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What alternatives are there to Professional Employment Organisations (PEOs)?
By AMREP | Posted on September 23, 2024
It’s extremely common nowadays for businesses, especially those involved in product manufacturing, to have international business operations, global supply chains, and a worldwide network of suppliers, manufacturers, and distributors. A key challenge for executive leaders is how to find local talent to run business operations overseas. Another key challenge is how to maintain oversight over global supply chains and suppliers. These challenges are particularly acute when a company has not incorporated its own legal business entities outside its home country.
Professional Employment Organisations (PEO) are one solution for companies to solve their overseas talent needs. We give a brief overview of what PEOs do and discuss alternatives to them.
- What is a PEO?
- Advantages of PEOs
- Disadvantages of PEOs
- Alternatives to PEOs
- What option is right for you?
- Contact AMREP to see how we can support your offshore recruitment needs!
What is a PEO?
A PEO is a company that acts as a co-employer and hires staff on your behalf. It handles HR functions like payroll administration, employee benefits, and HR compliance. PEOs are also used to hire employees overseas without establishing a legal entity - for example, if you’re a US company and need local staff in China but don’t have a China-registered business, you can use a PEO to indirectly hire local employees. The China PEO would hire the local Chinese staff and ensure that this is in accordance with China’s labor laws. It would also take care of drafting legally-compliant employment contracts. Local staff hired through the PEO will work under your direction.
PEOs come in all sizes. Some are extremely large multinational companies who offer PEO arrangements in almost every country of the world; others are local companies who may just focus on their own country.
Advantages of PEOs
The main advantages are:
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Can hire staff quickly without incorporating a local corporate entity - this can be extremely complicated in countries like Mexico, Thailand, Vietnam, China, and India.
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Avoid having to deal with complex local labor laws.
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Reduce your own company’s liability through third-party hiring.
Disadvantages of PEOs
However, there are some disadvantages to consider:
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PEOs can be extremely expensive and affordable only for large businesses
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PEOs are more of an administrative vehicle. They may not necessarily be able to support you with finding the right talent for your business, especially when you are in technical fields such as engineering and manufacturing.
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PEOs are better for hiring a large workforce rather than making individual hires.
Alternatives to PEOs
What options do you have aside from PEOs? Here are a few suggestions:
1. Consultants
If you have temporary or short-term work requirements, using consultants can be a good option. Particularly in the engineering, manufacturing, and other technical fields, consultants are usually career professionals who have deep expertise and are able to provide specialized inputs to your business. Consultants would typically have their own consulting and advisory business so they can contract with your company to provide professional services.
The main disadvantages to using consultants is that they function more as advisors rather than a hands-on member of your team. They may be serving different clients and so you may not receive the full attention and work commitment that you require. Consultants may also charge higher fees than staff hired on an employee basis.
2. Local HR/Manpower Companies
Local HR, recruitment consultants, or manpower companies can be used to hire local staff. They are similar to PEO companies in that they can offer third party hiring arrangements; one main difference is that they would have more skills and knowledge in recruiting highly qualified professionals. They would also have experience in head hunting senior professionals for management roles, such as technical program managers, continuous improvement managers, operations program managers.
A disadvantage with local HR or manpower companies is that they typically recruit more for general roles and aren’t specialists in technical recruitment. This is particularly the case for manufacturing and engineering roles.
3. Specialist Technical Companies
If you’re in sourcing, manufacturing, engineering, or supply chain management, there are companies such as AMREP Supplier Management Services who can help you with finding and hiring local professionals. These companies are themselves specialists in these fields and combine their knowledge of manufacturing, engineering, supply chains, and supplier management to help make your overseas business operations a success. Their staff work as a hands-on local extension of your international team and are employed by the company’s local legal business entities.
Their work activities can also be varied according to your requirements. As AMREP’s staff are in technical fields such as quality engineering, manufacturing engineering, process engineering, supply chain management, and supplier development, this means that they are advantageously placed to have the right staff for your needs.
What option is right for you?
If you are looking for staff in engineering, manufacturing, or supply chain management fields, it is worth seeing what specialist technical companies can offer you.
Contact AMREP to see how we can support your offshore recruitment needs!
AMREP Supplier Management Services works in advanced manufacturing and has supported many major US, European, and Canadian companies with their offshore local resource needs. AMREP is typically used when the client wants to have local oversight and work more closely with their local supply sources, rather than have to wrestle with long-distance communication and delayed responses. AMREP is also called on when a client needs to have local engineering staff in their offshore business locations.
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