Professional Employer Organizations (PEOs) are growing in popularity as a form of partnership between a client (often a foreign-invested enterprise in a new market or a mid-sized business) and a professional service provider to handle all matters related to human resources management in a flexible and cost-efficient arrangement.
Definition
PEO stands for Professional Employer Organization, which refers to a service providing firm that enters into employment relationships with employees on behalf of their clients. These employees work for the client, but are legally employed by the PEO, which enables the PEO to provide a one-stop HR solution for the client.
In other words, the PEO functions in replacement of an HR department, performing a comprehensive HR-related scope of work, including but not limited to: payroll administration, compensation and benefits (C&B), SHUI management, HR compliance, and recruitment and training. This is why it is common to see PEO services also being referred to as co-employment, HR outsourcing, or personnel outsourcing services.
Even though the employees are recorded under the PEO for tax and legal purposes, the clients retain full authority over their workforce and do not delegate any business decision-making to the partnering PEO.
Services within a PEO arrangement
A standard PEO engagement with Viettonkin Consulting consist of several or all of the following solutions:
- Payroll Administration & PIT Filing
- Local SHUI Consulting & Management
- Labor Market Research
- Compensation & Benefits (C&B)
- Talent Recruitment, Management & Development
- HR Compliance & Contracting
- Data Analytics & Reporting
- Ad-hoc HR Support
Why should foreign investors work with PEOs?
PEOs offer great flexibility for foreign investors starting a business in a new market, who are often in the early stages of market expansion and lack a full range of HR capabilities as well as knowledge of the local labor market and its prevailing practices. With PEOs, clients shall sign a service contract with the service provider, which proceeds to sign direct employment contracts with the employees and thus are legally liable for them. As clients are not directly employing such employees, they are also not required to establish a local entity and are able to opt for signing a service contract with the local PEO using their global entities. This reduces time, costs, and resources for many foreign investors who are exploring or researching new markets.
Further, co-employment partnerships relieve foreign investors from the burden of building an in-house HR team and committing to formal employment relationships with a new local team that could change as fast as their business strategy in unfamiliar territories. Attempting to apply a DIY approach to HR matters in a new geography could also be highly costly, as a result of a lack of understanding regarding local labor regulations, taxes, social contributions, and other related issues – which can eventually amount to penalties and a damaged employer brand in this market.
As a result, the client can focus 100% of their efforts on their business development and other core activities, while entrusting most, if not all, HR matters to the designated PEO. At Viettonkin, our local HR experts are able to synergize and align with global HR teams of our multinational clients, enabling more optimal business decisions with well-informed inputs from the local market.
Why is Viettonkin your trusted PEO partner for SEA markets?
Viettonkin Consulting is a leading FDI-focused consulting firm based in Southeast Asia, providing a one-stop solution hub for foreign investors around the world. Our team of HR experts and consultants have 10 years of experience helping Fortune Global 500 and other major multinational corporations with their HR-related matters upon entering the new global markets. Our clients include corporations from the United States, Canada, South Korea, Europe, Singapore, Hong Kong, and other developed markets looking to enter Vietnam, Indonesia, Thailand, and other emerging Southeast Asian destinations. Schedule a free 15-min call with us today to discuss your business and human resources expansion plans.
