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  • 14 Jul, 2022
  • 5 min read

Q&A: How PEO Services Benefit when Expanding into Singapore

Q&A: How PEO Services Benefit when Expanding into Singapore
For successful businesses to get to the next level of growth, overseas expansion is inevitable. However, international expansion can be particularly daunting in the areas of managing compliance with foreign employment regulations and getting the right manpower. Thankfully, in Singapore, there is qualified help at hand that will take care of many of the compliance and HR needs. Read on as we explain the PEO industry, why you need them, and how they can benefit your business in the process of expanding into Singapore.

What is a PEO?

PEO stands for Professional Employer Organisation. A good PEO works with enterprises of all sizes to assist them in managing staff employment, ensuring payroll compliance, running day-to-day human resources (HR) tasks, as well as administering employee benefits.

A PEO has global implications for businesses that have ambitions to expand overseas. By tapping into PEO services in Singapore, an expanding company can take a reasonable hands-off approach to the regulatory side of foreign recruitment and HR.

Expanding enterprises can engage PEO service in hiring their employees and seconding back the employees to them.

This arrangement allows, among other things, for the company to focus on the core business functions of growth and profit maximisation without worrying about the employment regulations and employee matters during the expansion process.

Why do I need a PEO to expand into Singapore?

There are two major hurdles when expanding overseas — managing your risk properly, and adhering to the regulations of the country in which you are expanding to.

In the last 30 years, PEOs have come to the fore to help organisations with international aspirations tackle these problems. The PEO industry has become so prevalent, that their 175,000 clients now represent 15% of employers with 10 to 99 employees in the United States alone. In Singapore, employers have also increasingly relied on agencies to supply staff on a contract or recurring basis.

Let’s have a look at how a PEO can mitigate or negate your risks of expansion.

1. Lower Risk Profile

Lower Risk Profile
Expanding into a foreign market is fraught with financial risks, no matter what country it might be. There will be significant investment required regardless of your expansion structure, so adding to that risk with more outlay into regulatory and HR needs is hardly prudent when there are better options.

By partnering with a PEO, you can reach out to available resources quicker, because your PEO will have their own established (and more efficient) resources in that foreign market. The numbers speak for themselves, as PEO clients have a 35% reduction in HR administration costs.

What’s more, if for some reason your expansion fails, you will be able to pull out of the market with a lot more ease, thanks to the fact you don’t have so much overheads and obligations to the termination of employees in that market.

2. Regulatory Compliance

PEO Regulatory Compliance
Every foreign market is different, and will have their own set of options for company structures or legal entities to create. They will then have their own labour laws, local compliance needs, safety requirements, etc.

A PEO has already established themselves in that foreign market, and because they are a co-employer with you, they can act as an umbrella for all your regulatory needs in the expansion process.

Again, this all means more time for you to focus on operations, while the PEO takes care of your foreign day-to-day HR and compliance needs.

How can a PEO benefit your business?

How can a PEO benefit your business?

A PEO is not just good for being that regulatory umbrella we talked about — they actually provide many more broader benefits when it comes to expanding your organisation in Singapore.

1. Cost Effective Benefits for Your Foreign Employees

No matter the market, your foreign employees will want benefit plans, which a PEO can take care of for you. That may be one of the reasons that PEOs can reduce employee turnover by up to 14%.

A PEO can organise and facilitate:

  • Life and personal accident insurance
  • Medical, vision, and dental care plans
  • Disability insurance, both short term and long term
  • Benefits for commuters
  • Educational assistance
  • Fitness memberships

2. Navigation of, and Assistance with Foreign Laws and Regulations

In most cases, a PEO can assist your organisation with:

  • Managing unemployment claims
  • Addressing employment verifications
  • Helping with employer health care compliance where mandated
  • Making sure payroll follows all laws of the foreign market’s governments

3. Reduce Your Administration and Payroll Responsibilities

A PEO can save you substantial time and effort on:

  • Payroll
  • Paycheck preparation and payments
  • Payroll slips
  • Payroll reporting
  • Tax reporting

4. Experienced HR Staff on the Ground

Having a PEO working on your behalf in the foreign market gives you assurance that all HR issues will be handled properly:

  • Onboarding & exit
  • Employee relations
  • Paid family leave and other absences
  • Recruiting, onboarding, and terminating employees
  • Overtime management

5. Reduce Your Organisation’s Liability in Your Expansion

PEO’s are experienced in assisting you with all matters of HR compliance issues, including:

  • Worker’s compensation
  • Interaction with local agencies on your behalf
  • Liability insurance
  • Creation of employee handbooks

How Does a PEO Work?

How Does a PEO Work?
A PEO employs a staff (whether recommended by yourself or sourced by the PEO) and second them to you to take on their designated tasks on your organisation’s behalf, as they have a contractual allocation and sharing of said tasks.

When you partner with a PEO in Singapore, you will agree on the responsibilities that the PEO will take care of on your behalf. For example, the PEO might take care or HR support, payroll, and tax filing, while the organisation retains control of general operations and day-to-day business, as well as overall management of your employees.

As the PEO will help you to establish assets and infrastructure in your new foreign market, you can leverage their economies of scale to reduce your expansion costs.

What is a PEO unable to do?

While PEO services are for the most part a boon in terms of mitigating administration load, there are some things they can’t take care of.

PEOs are not legal advisors in either tax or law. They can certainly help you with many aspects of your on-the-ground obligations, but it is the expanding organisation that must be responsible for operating within the laws and regulations of their foreign market.

Moreover, a PEO will not take responsibility for running the day-to-day operations of your business in the foreign market. It’s not within their mandate, so it is the expanding organisation that must take overall responsibility for both operations and employees in that foreign market.

How much does a PEO cost?

Professional Employer Organisation Cost
The PEO cost model will vary from provider to provider, but for example, you might pay a small monthly fee per employee, or you might pay a monthly fee based on how many employees you have in total.

A good PEO provider will work with you to create a cost model that suits your specific needs, in Singapore.

Conclusion

Overall, a PEO would be invaluable to any organisation that has ambitions for expanding into Singapore. With the exception of operations and overall management, you can delegate a myriad of costly duties to a PEO, leaving you to do what you do best, growing your successful business.

To learn more about our reputable PEO services, please do contact us — it’s both our job and pleasure to assist.

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About the Author

Alton Neo

Alton has deep technical expertise in the Singapore Financial Reporting Standards as well as hands-on experience in accounting for publicly-listed entities and growing enterprises in Singapore. Beyond that, Alton also provides expertise to fund managers and family offices on structuring.

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