Employer of record for global teams as a trend in Vietnam
The global business environment has pushed foreign startups to seek ways to quickly and effectively access new markets. However, they face a major challenge in recruiting local employees legally without having to set up a legal entity from the beginning. This is the reason why employer of record for small business has become a popular solution to help foreign startups quickly build a team in Vietnam while still ensuring legal compliance.
So, how does employer of record for startups work and why is it suitable for foreign startups in recruiting employees quickly and effectively? Let’s find out in this article by S4B Vietnam.
1- Difficulties foreign startups face when recruiting staff
Expanding the global business market is what foreign startups aim for. However, they often encounter many difficulties in recruiting staff to serve their business development goals.
Here are some difficulties that foreign startups often encounter when recruiting staff:
1.1- Complicated legal procedures
Each country often has its own regulations on labor, tax and social insurance. This makes recruiting staff for foreign startups more complicated.
Usually, businesses will have to comply with regulations on work permits, labor contracts, tax obligations and social insurance to ensure the legality of business operations as well as market expansion progress.
In return, if they do not understand the legal system of the host country, startups will have difficulty recruiting and negatively affect business operations.
1.2- High operating costs
When entering a new market, startups often face quite high costs for establishing a legal entity, opening an office and managing human resources.
In addition, they also have to pay taxes, social insurance and other labor obligations in addition to fixed expenses such as rent, employee salaries and administrative costs.
Meanwhile, startups often have quite limited resources, so spending too much on recruitment and human resources management can affect their ability to expand quickly.
Employer of record for tech companies
1.3- Slow recruitment process
Finding and recruiting suitable personnel depends on many different factors such as the candidate’s capacity, legal verification process, signing labor contracts and completing administrative procedures.
This means that if startups do not have a dedicated team to handle the recruitment process, they may take a long time to build the necessary staff, slowing down their operations and market expansion.
1.4- Legal risks
One of the other major challenges for foreign startups when recruiting staff in another country is compliance with the local labor laws.
According to Uptalent, businesses can be fined or even face legal disputes if they do not comply with regulations on labor contracts, employee benefits, personal income tax or social insurance.
2- How does EOR help startups recruit quickly and legally?
Eor for distributed workforce helps foreign startups recruit quickly and legally with the following solutions:
2.1- No legal entity establishment
Establishing a legal entity in a new country requires many complicated administrative procedures, including business registration, compliance with local regulations and tax management. However, EOR can help startups eliminate this process by recruiting employees on behalf of the business.
With the help of employer of record for tech companies, startups can operate legally in the host country without having to register the company directly. At the same time, they also save time, costs and focus resources on other important business activities.
2.2- Handling the work permit application process
To ensure that foreign employees can work legally, EOR will support startups in carrying out the entire work permit application process, from preparing documents to working with the authorities.
Thanks to that, businesses can avoid legal issues related to foreign workers and ensure that their employees are qualified to work according to local regulations.
2.3- Support for tax and social insurance procedures
Each country has different tax and social insurance obligations. Failure to comply may result in fines or legal risks for startups.
By partnering with an EOR, startups do not need to directly manage these obligations while still ensuring that employees receive benefits according to the law.
With the help of employer of record for global teams, businesses will have more resources to focus on product development and business strategy implementation without having to worry about legal issues.
2.4- Save time on recruitment
Recruiting the right staff often takes a long time. This is especially difficult when businesses do not have a dedicated HR team in the host country.
EOR units can help startups speed up this process by supporting the search for suitable talent, completing labor contracts quickly and ensuring compliance with legal regulations. As a result, businesses can quickly build a team without facing administrative obstacles.
3- Benefits of EOR for foreign startups
EOR is increasingly becoming the top choice of foreign startups due to its speed and high legality in recruitment activities.
Here are some typical benefits that EOR can bring to foreign startups:
Remote team employer of record
3.1- Cost optimization
One of the biggest benefits of EOR for foreign startups is the ability to minimize operating costs.
As you probably know, establishing a legal entity in a new country requires a large investment in infrastructure, offices, taxes and social insurance.
Meanwhile, when using remote team employer of record, businesses do not need to establish a separate legal entity but can still recruit employees. This helps them save significantly on expenses related to human resource management, legal compliance and business operations.
3.2- Rapid Market Expansion
Startups often need to expand rapidly to capture business opportunities. However, legal procedures can slow down the recruitment and operation process.
However, businesses can use EOR to start recruiting staff immediately without having to wait for the completion of the traditional business registration process. This is especially beneficial for companies wishing to test the potential of a new market before committing to a long-term investment.
3.3- Minimize legal risks
Compliance with labor laws, taxes, and social insurance regulations is an important factor in ensuring that a startup can operate legally in a new country. If a startup does not understand the legal regulations of the host country, it may face the risk of being fined or having a personnel dispute.
By using EOR, businesses will receive comprehensive support in legal procedures. This helps them take advantage of minimizing risks and ensuring full compliance with labor, tax and welfare regulations.
3.4- Increased focus on business activities
Using EOR allows startups to have more time and resources to focus on developing products, services and business strategies.
In fact, businesses will no longer have to spend too much time handling human resource procedures because the EOR unit has taken care of administrative processes such as signing labor contracts, paying salaries, social insurance and taxes. Thanks to that, businesses can free up resources to focus on more important goals.
Using eor solution for fintech companies is becoming the optimal solution for foreign startups that want to expand their operations quickly and legally. With the help of this service, they can reduce the legal burden, save operating costs and ensure compliance with labor regulations in the host country.
In addition, EOR also plays an important role in supporting startups in managing human resources and maintaining the stability of business operations. From there, startups can focus on product development and market expansion without worrying about legal or administrative barriers.
It can be seen that EOR is not only an effective solution in the short term but also a strategy to help startups develop sustainably when entering new markets. At the same time, choosing the right human resource management model also plays an important role in their success.
Hopefully, the above sharing from S4B Vietnam has helped readers better understand the benefits and how EOR can help foreign startups recruit staff quickly and legally. Wish you always success!
>>>Read more: Hiring Talents for Recruitment outsourcing Vietnam
S4B Vietnam
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- Email: service@s4b.com.vn
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