communication regarding staffing issues. So, it makes sense to choose a provider in a close time zone or at least with a couple of overlapping office hours.

Pros also recommend focusing on the following issues to find the company you really need:

• Determine the level of support you need before searching for options. Think of how many HR employees you already have, how many new employees you plan to hire, and what HR problems you’re facing.
• Never ignore compliance issues, as they can make or break your business. Partner with an outsourcing provider with unbeatable compliance competencies.
• Work with providers that have a well-established database of template documentation for all HR functions. Such a partner can give your business quick gains by streamlining and harmonizing the whole HR documentation.
• Focus on the available budget for HR outsourcing, but don’t opt for the cheapest option. Your investments will pay off only if you strike a proper balance of best practices, service quality, and market expertise.

Conclusion

Based on our analysis, employment outsourcing is quickly gaining prominence in the world of growing connectivity and a global labor market. This method of closing your staffing gaps is flexible, fast, and legally compliant – a killer combo for a business wishing to play safe in the labor legislation field.

Thus, you should consider the existing variants of getting the right talent on board without costly and lengthy in-house recruitment arrangements. As you may see, there are plenty of options available to businesses – EOR services, outsourced staffing, leasing, and the like. We recommend studying each of them closer to find the right fit for your particular business situation and staffing needs. You can always turn to GEOR managers to clarify the terminology. We are an international employment outsourcing provider with global coverage and in-depth expertise, so we’ll quickly find an optimal solution for you without further confusion.