Professional Employer Organization (PEO) is also known as Employee Leasing, is where companies outsource their employees to other businesses or an outsourcing vendor in order to remove the complicated hiring requirements and focus more on their core business. Whilst this is the main reason, there are some other reasons why companies consider moving to a PEO service model.
To avoid costly pitfalls
A staffing agency like us (CP&O) is able to make sure the right talent is placed and HR responsibilities such as payroll and benefits of the candidate are no longer a headache of the company. The updated information from the government offices (Social Security, Tax and Labour) is shared with the clients not only to be compliant with the laws but also to help them make the right decisions when necessary.
To manage company’s HR expenses
There are many functions an HR team must perform, and it is almost impossible if only one HR is to handle everything. The bigger the organization, the busier HR will be. If more HR people are hired, there will be a significant cost increase and managing them as employees will also be required. That’s why many companies decide not to add more people into their HR team but decide to outsource part or all of their employees to a vendor by considering and comparing the cost and the management time burden within the company.
To keep things confidential
A company itself is required to keep many things confidential even from some of the management team members due to various reasons. Employees’ salaries information is definitely a sensitive topic, and only a limited number of people are allowed to know it’s details. Also, when there are short term projects, the offered salary for the short-term employee is usually higher than the permanent ones, and this can cause tension internally. So, companies that understand the consequences of salary packages being known by many people decide to use an outsourcing vendor to avoid the possible internal conflicts.
To try out the market before launching
When a test-run of operations is required in a new market or a new region, companies prefer to outsource the employees to a vendor because they need to find out if a full business move is actually required there. CP&O is experienced in helping many international clients relocate in Cambodia not only with the PEO service but also the company registrations and other administrative services.
The PEO service model is getting more popular nowadays due to the above reasons and it is a smart option for the employers to save time, cost and risks of the human resources management functions.