When you expanded sometime back to a foreign country, it must have made complete sense to establish a local legal entity in the new country. It would have been more straightforward at that time to set up an entity as a subsidiary while directly employing people to your new company. Having the brand exposure with a physical presence in the region, entering into contracts within the country, simplifying tax obligations and arrangements are some of the benefits of directly expanding with an entity. It may have seemed like the more obvious choice at that time, but the pandemic has changed everything for corporates including expansions.
By setting up an entity, companies look at different ways of managing operations and employees, in most cases in a more expensive way. Many companies send existing employees to the new country to manage operations on their behalf, while some look at different relationships – getting individual and independent agencies to carry out the operations. Then there are certain instances where a company would acquire a smaller company within the country or look at a joint venture which will operate on a profit share and shared control.
Many corporates are looking at cost savings, cost reductions and even shutting down foreign branches to sustain businesses in the long run. Instead of shutting down, many companies are also looking into transferring the foreign entity to a global PEO (Professional Employer Organisation). There will be a significant cost saving in transferring to a PEO while this process can be done fast, cost effectively and compliantly within days. Maintaining multiple subsidiaries will be a huge burden on the operational cost in the long run therefore global PEOs such as ExroAsia offer their low cost services for companies to maintain their global officers through a PEO.
Switching from a local entity to a renown PEO in the region will give you multiple benefits including saving thousands of costs and cutting down on your operational time. Global PEOs such as ExroAsia manages payroll, HR, recruitment and employee compliance and labor issues. While a global PEO can administer payroll at a lower cost, there will be reduced compliance cost with no requirement to engage lawyers or tax advisors as this will be managed by the PEO itself. Further all HR related tasks, employee responsibilities will be managed centrally by the PEO while the company leadership can engage in more strategic decision making.