Developing a global presence is an excellent business tactic for companies of all sizes. Through global expansion, businesses can diversify their market, access a broader talent pool, and even cut business costs. And partnering with an international PEO simplifies the entire process.
In our guide, learn about the role of an international PEO, the benefits of working with an international PEO, and how to reach your global business goals with the right partner.
Table of Contents
- What Is International PEO?
- What Does an International PEO Do?
- Benefits of International PEO Services
- When to Use an International PEO
- How to Select an International PEO
- International PEO FAQs
- Hire Talent Anywhere With Velocity Global
What Is International PEO?
International PEO (professional employer organization) is a global employment solution that enables companies to hire supported employees anywhere in the world quickly, compliantly, and without the burden of establishing a foreign legal entity.
The term international PEO can be interchanged with the terms global PEO and global employer of record (EOR).
International PEO vs. PEO
While the term international PEO comes from the term (non-international) PEO, these solutions are different. The main difference is that an international PEO serves as the legal employer of a company’s distributed workforce, while a PEO serves as a company’s co-employer.
PEOs simply provide HR services for companies in their headquartered location. International PEOs, on the other hand, handle all employment responsibilities on a company’s behalf—from onboarding to payroll, taxes, benefits, talent relocation, and compliance.
A more accurate term for international PEO is a global employer of record (EOR), which we discuss below.
International PEO vs. Global Employer of Record (EOR)
An international PEO and a global employer of record (EOR) are two names for the same solution. While a global EOR is more accurate in terminology, global EOR and international PEO can be used interchangeably.
What Does an International PEO Company Do?
International PEO companies enable businesses to establish a presence and hire talent in foreign markets without the complexities and restrictions of setting up an entity.
As mentioned, an international PEO partner serves as your employer of record and hires members of your global team on your behalf through local, compliant employment contracts.
International PEO companies handle all employer-related responsibilities, including the following:
- Onboarding and offboarding
- Global payroll
- Benefits administration
- Contractor conversion
- Global mobility and relocation services
- Global compliance
While an international PEO technically employs your global team and handles many HR tasks on your behalf, your company still controls all daily managerial and operational tasks.
Benefits of International PEO Services
International PEO services enable startups, enterprises, and every business in between to compliantly hire top global talent and quickly expand market share with ease.
Below are some key benefits companies experience when partnering with an international PEO:
- Fast market entry. Get up and running in a new country in as little as 48 hours.
- Cost savings. Save 60% when compared to establishing a foreign entity and ongoing maintenance costs in-country.
- Risk mitigation. Avoid compliance risks by protecting your company, intellectual property, and supported employees.
- Talent retention. Retain relocating employees—without having to set up a new entity.
- Streamlined support. Simplify talent support with a partner that manages onboarding, payroll, benefits, and compliance on your behalf.
Still, companies must carefully vet and choose their global PEO partner wisely to ensure reliability, transparency, and success.
When to Use a Global PEO Provider
Global PEO providers benefit organizations of all sizes and sectors. They’re particularly valuable to companies that want to do the following:
Quickly Enter or Exit New Markets
A global PEO provider makes it easy for companies to set up or leave international markets. Partnering with a global PEO provider is a smart choice for companies that:
- Are unsure how long they plan to be in a market. Through an international PEO, companies can compliantly test new markets without building legal entities—making market entry and exit seamless. An international PEO hires local talent on your behalf and helps you quickly reach new international customers.
- Do not have the financial or internal resources required for global expansion. Establishing a legal entity is costly and time-consuming, making it difficult for most companies to hire overseas. An international PEO partner handles many expansion responsibilities, including hiring, onboarding, and managing payroll so companies don’t have to establish foreign legal entities in their target markets.
Hire Talent During Entity Establishment
Even companies that have plans to establish a legal entity face challenges when hiring staff overseas. The entity establishment process takes time, causing some companies to delay hiring and stall business expansion.
An international PEO makes it possible for companies to hire talent during the entity establishment process. Companies that can’t delay their hiring timelines or that don’t have the legal understanding of local employment laws but need to be operational in new markets quickly benefit from partnering with an international PEO to hit the ground running.
Engage and Retain the Best Talent Regardless of Location
An international PEO partner helps companies find and hire top talent no matter their location. For example, if a U.S. tech company wants to hire a software engineer located in France, an international PEO partner swiftly and compliantly handles onboarding, global payroll, benefits, and HR support on the tech company’s behalf.
Companies can hire top talent anywhere in the world quickly and easily when they partner with an international PEO.
