What is an International PEO? Guide for Global Businesses

An International PEO is introduced in the employment world to ease the global hiring process of businesses trying to expand internationally. International PEO is not a co-employment of international employees but is a service similar to an employer of record service (EOR) to onboard resources without having an entity in a foreign country. Basically what an International PEO does is to help businesses set up a fully functional and legally thorough international remote team without the need of setting up an entity in the country a company is hiring from.

Let us take a closer look at how an International PEO actually works, what is the difference between an International PEO and other closely related employment models, what are the requirements to collaborate with one of them, the benefits of collaborating with them, and how to build a dream team with the help of them.

What is an International PEO?

International PEO is an employment service that helps companies with the compliant hiring of international candidates from anywhere in the globe without setting up a legal entity in that country of the candidate. It saves companies from HR and legal hassles involved in the recruitment and maintenance of international candidates. An International PEO manages complex processes like international payroll, onboarding and offboarding of the candidates, dealing with conflicting local labor laws of the hiring country, employee engagement and employee retention, and many other related operations. The HR tasks can often be finicky especially when a business is dealing with international candidates and employers have to be particularly expert in handling individual HR issues all by themselves.

Employers may find themselves in the middle of nowhere with this humongous responsibility and miss out on stellar candidates. Fortunately enough, there is an employment model (International Professional Employer Organization) at hand whose expertise will not only eradicate this operational conundrum but also make these tasks rudimentary in the global expansion process of a company’s workforce.

This legal employer for a company’s global workforce along with all the compliance and administrative heavy lifting, comes in handy to manage the employee benefits, contracts, and taxes at a very cost-effective budget. The International PEO employment service is however frequently confused with other interconnected employment services such as global PEO, domestic PEO, and global employer of record (EOR).

While each of these services is responsible for hiring and managing an organization’s workforce, there is a thin line between these three-letter employment acronyms and the terms and conditions for the individual models vary greatly from one another.

What Do International PEO Companies Do?

International PEO companies help businesses explore new opportunities in emerging global markets by assisting them with a full spectrum of services. International PEO companies support businesses in expanding their workforce without any geographical constraints by abiding by all foreign laws and regulations.

They manage the entire legal payroll on a company’s behalf which involves international taxes, timely salary for every employee, and miscellaneous financial liabilities for international employees. Even a slight negligence of the payroll system can lead a business to reputational damage and in worst-case scenarios to potential compliance risk but International PEO companies cover it all for it.

However, the core essence of partnering with International PEO companies is that they become the heart and soul of human resources of a business along with saving time and money in the process. With their vast network and strong hold on the international markets, International PEO companies work way smarter and faster than any other employment model.

An International PEO has access to a diverse talent pool that is excellent at their jobs yet available at a very economical salary range. International PEO companies also save businesses from unnecessary legal fines due to non-compliance, on-time payment failures, or workers’ misclassification.

When to Use an International PEO?

Small and medium-sized businesses that are aiming to grow bigger and potentially expand their teams in foreign locations can engage with an International PEO. It helps them to access the less expensive talent pool outside their own country. International professional employer organizations are for those organizations who plan to build a fully operational remote workforce in another country but do not want to go through the hassles of setting up a legal entity in a new and unknown location. Additionally, International PEOs are also used for converting existing contractors or freelancers to permanent employment. Let us discuss the reasons for using an International PEO in detail:

Swift Entry and Exit in Global Markets

An International PEO acts as the perfect guide for organizations that have not planned a period of stay in the new location and are just experimenting with the business market. In such cases, investing in a legal entity financially and emotionally may feel premature.

An International PEO allows a business to be less committed here and takes on the operational responsibility in the new country for it. This way the business can enter the new market without much paperwork or legal hindrances and exit the market as and when required if it does not work out for the business.

Moreover, setting up a whole new entity in an international land can go over budget for some businesses. Many businesses become wary of the cost and time involved in the expansion process and step back assuming undesirable consequences. An International PEO provides such businesses an opportunity to grow in an international market on a low