The COVID-19 pandemic triggered an unexpected boom in entrepreneurship in the US, with research published by Harvard Business Review confirming that Americans are now starting businesses at record rates.
This surge in entrepreneurship signals a promising future for the US economy, heralding potential productivity growth and job creation. However, small businesses face unique challenges, especially when expanding domestically and internationally. They often encounter complex legal, tax and employment risks that can be daunting to navigate.
In this blog post, we look at how various cross-border HR solutions can provide the support small businesses need to thrive.
Simplified global expansion and hiring with EOR solutions
One of the greatest hurdles for small businesses aiming to hire internationally is managing compliance with foreign laws and regulations. An Employer of Record (EOR) simplifies this process by taking on compliance, payroll and HR functions. This allows businesses to enter new markets without the need to establish local entities, thereby reducing administrative burdens and legal risks.
For instance, a tech startup based in Silicon Valley sought to expand into the European market. By partnering with a leading EOR provider, the startup was able to quickly set up operations in Germany. The EOR managed local compliance, payroll and HR tasks, freeing the startup to concentrate on scaling its product and operations.
The strategic use of EOR services facilitates a smooth market entry and mitigates the risks associated with international expansion.
Cost-effective global payroll
Managing a global workforce can be costly and resource-intensive, largely due to the burden of global payroll. Establishing in-house HR and legal teams in multiple countries can strain a small business’s resources.
EOR solutions can offer a cost-effective alternative by providing the necessary expertise at a fraction of the cost of building local teams. This approach not only saves money but also supports compliance with local regulations.
Consider a US-based e-commerce services company that wanted to expand into several countries in Latin America. By outsourcing HR and compliance functions to an EOR, the company avoided the high costs of hiring in-house teams in each new country. This strategic move provided access to local expertise while minimizing overhead costs associated with managing global payroll. The arrangement ultimately supported the company’s expansion endeavors without compromising its financial stability.
Driving global talent acquisition with expert recruitment services
Effective recruitment is critical for global expansion, especially for hard-to-fill, in-demand roles. Expert recruitment agencies specializing in international talent acquisition help businesses find the right candidates for their global operations. These agencies navigate local job markets, cultural nuances and regulatory requirements to help businesses hire top talent.
For instance, a US-based fintech startup expanding into Southeast Asia utilized an EOR provider with recruitment capabilities to identify and hire financial analysts with regional expertise. The recruitment team’s deep understanding of the local job market and talent pool enabled the fintech to build a strong team quickly and efficiently. The startup then utilized the EOR solution to onboard and manage its local headcount. This model facilitated growth and success in the new market.
Unifying cross-border teams with global benefits
Offering competitive global benefits is essential for attracting and retaining talent in different regions. Cross-border HR solutions that include global benefits management allow businesses to offer comprehensive and compliant benefits packages tailored to local expectations.
A software company expanding into Europe and Asia partnered with a global benefits provider to design and implement benefits packages for its international employees. This approach not only promoted compliance with local benefits regulations but also helped the company compete effectively for top talent in diverse markets.
Accessing specialized skills with AOR engagement
Engaging independent contractors (ICs) can significantly benefit businesses by providing access to specialized skills and adapting to evolving demands. However, managing IC relationships involves specific risks, including compliance with local regulations and proper worker classification. This is where an Agent of Record (AOR) becomes invaluable.
An AOR is a service provider that handles the compliance and administrative responsibilities associated with engaging ICs. The primary role of an AOR is to ensure that ICs are correctly classified and managed in accordance with local regulations. This involves overseeing contracts, managing proper payment and handling legal and tax compliance for ICs.
A US-based app development startup aimed to enhance its products by integrating advanced AI features. To achieve this, the company sought to engage independent AI experts from Poland and Lithuania. The key challenges included managing regulatory compliance, drafting contracts that met local requirements and handling invoicing and tax compliance across multiple jurisdictions.
The company utilized a local AOR to address these challenges. The AOR handled the proper classification of the AI experts, led the contracting process and managed payments. Throughout the process, the AOR’s dedicated professionals made sure local tax and labor laws were followed.
This streamlined approach allowed the company to focus on integrating AI features while remaining compliant with international regulations.
Turning challenges into opportunities
The startup surge is not just happening in the US. According to the Global Entrepreneurship Monitor (GEM), an entrepreneurial wave is transforming economies worldwide, driving innovation and job creation. As new business owners embrace the future, they face unique challenges, particularly when expanding beyond their home markets.
Cross-border HR solutions play a pivotal role in supporting the entrepreneurial revolution. By reducing risks and supporting critical business expansion processes, these solutions enable organizations to scale effectively while navigating complex regulations.
As entrepreneurship continues to rise, leveraging cross-border HR services can help businesses turn challenges into opportunities and drive sustainable growth in an increasingly interconnected world.
Contact us today to learn more about how cross-border HR solutions can help you scale your business.