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How an Employer of Record Helps With Business Cost Reduction

Author:

Clarisa Wong

Published:

March 28, 2024

Last Update:

December 18, 2024

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The world and workforce today is a changing landscape. In 2025, it is predicted that 70% of global GDP growth will come from emerging markets.

Thanks to the advancement of technology, we are able to reach people in seconds as opposed to days – given this context, companies, especially those in developed countries, are expanding beyond their national borders today.

As the pursuit of cost efficiencies is also the driving force behind international expansion, it has become the top reason for global expansion, as agreed by 19% of surveyed respondents in an annual report by Thomson Reuters. Business cost reduction, more efficient logistics, and increased customer satisfaction are among other reasons for expanding internationally.1

Costs of expanding globally

While opening a new office is a great achievement that comes with a lot of new opportunities, it can also be costly for businesses since there can be many associated expenses to be considered.

As an example, setting up a new overseas business entity could rack up expensive fees by just registering your company. In addition to that, business owners need to consider compliance costs, tax rates, and ongoing maintenance costs of the entity.

Besides this, staffing and relocation may pose another challenge – if you are considering relocating some of your existing employees, there are costs to be accounted for such as immigration visas, accommodation, transportation, language training, and the cost of living.

More expensive locations may also require you to boost your staff’s salary to keep up with the minimum local remuneration norms. And finally, finding and renting premises in a new foreign land may also demand high prices for office and retail space.2

Considering all these costs involved, it may come across as a better cost-saving alternative to consider engaging Employer of Record companies to hire staff internationally.

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Key benefits of Employer of Record services and how they can help your business save costs

Choosing the best Employer of Record can benefit you and help you save costs through these 4 ways:3

    1. Upfront expenses are eliminated
      With an Employer of Record provider, your company does not need to take on costs associated with setting up and maintaining your own legal entities. These expenses include registration fees, expansion experts for setup, and legal fees.
    2. There is a decreased risk of non-compliance fines and penalties
      An Employer of Record acts as the legal employer of your employees, hence they ensure adherence to local tax regulations, payroll laws, and labour laws. This safeguards you from tax and legal compliance risks and reduces potential fines as well as liabilities.
    3. Lower costs of administration
      There can be many operational costs that come with the responsibilities of managing a workforce, payroll and HR functions. From cooperation taxes to employment contributions and costs of hiring a payroll manager in each country to manage benefits, you can easily manage these responsibilities and costs by engaging an Employer of Record provider – thus allowing you to focus on your core business activities and lowering your administrative overhead.
    4. Cost-saving tech stack
      You can streamline your HR functions and payroll within an all-inclusive platform solution – thereby simplifying your processes and cutting costs significantly.

If you are looking for Employer of Record services that can help you scale your business and save you time and costs, let AYP assist you in achieving your global business goals. With our solution, you can have dedicated team members working for you without the hassle of entity setup, payroll management, and compliance. Enjoy a seamless and hassle-free experience as we take care of all the necessary details.

Visit our EOR solutions here and book a demo with us today!