Why is EOR the Best Model to Start Business in India?
India is emerging as the new land of opportunities. A rapidly growing economy, robust infrastructure, skilled manpower, and a huge market bustling with consumers are what attract organizations from across the world. Some are already here; some are setting up their shop while some are in the process of fine-tuning their entry strategy.
India is definitely one of the most lucrative markets in the world today and shall remain so in the future too. But setting up operations, hiring a team, and then complying with all the relevant payroll processing outsourcing rules and regulations of the land can prove too much for any company wanting to establish its presence in the country.
Over the years, there have emerged many different models of starting business activity in India. While some have fared really well, some have collapsed no sooner than they started. However, in the past few years, many organizations have realised that the best model to start a business activity in India is through the EOR service route. Here is all you need to know about EOR, its features, advantages, and disadvantages too!
What is Employer of Record (EOR)?
Here, the manpower is not hired on the company rolls but is done on the rolls of the EOR. All regulatory requirements and compliances are taken care of by the EOR and not by the organisation. While the parent organization plays an active role in shortlisting, interviewing and recruiting all employees, they are hired on the EOR’s payroll. Thereafter, onboarding to taking care of the entire employee life cycle activities including payroll, mandatory employee insurances, leave management, managing employee benefits activities, legal compliances, termination etc. are the responsibility of the EOR and not the parent organisation.
Top Features of EOR
EOR has become quite popular in recent times due to its win-win nature. Here are some top features of the EOR arrangement:
- All employees are hired on the rolls of EOR
- The organisation shortlists, interviews, finalises the employees and lets the EOR hire them on its rolls.
- Recurring activities like training, skill-upgrading etc. are conducted by the parent organisation as per its needs.
- The EOR service provider takes care of the employee life cycle starting from the onboarding, payroll, mandatory employee insurances, leave management, managing employee benefits activities, legal compliances, termination etc.
- The organisation is free to decide the payscale, performance benefits and perks for all employees.
- Legal compliance is the responsibility of the EOR service provider.
- In case of resignations or terminations, the necessary process is conducted by the EOR and informed to the organisation.
Why EOR services are required for any organization wanting to establish their business in India:
- Registering a Legal Entity in India :
Starting operations in a vast country like India can be a really difficult task. Given its geographical scale and extensive registration process and rules & regulations to have a legal entity in India can prove to be a gargantuan task even for seasoned players. Hence, there exists an Employer of Record (EOR) service provider.
- Hassle-Free Employee Management :
Managing employees payroll is the most difficult and challenging task for any organization wanting to spread its wings in India. Once the organisation has identified the human resources, the EOR service provider helps the organization to hire employees on EOR service providers rolls and also does the entire onboarding, taking care of their compliances, mandatory insurances and lastly the very important part of managing payroll process. The EOR service provider helps the company to be proficient in knowing the entire set of rules & regulations of employee management while complying with every requirement of the law.
- Complying With the Local Employment Laws in India :
Every country has its own set of employment laws and so does India. When it comes to India there are many complexities involved in hiring a local talent. With EOR service provider you can be rest assured of complying with the local employment laws of India, which will help you to run your business smoothly. The EOR service provider will take care of all the local employment compliances, so that organization can only concentrate on their core business.
- Create an Employer of Record :
In the last few years, a new model has emerged which promises the best of both worlds. By bringing an Employer of Record service provider, the organisation gets the benefit of outsourcing the most difficult of all tasks –managing the employee payroll, to a competent third party. This allows the organisation to focus better on managing the business, setting up its customer servicing strategies, kick-start profitable growth and quickly scaling up the business.
Advantages of EOR
The simplicity and transparency of EOR are the secrets behind its success. Here are some key advantages that explain why the best model to start a business activity in India is through EOR Service:
- The parent organisation is not required to know the laws, rules and regulations in depth.
- One of the most difficult of all HR processes, Payroll management, is taken care of by the EOR thus relieving the organisation of investing resources.
- The organisation need not worry about legal compliances at all.
- The organisation can focus on training and attracting the best talent without worrying about managing them.
- EOR helps in creating a lean organisation.
- The parent organisation always remains in control of the strategic functions while outsourcing the non-strategic ones.
Shortcomings of EOR
While there are no serious drawbacks to the EOR arrangement, selecting the right EOR services provider proves to be the most critical task. If this is done correctly, then the benefits of EOR start flowing in very soon. That is the reason why an organisation must choose an EOR partner who is not only experienced but also has the infrastructure to manage large-scale operations.
Paysquare has emerged as one of the leading EOR service providers in the country. With years of experience in diverse industries, Paysquare has been supporting the Indian operations of many reputed international organisations.
Besides years of experience, Paysquare has developed a robust IT infrastructure to manage multi-industry requirements. It even has payroll and legal experts on board who make sure that the entire EOR process functions without a hitch.
So, if you are an organisation that wants to be a part of India’s growth story, then you must actively look at Paysquare as your EOR partner. This will ensure that you can focus on things that matter the most for your business and take care of your greatest asset — your employees better!