Growing Utility Of Peo/eor Services And How Businesses Can Benefit From Them

By Author: husys
Total Articles: 15
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A PEO is a professional employer organization, It is also known as EOR (Employer of record) in some countries, like the UK. It’s a third-party organization that hires and pays an employee on behalf of another company and takes responsibility for all formal employment tasks. PEO services include recruitment, payroll and benefits, on-boarding of new recruits, taxation, labor regulation compliance, and other statutory compliances.

Using a PEO service, allows companies to legally and efficiently engage with overseas workers either in a new country or state, without having to set up a local entity or risk violating local employment laws. Thus, making them a legal employer, and in charge of all of the liabilities of hiring, employing, and terminating workers.

PEO’s provide small businesses with the infrastructure and resources to navigate about employment-related complexities, employee relation assistance and help them adjust to the rapidly changing business environment such that these businesses can focus on growth and market penetration instead of being bogged down by due compliances.

As per data by NAPEO ...
... (National Association of Professional Employer Organizations), US, small businesses that use professional employee services, can grow 7-9% faster than those that use a more traditional approach, have reduced employee turnover by 10-14%, and are approximately 50% less likely to go out of business in trying times.

PEO’s don’t just help small local business ventures grow. They can also help remove the complications of setting up a new foreign subsidiary and help businesses cut down on excessive avoidable costs, by employing talented individuals on behalf of these businesses and handling all other essential related steps, ranging from drafting terms and conditions of employment contracts, to payroll, taxation and managing insurance schemes thus helping these foreign businesses with expedited market entry into lucrative Indian markets.
2020 pandemic and its impacts on the global workforce
The potential threat of contracting Covid-19 has pushed most office spaces online resulting in a work from home (WFH) setup. While the sudden shift to WFH brought with it an onslaught of issues, it has now become the new normal. Several major companies are now looking to allow some employees to continue working from home in the long term while some other companies are looking to create Hybrid workspaces while some employees will be allowed to permanently work from home while the others will have to switch between WFH and regular office hours.

There has also been an observed growth in the percentage of short term, project-based employment on a contractual basis, over full-time employment.

The financial and economic downsides of the pandemic resulted in businesses showing an increase in M&A activity, resulting in greater organizational complexities as well as challenges concerning management of these rapid changes.

In light of these circumstances, it becomes even more important to understand the relevance of PEO’s today. As we enter 2021, businesses continue to grapple with navigating about workforce requirements and making requisite adjustments. PEO services are best suited to help businesses (whether an Indian MSME or foreign company looking to expand its operations within India) adjust to this new normal, including remote work, in a seamless fashion.

New employee recruitment and Onboarding in a remote set-up is also a new challenge that can become a daunting task for some businesses. PEO service providers can help build a foundation for electronic on-boarding, enrollment, and communication.
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