History shows that the business landscape is always evolving, sometimes at breakneck speed. These shifts often lead to drastic changes in business strategies, long-term goals, and the strategic function of operations, which generally result in new HR trends. One such trend is the increasing reliance on employer of record (or EOR) service providers. These third-party organizations serve as the legal employers of companies’ contingent or remote workforces.
There are many reasons for the increased trend in the use of EOR partners, including advancements in technology and the need for top talent.
How Technology and the Need for Talent Has Increased EOR Partnerships
The integration of digital technology into nearly every aspect of business has led to the globalization of the marketplace. Organizations looking to scale internationally can do so with the help of an EOR because it can hire and employ talent compliantly in different countries. Companies can test out emerging markets without the need to establish business entities in those markets. For this reason, employer of record benefits and services can make global expansion efforts much easier and quicker.
Advancements in technology have also led to greater remote work capabilities, which became essential during the pandemic. Though many companies are returning to the office, remote work arrangements remain popular. In fact, a 2023 WFH Research survey found that 12.7% of full-time employees still work from home, while another 28.2% work hybrid schedules. The move to remote work has an increasing number of companies now embracing remote employment, and many of these companies partner with EORs to engage their remote talent in different states or countries.
Additionally, AI and natural language processing tools such as ChatGPT are transforming business tools and processes for organizations of all sizes. Automation, in particular, has become much more prevalent in today’s workplace, and many companies engage contingent workers or talent with specialized knowledge and skills to effectively incorporate it into their businesses.
Though the use of contingent workers to augment a company’s direct staff has been a practice for many years, the need to use a flexible workforce to help keep a company agile is more important than ever. Partnering with an EOR to outsource the compliance, employment, and liability for this fluctuating workforce provides a key strategic value to companies looking to stay agile with the ebbs and flows of their businesses.
Establishing a Successful Strategic Partnership
For many companies, the move to work with an EOR is a strategic one. These services can help you more easily expand your market to another city, state, or country. They can also help you more easily handle the onboarding and offboarding with a fluctuating contingent workforce. Additionally, these partnerships bring another layer of protection to your operations because EORs own the compliance with employment laws for the remote or contingent workers they hire on your behalf.
This is in addition to the fact that EORs often become strategic partners with HR and talent acquisition teams, helping with onboarding, payroll, benefits, reporting, compliance, offboarding, and, in some cases, direct sourcing initiatives to help the company quickly access top talent via curated talent pools. A strong EOR partner will consult on talent acquisition and HR management best practices for the betterment of the partnership and employment experience of the workers.
However, finding the right EOR isn’t always as straightforward as it might seem. There are a few key characteristics that you should look for. The following often top the list:
EOR compliance
When hiring or terminating talent in another state or country, employers must comply with local, state, and national laws of that region. EORs are no exception. While employment law compliance is one of the main services provided by EORs, it’s still critical that your business vet any potential EOR partner’s experience in this space. This includes asking how long they have been in business, confirming they have the appropriate business insurance, asking them how they ensure their processes and policies stay in line with compliance requirements, etc.
User experience and ongoing support
The employee experience plays an essential role in a company’s brand, and this includes the remote and contingent worker experience, even if they are hired under an EOR. Because of this, it’s important for companies to partner with an EOR that has a proven track record of providing a strong user experience for the workers during onboarding and throughout the employment engagement. Much of this user experience will be through a technology platform; however, a good EOR will not rely on its tech exclusively and will have a dedicated live support team to provide ongoing assistance to the workers and the company as well.
It’s important not to forget that employment is a human-to-human relationship dealing with vital aspects of the worker’s life, such as payroll, benefits, and time off. Having a live person to support this relationship and provide guidance or answers to important questions when needed can make or break the overall experience.
Knowledge and experience
Given the complexity of various employment and tax laws across cities, states, and countries, when vetting an EOR, it isn’t enough to look for one with a flashy tech platform alone. Its team must understand the employment laws and regulations in the various jurisdictions where you plan to operate, and it must have processes and the proper business setup to meet these requirements. Additionally, an EOR should be able to provide insight and guidance into local requirements, insights into things that may be customary for employment if not mandated, and other consultations about local employment necessities and laws.
An employer of record partner can be critical to businesses that employ international remote or contingent workers. It affords you the opportunity to engage talent not otherwise available to you — and quickly. This provides your organization with the agility, flexibility, and adaptability needed in today’s marketplace and can help you meet or exceed your business objectives — all while saving you time and money in the process.
Contact Innovative Employee Solutions (IES) today to learn more.
Written by: Sara Jensen, Senior Vice President of Growth & Strategy at IES
Sara Jensen is the senior vice president of growth & strategy at Innovative Employee Solutions (IES), a leading provider of remote and contingent workforce solutions specializing in global Employer of Record, Agent of Record, and Independent Contractor compliance services in 150+ countries. Founded in 1974, IES is a woman-owned business, certified by the WBENC, and partners with companies to provide compliant employment solutions that empower people’s lives.
