As businesses today are increasingly operating at a global level, they face inherent complexity and compliance hurdles. Indeed, a recurring finding in NelsonHall’s annual payroll market analysis is that compliance is a key driver for organizations outsourcing payroll. And new regulatory directives such as GDPR are placing yet more compliance pressure on the HR and payroll leaders of multinational organizations.

While traditional payroll outsourcing arrangements have enabled businesses to plug in to a compliant global delivery model, what they do not provide is the front-end due diligence and legal structuring required to establish a business presence in a new country. Yet this is a critical first step to compliant global expansion, one that is often ignored by new entrants, and is commonly a cause for deterring new market entry altogether.

SafeGuard World International (SGWI) has developed an offering called GEO (Global Employment Outsourcing) in recognition of the needs of growing multinational organizations. The aim is to provide compliant payroll solutions that can scale and pivot as the business expands, to support non-traditional employment arrangements, and to reduce barriers to entry.

How GEO works

Similar to a PEO (Professional Employer Organization) co-employment model in the U.S., businesses can use GEO to tap into a near turnkey HR delivery offering which combines elements of a co-employment model with global payroll outsourcing services and a traditional staffing arrangement. Leveraging its extensive global payroll infrastructure, SGWI is able to provide GEO clients with end-to-end HR support for workers in over 175 countries. 

Take the example of a U.S.-headquartered organization that wants to expand operations to Europe by establishing a small team of workers in France.  Once the client has sourced its talent in France, SGWI assigns a local delivery team and a dedicated HR expert to the client to begin supporting its in-country HR and payroll needs. This begins with SGWI preparing an employment contract between client and worker, which ensures compliance with local employment laws, and also transfers the worker (legally speaking) to SGWI’s business entity within that country.

From there, SGWI will process all payroll, taxes, and the subsequent payment remittance for the client and provide regular check-ins with both client and employee throughout the life of the contract. Additionally, SGWI provides HR management services for the workers, up to and including separation should that become necessary.  

Key benefits of GEO

Through the GEO model, employers are able to become agile in their global expansion efforts and do so with lower employment-related risk than might be the case otherwise. Some of the key benefits of GEO include:

• Flexibility: it provides employers with a mechanism for compliant global expansion (both short and long term), that can be engaged across 175 countries
• Low barrier to entry: clients can enter, test, and expand to new markets as and when ready without needing to establish a legal presence in the targeted country
• Rapid start-up: clients can be live in as short as two weeks (once talent has been sourced)
• Reduced risk: it ensures proper classification of workers (e.g. employee vs. contractor), a common pitfall that often results in penalties during global expansion efforts, and provides for compliant handling of workers throughout the relationship to ensure ongoing compliance with local labor laws.

Looking ahead

SGWI has seen steady uptake for its GEO offering, with demand in line with its traditional outsourcing model, and quickly increasing. To date, it has more than 400 GEO clients with employees operating in over 120 countries. Going forward, SGWI will focus GEO investments on enhancing its technology to support more capability for contingent workers, including expanded HR and payroll analytics, and incorporating complementary HR capabilities (e.g. recruiting board, etc.) to support mixed talent pools. 

The GEO model is well-timed, with only a few other vendors playing in this specific space currently. With organizations continuing to expand globally, coupled with increasing contingent labor use, SGWI is in a strong position to grow its GEO adoption in the coming year.