Mapping the World One Employee at a Time
Asian SMEs and startups are looking beyond their borders to sustain their business momentum.
A 2022 Equinix survey highlighted that the pandemic only made this hunger keener. 82% of those surveyed said they want to expand in the next 12 months (which means they are expanding this year).
It won't be easy. The biggest challenge that SMEs and startups face is each country's convoluted set of regulatory requirements.
“Each country has its own unique laws and regulations governing employment, taxes, and business operations, which can be overwhelming for companies that are new to these markets,” says Rick Hammell, founder and chief executive officer of Atlas (formerly Elements Global Services).
While cultural and language differences, visa rules, and compliance pose other challenges, another significant one for Asian or Chinese companies looking outward is poor employer branding.
"For Chinese companies that look to expand globally, especially for small and mid-sized companies that are less well-known, talent attraction can be challenging as they don't have a strong employer brand in the overseas market they are trying to attract talent. They will have to compete with local competitors and globally-known organizations for talent," says Hammell.
The pandemic has also raised the complexity of these challenges as governments protect their local employee base.
Hammell notes that Indonesia has a 5:1 ratio for local to foreign employees, while Thailand's ratio is 4:1. "Countries use this approach to promote employment opportunities with local jobseekers and to ensure that employers take local candidates and skills into account."
“Governments can use this to control foreign workers entering the country, thereby ensuring local workers have access to more employment opportunities and foreign workers are not displacing their local counterparts based on factors such as cost, flexibility, and so on,” he adds.
For SMEs and startups, these challenges can be immense. Instead of focusing on building their customer base and momentum, they must divert their resources to address employee management issues. The solution, says Hammell, is direct employer of record (EOR).
What EOR is not
Hammell knows the value of EOR. After all, he claims that his company came up with the term.
“We coined the phrase ‘Employer of Record’ to describe what we do. Naturally, our competitors quickly adopted it. But we’re still the only direct EOR company in the world,” he notes.
To understand what direct EOR is, a good starting point is what it is not. Hammell explains that EOR is not a headhunting firm, a recruitment service or for processing payroll only. It's more than these.
“What (EOR) really means is that Atlas takes on the legal and compliance responsibilities of employing a company's workforce in a foreign country. This can include everything from payroll and benefits administration to tax compliance and regulatory reporting,” says Hammell.
EOR promises startups and SMEs that they can expand globally quickly and recruit high-caliber employees without being bogged down by administration and legal complexities.
"By partnering with an EOR provider like Atlas, these companies can benefit from a fully compliant and flexible employment solution that allows them to focus on their core business activities while having peace of mind that their global workforce is taken care of and compliant with all local laws," says Hammell.
He claims that by using direct EOR, companies can expand worldwide without opening individual entities, having their teams of experts, or meeting immigration requirements like quotas by themselves.
"Our clients can leverage our internal local, national employees as well as other clients' local, national worksite employees for quota purposes. Atlas also facilitates other quota requirements such as office space and local national training programs," says Hammell.
Using EOR as an enabler
Atlas uses direct EOR to unlock a series of advantages for startups and SMEs.
First, Atlas already has entities in 160+ countries. Companies can partner with Atlas, using our Employer of Record (EOR) services, to onboard employees and start operating in these markets in a few days.
Companies do not have to start from scratch at each of the locations. They "only need to spend a one-time onboarding fee versus a large amount of capital investment in a particular country that they cannot move for up to 18 months," says Hammell.
At the same time, they have access to local expertise to navigate the local legal and compliance scene, which can change quite quickly.
Overall, Atlas help to address “the complexities of global compliance, cutting through the red tape and ensuring businesses can focus on their core competencies and growth,” says Hammell.
Atlas also offers the Atlas Human Experience Management (HXM) platform. "Organizations can manage their employee's lifecycle from onboarding, regular pay cycles payments, all the way to offboarding through a single platform. They are also supported by employee relationship consultants in the same time zone for any HR-related inquiries they might have," says Hammell.
The flexible workforce advantage
Direct EOR plays another crucial role for today's companies looking for flexible workforce management.
“The pandemic has accelerated the adoption of remote work and transformed traditional workplace dynamics. Engaging remote workers has become a focal point for organizations worldwide,” observes Hammell.
“Additionally, the need to hire international employees has become essential as companies seek global expansion. Furthermore, ensuring talent is recession-proof has emerged as a critical concern, given the current uncertain macroeconomic scenario,” he adds.
He sees companies prioritizing technology to enable remote collaboration and communication, adopting flexible and hybrid work environments. They are also investing in upskilling and reskilling programs to equip their workforce with the necessary skills to navigate future disruptions.
While these areas are important, Hammell believes that direct EOR solutions such as Atlas’ can help the HR teams and management to focus on developing their talent potential.
“One key aspect that people may overlook is the ability of EOR to enable businesses to expand their operations without the need for establishing local entities in each country...In addition to the flexibility of global expansion, EOR also takes on the responsibility of being the legal employer,” says Hammell.
“This means that once businesses find the talent, Atlas manages the employee lifecycle, including onboarding and payroll processing,” he adds.
The future of EOR lies in AI and data
Hammell sees AI augmenting HR. It can take over time-consuming HR tasks such as resume screening, candidate sourcing, and scheduling interviews.
AI frees HR professionals to focus their time and energy on more strategic activities, such as talent development and employee engagement.
“AI-powered tools can efficiently analyze large volumes of data to identify patterns, trends, and insights, enabling HR teams to make data-driven decisions regarding recruitment, performance management, and workforce planning,” says Hammell.
Data analytics will also play an important role in HR by offering them deeper insights. By analyzing data related to employee performance, engagement surveys, and feedback, HR professionals can better understand their workforce's needs and tailor strategies and initiatives so they do not get flatfooted by talent gaps due to new technological trends.
“Data-driven insights can also assist in identifying skill gaps and developing targeted training and development programs to upskill employees,” says Hammell.
It is why Hammell and his company “are currently exploring using AI to improve our customer experience.”
Winston Thomas is the editor-in-chief of CDOTrends and DigitalWorkforceTrends. He’s a singularity believer, a blockchain enthusiast, and believes we already live in a metaverse. You can reach him at [email protected].
Image credit: iStockphoto/Tasha Art
