Introduction

The sudden onset of the new crown epidemic in 2020 has disrupted the expansion plans of many companies, and the travel restrictions brought about by the virus have forced companies to shift their business development methods, and uncertainty about the economic environment has forced many companies to adopt a “defensive” business strategy.

According to the International Monetary Fund, the global economy will decline by 4.4% in 2020, while in 2021, the global economy will grow by 5.5% and China’s growth will reach 8.8%. Today, before the epidemic is completely over, some of the most efficient and flexible companies have been the first to adapt their business models to the new environment and are beginning to benefit from the recovery period.

A new way of living and working

Looking back over the past two years, it’s safe to say that the epidemic has permanently changed the way people live and work. A large number of companies, including Google, Microsoft and JPMorgan Chase, have continued to telecommute their employees, and companies have found that telecommuting does not negatively impact productivity. In fact, studies have shown that if employees work from home at least one day a week, productivity can increase by 13%, and employees are more likely to adopt this more flexible work model.

According to data from Aimedia Consulting, there are more than 300 million telecommuters and 18 million telecommuting companies in China in the New Year 2020. In the telecommuting survey, nearly 50% of surveyed users opened the telecommuting mode, and mainly focused on the Internet industry; 44.4% of surveyed users used the telecommuting “online communication” function; 63.4% of surveyed users believe that the advantage of telecommuting is the flexibility and freedom of the workplace; 63.5% of surveyed 63.5% of the respondents expressed their optimism about the development prospect of telecommuting industry.

This is a priority for enterprises going abroad, and the mode of telecommuting can bring the global talent pool into the enterprise’s reserve. If there is a clear destination country, having a telecommuting employee in the local area can help the company play a huge role in familiarizing itself with the local culture and business development.

Challenges faced by companies when expanding overseas

Although overseas markets and talent have great potential for business development, it usually takes a local entity to set up a business or hire an overseas employee. The cost and time required to set up a local entity overseas varies by country and region, but the average cost is about $80,000, and the average time can take as long as five months. For businesses, time is money, and excessively long lead times can create significant (*varies depending on country data) when entering overseas markets

It is also important to pay attention to local regulations and policies when doing business there. A case study released by HM Revenue & Customs, the UK’s national tax authority, revealed that a company was found to have transferred some of its income to a personal account in Spain in an attempt to avoid UK tax charges totaling more than $370,000. The owner of the company now faces a 21-month suspended prison sentence, with the possibility of five years in prison if the tax and penalties are not paid within the three-month conviction period.

In the process of going abroad companies need professional legal and financial teams to ensure compliance, HR teams to handle the onboarding of overseas employees and global payroll service providers to support the establishment of the entity, after which companies still need to continue to comply with the payment of various local taxes and employee benefits. Even for an experienced team, facing all of this can be a daunting challenge.

A better first step to go abroad

For companies going overseas for the first time or entering a new regional market, whether full-time or part-time, entrusting the HR business to a quality EOR service provider is a better choice, as it can significantly reduce the cost, time and risk of hiring overseas employees by eliminating the need to build your own entity.

With third-party services, the complex process of building your own entity and then hiring employees is simplified into a few short steps and handled by a professional team provided by the service provider.

Hiring full-time employees through a service provider allows for the hiring and management of employees, background checks, local taxation and mandatory benefits (similar to social security provident fund), legal compliance, local currency payroll, local culture and policy consultation, and other matters without the company having an overseas entity.

Although the company hires the employees, legally, the employees are the subject of the service provider, and with the compliance and payroll services provided by the service provider, the company will be fully legal and risk-free in its employment. It is a pure HR service that helps the company deal with the complexities of day-to-day affairs while retaining the management rights of the employer, who still has full discretion.

Once the employee is onboarded, the service provider will provide the company with a monthly payroll based on the employee’s contracted salary that protects social security, personal taxes and other necessary expenses.

The service provider will ensure that the company’s employment is fully legal and compliant. The company only needs to adjust the bill according to the specific situation and deliver a lump sum of fees to the service provider in the amount stated on the payroll.