Convert International Contractors to Employees
Companies often hire international contractors as a flexible and cost-effective way to accomplish short-term or long-term projects. However, hiring contractors rather than full-time employees opens a company up to potential worker classification risks that could lead to fines and other legal penalties.
To avoid worker classification risks and retain talent, companies may choose to convert their contractors to employees.
An international PEO expedites the process of contractor conversion by:
- Verifying worker classification
- Advising companies on competitive compensation
- Crafting compliant employment contracts
- Adding converted employees to payroll
- Administering locally-tailored benefits
- Ensuring compliance with employment laws
Expedite Cross-Border Transactions
Partnering with an international PEO partner is especially helpful when a company engages in a cross-border transaction and faces acquisition and employment challenges such as:
- Country-specific employment compliance
- Onboarding multiple foreign employees at once
- Transitional services agreements
An IPEO partnership makes it easy for merging companies to onboard international talent quickly and ensure compliance during the expansion.
How to Select a Global PEO Partner
Organizations should consider several factors when partnering with an international PEO, including the following:
- Transparency. Your international PEO partner should provide transparent pricing for their services and fees. Beyond transparent prices, look for an international PEO that accurately calculates and clearly communicates employer burden costs.
- Comprehensive talent solutions. Find a provider that offers solutions for supported employees beyond hiring and paying, including locally-tailored benefits administration and global mobility and relocation services.
- Established global infrastructure. It’s best to partner with an international PEO that has extensive expertise and knowledge of the markets where you seek to hire talent. Inexperienced international PEOs cost businesses time and money, slowing down expansion and risking noncompliance risks for company leaders.
- Full-service support. An international PEO partner should offer comprehensive support, including localized, real-time legal, finance, and HR support for company leaders and their distributed talent no matter where they’re located.
International PEO: FAQs
Below are answers to frequently asked questions related to international PEO.
Will an International PEO Provider Hire Candidates for Me?
Yes, a reliable international PEO partner uses locally compliant employment contracts to hire new members of your global team and becomes their legal employer of record (EOR).
Why Use International PEO Instead of Paying Contractors?
Employee misclassification is a considerable risk. If the employer manages an employee’s day-to-day responsibilities, or if the employee reports only to that employer, the employee is not a true contractor by law.
Misclassification can result in severe fines and penalties, so if you are unsure of the status of any employee, partnering with an international PEO provider ensures compliant hiring.
Does an International PEO Partner Deduct and Pay Taxes from the Supported Employee’s Payroll?
Yes, an international PEO partner withholds individual taxes and follows all local tax laws in each supported employee’s respective region of residence.
Does an International PEO Pay Necessary Country Contributions?
Yes, a reliable international PEO accurately calculates employer burden costs for your supported employees and pays in compliance with local employment laws.
These employer burden costs include payroll and social contributions, such as paid leave entitlements, social security, and other public programs.
Does an International PEO Charge for Offboarding?
Offboarding processes may vary depending on your selected international PEO provider. For example, Velocity Global does not charge for employee termination, but we do require 30 days’ notice to offboard a client.
Keep in mind that the statutory notice period for the supported employee in a given country may be longer than 30 days by law. Some countries have unique mandatory severance periods and payouts, which an international PEO helps you navigate.
If you must offboard an employee, your international PEO partner should ensure compliance with local severance requirements and termination regulations. Whether it’s voluntary or involuntary, a reliable partner should assist you through the country-specific nuances to ensure a smooth separation.
Does an International PEO Provider Broker Deals With Local Partners?
It depends on the global reach and resources of the international PEO company. When choosing a partner, be sure to ask them about their global network and potential local partners.
Velocity Global’s clients and supported employees rely on our global network of experts, which allows us to manage and control their experience. We provide our clients and supported employees with local experts who quickly answer questions on pay, benefits, and more.
Velocity Global’s regional teams remain up-to-date with any local employment law changes and perform quarterly reviews to ensure accuracy and compliance with these laws.
Hire Talent Anywhere With Velocity Global
Global hiring and expansion offer enormous opportunities for businesses. Don’t let the logistics of managing a global workforce get in the way. Partner with Velocity Global instead.
Velocity Global’s Employer of Record (EOR) solution expedites market entry without entity establishment and simplifies employee onboarding, global payroll, benefits administration, and compliance so you can focus on your business goals.
An international PEO company is your best chance to grow and expand your business quickly, compliantly, and cost-effectively. Contact Velocity Global today to get started.