Article
8 min read
Author
Shannon Hodgen
Published
June 01, 2023
Last Update
July 24, 2024
Table of Contents
What is a global PEO (professional employer organization)?
Is a PEO the same as a global PEO?
What’s the difference between a global PEO, EOR, GEO, and temp agencies?
What does a global PEO service do?
What are the benefits of global PEO outsourcing?
How to choose a global PEO service
Frequently asked questions about global PEO
Grow your global team with Deel, and never worry about compliance again
Expanding into a new local market or two is manageable for most growing companies. But simultaneously expanding into multiple international markets gets complicated, fast. You have to juggle a variety of strict labor laws and tax laws while avoiding misclassification and navigating international payroll.
Because of these roadblocks, many companies struggle with successful international expansion. So, why not outsource the hard parts?
Deel’s State of Global Hiring Report shows that companies are looking globally for the best talent. And according to a 2022 HR Dive survey, HR teams are also looking outside of their organization for help with payroll processing and benefits outsourcing. With a global PEO (professional employer organization), you can get much more than that off your plate.
Let’s look at what a global PEO is, how it works, and how it can benefit you.
A global PEO (global professional employer organization) is an organization companies hire to outsource international hiring. The global PEO becomes the employer of record (EOR) for their client company, legally employing their workers and providing services like compliant contract creation, global payroll, and tax compliance.
No. Standard PEOs and global PEOs are alike but not the same.
A standard PEO takes on HR tasks and administrative duties on behalf of an employer. The two entities enter into a co-employment relationship and share status as the workers’ legal employers. Standard PEOs don't help you hire employees internationally—you'd need to set up your own foreign entity on your own, then find a domestic PEO to assist you with the new HR tasks in that new country.
In comparison, when you work with a global PEO, they alone become the legal employer of the worker, taking on all legal requirements and risk. Global PEOs make it easy to hire internationally, because the global PEO already has local entities set up that hire the desired international workers on your behalf.
Client companies that hire through global PEOs still manage and oversee the day-to-day work of their employees, conduct performance reviews, and determine each worker’s pay. But they no longer have to worry about complying with the employee’s local tax and employment laws or figure out international payroll processing. The global PEO's local entity is fully responsible for ensuring the employment contracts, payments, and taxes comply with the local labor laws.
Here’s a snapshot of the differences between a standard PEO and global PEO:
So if you already have a US team, you might prefer to use a standard US PEO service to bolster your existing HR department and ensure you meet full regulatory compliance with state payroll and labor laws. However, if you plan to expand your workforce by hiring internationally, you’ll want to consider a global PEO to hire quickly and compliantly. And if both situations apply to you, consider a service like Deel, which offers local and global PEO services for maximum flexibility with your hiring plans.
While some use these terms interchangeably, they don’t all offer the same global PEO services. Let’s take a look at the differences:
A temp agency is a staffing solution dedicated to identifying, interviewing, and hiring temporary workers on an employer’s behalf. Recruitment is typically where the working relationship ends, though.
A global PEO won’t recruit employees on behalf of their client company. Instead, once a company identifies a foreign candidate they want to hire, they provide facilitation for onboarding, compliant contracts, benefits administration, and more, to ensure they’re hired correctly.
A global PEO, international PEO, and EOR (employer of record) are three different names for the same service. But remember: a standard PEO and EOR aren’t the same.
GEO stands for global employment organization and is the same as a global PEO. You’ll see the two terms used interchangeably, which is accurate.
A global PEO (or EOR) helps companies with international expansion by helping them hire top talent from around the world. But employing global talent is a complex web of legal compliance, so global PEOs offer a suite of additional features to support their clients.
Common global PEO services include:
The core benefit of global PEO outsourcing is simple: it uncomplicates international expansion. But let’s take a closer look at the specific benefits your HR team can experience.
International expansion can divide an HR team’s attention, especially if you’re a small business. Instead of focusing on human resources alone, they also need to manage unique labor, tax, and compliance laws for every international employee they hire.
A global PEO means business owners and HR teams can hand these responsibilities over to international employment experts. You’ll have more time to develop your global workforce or expand your services without trying to master the legal implications (and worrying about the liability) of becoming a global business.
Global PEOs set up sturdy automation and systems to process invoices, transfer data, and perform general payroll duties. If you hire employees overseas on your own, you’ll have to set up (and manage) these processes on your own.
