Navigating Business Cost Challenges: How Employer of Record Can Help
Author:
Clarisa Wong
Published:
June 14, 2024
Last Update:
October 17, 2024
Navigating the challenges of business costs is a critical concern for companies worldwide, and Singapore is no exception.
ManpowerGroup’s latest Employment Outlook Survey recent report concluded that hiring sentiments in Singapore have softened for the second consecutive quarter in 2024. Out of 525 employers surveyed, 41% plan to hire, 17% expect to reduce their staffing levels, and 42% foresee no changes. Despite this overall cautious outlook, the Financials and Real Estate sectors report robust hiring intentions at +45% – placing Singapore third globally among 42 countries in these industries. However, with the uncertain business climate, companies are reducing marketing spend and re-evaluating manpower needs – especially in the media, publishing, and advertising industries.1
The hiring outlook in Singapore exemplifies a broader global business challenge where companies must balance cost optimization with talent retention. As economic conditions tighten, there may be short-term relief, such as increased availability of tech talent following widespread layoffs after the sector’s over-hiring during the COVID-19 pandemic.2 Yet, recessions, cost of living crises, credit crunches, financial downturns, and economic volatilities pose significant challenges for organisations and their employees. These difficulties – though painful – are often temporary and necessitate a short to medium-term strategy to navigate successfully. Specialist skills and proven experience become invaluable during these times, and outsourcing talent with lower labor costs can help businesses not only to survive but also to thrive. Consequently, hiring and retaining talent remains a key priority amidst these economic fluctuations.3
What are the cost challenges for companies today?
Today’s companies face significant cost challenges driven by market uncertainty and economic pressures. Leaders were scrutinising budgets more closely in preparation for a potential recession; often resulting in reduced financial resources. This creates a difficult environment for companies, as they must find ways to achieve more with less. Additionally, rising prices present a major challenge for global teams. As costs increase, organisations are compelled to reevaluate their expenditures – making it harder to identify non-essential cuts. Eventually, businesses are left with only essential resources; forcing teams to innovate and succeed with minimal support.4
Payroll management can be another critical area, as maintaining consistent employee payments, managing payroll taxes, and providing health benefits are vital indicators of financial health. Utilising payroll software can enhance the employee experience and ensure compliance with frequently changing labor laws. Tax compliance adds another layer of complexity, with accounting teams needing to focus on understanding total tax liabilities and adapting to shifting trade and tariff policies. Effectively navigating these tax changes can free up funds to tackle other business challenges – therefore, employing digitised, accurate, and accessible accounting records can simplify complex tax years – making it easier to manage deductions and remain compliant as regulations evolve.5
We’re here to help you on your journey to hire, manage and pay.
How Employer of Record services help businesses navigate their cost challenges
An Employer of Record can significantly alleviate the cost challenges that companies face today.
By allowing businesses to hire employees in new regions without the need to establish a local entity, an Employer of Record saves considerable time and resources – potentially reducing the setup time from months to just a few weeks. This efficiency translates into cost savings, as businesses avoid expenses associated with creating new local entities – such as capital requirements, employment registration, and legal counsel. Instead, partnering with an Employer of Record means incurring only a fraction of these costs.
Additionally, Employer of Record providers streamline international payroll, ensuring employees are paid accurately and on time in their local currency. This service eliminates the need for businesses to set up local bank accounts and meet regional capital requirements, which can be both costly and complex.6 By removing these financial and administrative burdens, an Employer of Record enables companies to concentrate on their core business functions – for example, tech companies can focus on their core research and development efforts and investments while leaving their people management to an Employer of Record provider.
Another one of Employer of Record benefits is that they handle all HR and compliance-related matters – making them particularly valuable for companies operating in multiple jurisdictions or those with limited expertise in local employment laws and regulations.7 Thus, an Employer of Record offers a strategic solution for businesses navigating the intricate landscape to hire remote talent and compliance, ultimately helping them manage costs more effectively.
Looking for a trustworthy Employer of Record partner and solutions to accelerate your business goals and expand?
Book a call with our AYP HR experts here to find out more how we can help you achieve that today!
