Growing a global team through an international staffing agency is an option many companies consider when moving into new markets, but it is not without its drawbacks. Before you decide on how to add new international team members to your company, understand that there are many different employment models available for building a global team, and it is worth it to explore your options.
What is an International Staffing Agency (or Temp Agency)?
An international staffing agency handles the process of identifying, hiring, and terminating workers for a company. Some agencies work with a variety of professionals, while others are focused on specific industries. This service may also be referred to as a “temporary agency” (temp agency for short), but only when the agency specializes in providing short-term workers. The staffing agency model can also be used to hire professionals on a long-term basis.
What Is It Like to Hire Through an International Staffing Agency?
The agency is responsible for all matters directly related to the worker. You are not directly hiring the candidate – your company is a client of the temp or staffing agency, and they are providing you with a set number of professionals. The agency takes care of paying employees and providing them with benefits.
The agency will even negotiate the employee’s schedules, payment, responsibilities, and other employment details.
What is an Employer of Record?
An Employer of Record (EOR) allows companies to hire international professionals by serving as the legal employer and handling payroll, benefits, taxes, and HR functions. The EOR is not in charge of recruiting candidates, but rather provides your company with the ability to hire the candidate you identify in a region where you do not have a business entity in place.
What Is It Like to Hire Through an Employer of Record?
With an EOR, you find the candidates, and the EOR places them on its payroll. You are responsible for deciding who to hire, their responsibilities, and salary. The EOR will then draft a locally compliant contract and place the professional on its locally compliant entity. You maintain total control over management, and only you can decide when to terminate the employee.
What Are the Benefits of Each Option?
Both models will allow you to:
- Hire all over the world, without setting up an entity
- Hire and onboard professionals quickly
- Stay compliant by taking on the responsibility of labor and tax law
- Avoid dealing with international payroll
- Provide benefits packages to your employees
All in all, these two models seem to offer similar benefits. To understand what is best for your company, take a closer look at the details that make them different.
What Is the Difference?
- Scalability: To grow quickly around the world, it helps to work with one partner – everywhere. With an EOR like Globalization Partners, which allows you to expand in 187 countries, you have one point of contact for growing your global team. Even though you may hire team members in many different countries, you manage all expenses, payroll, and more in one place. With an international staffing agency, you may need to sign new contracts in every country you wish to hire. While you still may be able to use this method of hiring to scale, communications may not be as streamlined, and it will take considerably more management on your part if you must complete the contract process in multiple countries.
- Short vs. Long-Term Hires: While some international staffing agencies give companies access to long-term hires, many service providers are built for providing temporary labor. If hiring temporary staff is a better solution for specific projects, an agency could be a good solution. However, if you’re looking to build a highly skilled, long-term staff, an EOR is a better option for building a relationship directly with a candidate that is looking for stable, long-term employment.
- Attracting Talent: When it comes to contracts with the professional, a temp agency provides very little wiggle room when it comes to things like benefits and vacation days. When trying to attract top talent, many professionals might be hesitant to accept a job that’s tied to a staffing agency because they might not be sure about their employment stability. Even though an EOR serves as the legal employer, the employees work directly for your company. With an Employer of Record, you set the employment terms, and the EOR offers a competitive employment package.
What Is Best for Your Company?
While an EOR and an international staffing agency provide similar benefits, the truth is that they serve two very different purposes. Although temp and staffing agencies are now available worldwide, the truth is that they may benefit particular industries or certain types of projects by providing mostly temporary workers.
If you want to build a presence in a new international market or access some of the top talent around the world, an Employer of Record will allow you to do so without the hassle of setting up international entities, staying compliant along the way. This added benefit will significantly reduce your business’ time to market and begin adding value to your business fast.
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Are You Looking for More Information?
Want to learn more about how an Employer of Record works? Check out “Is an Employer of Record Right for You?”