UK businesses of all shapes and sizes are currently looking to expand overseas in a bid to capitalise on increased revenue opportunities in new marketplaces. In fact, since the seismic Brexit vote and US election results, 42% of UK businesses are now more inclined to expand their operations overseas, with emerging markets becoming increasingly attractive to 63% of businesses according to Dubai Multi Commodities Centre (DMCC).
Businesses deciding to follow traditional processes when expanding into a new market though – especially in countries that have significant cultural differences to the UK – face a complex set of challenges. But help is at hand in the form of an Employer of Record (EOR) service provider.
What is an EOR though? In short, an EOR takes legal responsibility for employees in foreign markets, as well as taking all of the time-consuming administrative tasks involved in managing workers away from businesses, many of which often don’t have the knowledge or experience to handle them.
By streamlining risk management, HR, benefits, payroll, tax and labour law compliance, EORs provide resources which many businesses find difficult to gain access to on their own when setting up a new operation overseas.
Setting up shop abroad
Companies decide to expand into international markets for many reasons, from accessing new customers and diversifying operations, through to tapping into a localised talent pool or materials.
Yet, even though creating a foreign subsidiary may offer advantages for the parent company in terms of taxes and intellectual property, managing the process can demand significant investments of time – especially that of the HR team – and money. In fact, setup time, which can be as much as six months or more, can present a serious speed bump to getting an organisation up and running. In China, for example, it can take 18 months or more.
Regulatory compliance is another major challenge that can delay the launch of a foreign operation with increasingly stringent international regulations having potentially dire consequences for businesses who don’t comply. These regulations vary widely from country to country and, as such, it is a challenge for HR departments to ensure they are well informed about these nuances and adhering to them correctly.
With all these challenges that business expansion into global markets presents, it’s no wonder many businesses opt to engage an EOR service provider to help them navigate the process, and reduce the pressure their HR departments face.
By helping companies avoid in-country business registration fees, develop employment contracts that comply with local employment laws, on-board employees and pay the right taxes, partnering with a direct EOR provider can ensure your business quick and compliant passage into a new country. It also allows you the opportunity to immediately take advantage of the prospects available in the new region.