It’s possible, but it’s slow and expensive: you have to become a legal local entity wherever you want to hire and build global contracts, payroll, and benefits from scratch. Companies use global PEOs to save on global can re-invest that money in their people and product.
Managing international teams requires handling sensitive employee data (like employment contracts and payroll information) from around the world.
Protecting that information shouldn’t be another administrative task for your HR team. The right EOR should be GDPR compliant and offer security features like advanced IP protection and Single Sign-On (SSO).
Have you ever found the perfect candidate for the job, only to realize they can’t join the team because of their physical location? With a global PEO, international borders are no longer barriers.
Global PEOs enable their client companies to hire employees anywhere in the world without setting up a subsidiary in a new country, opening the door to the best talent, not just the nearest.
Oursky is a software product studio based in Hong Kong. Since 2020, the 70-person team has been expanding its business internationally, establishing offices in Taiwan, the UK, and Canada.
But as they expanded, more of their time was consumed by administrative work. They spent a lot on hiring local lawyers, accountants, and consultants in each market to maintain compliant hiring.
Deel’s streamlined and automated platform allowed them to easily navigate an increasingly competitive environment, cutting their admin work time by 80%.
“When I hire overseas, I find that people know and trust Deel. Upon learning that their contract will be signed through Deel, they feel reassured because they know that the platform can be trusted, and it gives them peace of mind too,” said Founder and Project Manager, Ben Cheng.
If you’re looking to hire internationally without a global PEO, you have two options—you can:
Hiring foreign contractors can bring you a larger talent pool at (typically) lower prices. But hiring contractors also comes with the risk of worker misclassification and weaker non-competition clauses, NDA protection, and IP protection.
Starting up a new business entity in every new market you hire in is costly and can take time, which isn’t conducive to a fast-growing business. There are also many compliance challenges companies face when setting up an entity, including:
See also: 4 Compliance Challenges When Setting up Your Own Entity
With a global PEO, you hand off the legal and financial risk while still managing the day-to-day work of your employees.
Want to see an annual breakdown of your US Social Security contributions? What about your pension costs in the UK? With a data-driven EOR, you can see every line item to better understand your HR data and global payroll costs.
Here are a few ways Deel stacks up against competitors.
Scalability
Support
Compliance
Pricing
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Scalability
Support
Compliance
Pricing
Security
Learn more about how to choose a global PEO service. When you’re ready, you can use our EOR Request for Proposal template to invite vendors to create proposals for your business. If you're looking for a traditional US PEO, see our article: 9 Considerations When Selecting a PEO or US Payroll Provider.
Now that you have a better understanding of what a global PEO is and how it can help your team expand into new markets, let’s dive into some frequently asked questions.
Pricing for a global PEO is contingent on the services you need and the type of workers you’ll hire (contractors or employees). At Deel, we offer custom pricing and bespoke functionality for enterprises and offer a discount for qualified startups. See Deel’s pricing model to learn more about the costs and special offers.
A PEO broker is an individual (or firm) who helps companies decide which PEO company is right for them. They review your current business, identify your needs, and act as a consultant to match you with the right PEO. For example, they can help you determine if you’ll benefit more from a standalone global payroll provider or a more comprehensive global PEO solution.
Any company looking to expand into new, international markets can benefit from using a global PEO.
For start-ups, this service provides access to a more affordable talent pool. A global PEO can help you hire within days instead of weeks and fast-track your growth, without worrying about compliance, payroll, or HR and administrative tasks.
For growing enterprises, global PEOs can broaden your market reach and increase your team’s diversity, without the costs of setting up legal entities in each new country.
In short, no. When you partner with a global PEO, they become the sole legal employer of your international worker, so there’s no co-employment relationship. A standard PEO, on the other hand, uses a co-employment relationship, so the PEO and the client company are both the legal employers of their workers.
Building an international team can be time-consuming, especially when compliance is involved. There are different local labor laws, taxes, and mandatory employee benefits for each country to keep up with.
Luckily, a global PEO like Deel keeps up with it all for you.
Today, Deel is the largest EOR provider globally with 20,000+ active employees under 100+ solely owned entities. Every entity leverages in-country payroll and employee experience experts with no outsourcing to third-party providers.
Our proven system enables every company to scale with top-level efficiency so every company has access to industry-leading HR technology and workflows that enable global teams.
With Deel, you can rest assured legal experts vet your contracts to be completely compliant, so your new hires are set up to work correctly in no time.
Want to learn how it all works? Book a demo today to find out.
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