Introduction

International assignments are a good option for companies facing the challenges of entering international markets, recruiting global talent and winning international projects, but there are also challenges and how to handle international assignments becomes an important matter for companies to succeed overseas.

In 2022, the new crown epidemic is still spreading in every region of the world, making the issues facing international assignments far more complex than ever before.

But with 60 percent of multinational companies still using international assignments as an important option to support their talent and global business goals, according to KPMG, the international assignment challenges posed by the epidemic have not deterred companies from expanding globally.

According to Statista, 30 percent of companies in the U.S. cite achieving growth as the top purpose of international assignments. In 2020, global expansion accounts for 16 percent of the reasons for outplacement.

According to PwC, most globalized companies have chosen to send employees internationally, especially for a period of more than one year is most common.

With the increase in cross-border business activities of Chinese enterprises, the cross-border movement of talents is also becoming more frequent, and more and more Chinese employees are sent to work overseas in various forms.

There are a number of issues that need to be considered in advance in order to be prepared for the risks involved when choosing international assignment.

Challenges that companies need to focus on

At the project level, companies need to focus on the following questions.

• Is it possible to accomplish the project goals?
• Can the project be completed on time?
• Can the budget be kept within the plan?

In addition to the challenges mentioned above, sending an employee abroad requires attention to the following components.

• Coordinating employee accommodation and local bank accounts
• Payroll that meets local legal and tax requirements
• Establishing contact with local points of contact
• Support in securing employee visas and work permits
• Recruitment, onboarding, management and payment of remote employees
• Local health and safety regulations, such as isolation and social distance regulations

It is important to note that companies can face fines and legal action if they violate local labor laws, tax laws, HR requirements and even union requirements. However, each country has different labor and tax laws.

For example, according to the OECD Wage Levy 2020 report, mandatory social security contribution limits range from 0% in New Zealand, Denmark and Australia to 22% in Slovenia.

How should companies control costs?

Companies need to account for every cost when expatriating, as considering only the cost of expatriating and relocating employees can lead to significant deviations from the final budget.

If a company is incorporated in a local country or region for a three- to five-year project, the costs of incorporation and eventual cancellation should be factored into the overall budget, and these costs can vary greatly depending on the country or region.

For example, in Japan, the minimum foreign investment required is 100 million yen; in the Czech Republic, the minimum foreign investment required is 80,000 euros.

And there are many additional costs associated with maintaining a company’s operations and management, including tax, compliance, and operating expenses.

To avoid additional costs, companies should consider partnering with a nominal employer, EOR, either part-time or full-time, to legally hire or assign employees overseas without having to establish a local company, thus avoiding the additional costs of setting up and running a company and not being subject to the minimum investment requirement.

This not only helps companies control their overall costs, but also provides sufficient flexibility.

How can the outplacement process be completed faster?

According to the 2020 Corporate Assignment Survey, the average length of assignments has increased in 2020, with half of all assignments lasting between one and three years.

Many companies choose to incorporate a company in the location of their international assignments, but the cost and time required to set up a local entity overseas varies by country and region, but the average cost is generally around $80,000, and the average time is up to 5 months*. (*Data varies depending on the country)

For example, according to the World Bank, it can take 230 days to register a business in Venezuela. Precise onboarding of expatriates and employees is critical to ensure that projects with tight deadlines are completed on time, especially for projects that are awarded with fixed dates.

Companies that lack a local presence can work with an Employer of Record (EOR) to speed up the process by eliminating the wait time and cost of business registration and saving traditional placement time.

How should companies control risk?

According to Statista, 37% of companies view business interruption as a threat to global operations, so companies often have contingency plans in place, and international assignments are no exception. Companies should have contingency processes and procedures in place to protect projects and employees in the event of unforeseen events such as a new crown pneumonia outbreak.

In order to break down institutional barriers that restrict the management of foreigners working in China and better attract foreign talent, on April 1, 2017, China began to unify the foreigner work permit system in China, unifying the former Foreign Expert Certificate and Foreigner Employment Certificate into the Foreigner Work Permit, realizing one code for one person for life, and dynamically managing records of work, service and credit in China.

Many companies turn to professionals to ensure legal compliance even in the most difficult times. In fact, results of the Corporate Dispatch Survey show that 90% of companies outsourced dispatch services in 2019. China’s Interim Regulations on Labor Dispatch require employers to reduce the percentage of dispatched workers to less than 10% by March 1, 2016. Companies are unlikely to convert dispatchers but have a need to hire workers, so switching to outsourcing is the best way to go.

When it comes to choosing the best value partner for international assignments, EOR, a Notional Employer, can take care of everything you need and assume all the risks associated with international assignments, while supporting the entire employee experience, including onboarding, payroll, visa and management support on an ongoing basis.

Conclusion

Whether full time or part time, the service provider can provide full process services for companies to legally and compliantly hire their first overseas employee abroad. In a changing environment, the service provider also provides real-time alerts on local policy changes to help companies respond in advance.

The “EOR” business model means that companies can place employees without the need for a local entity, avoiding the time, cost and investment required to set up a company. It provides an efficient, compliant, low-cost and risk-free globalization solution for companies, truly simplifying their overseas employment.

In the process of globalization, companies can focus on business development and business success without the hassle of problems, and set sail.