PEO Outsourcing: How to Find a Professional Employer Organization
Managing a business requires a lot of time, resources, and effort. Often, businesses do not have the capacity to effectively run certain administrative tasks without compromising on quality. This is where professional employer organizations (PEO) can be highly beneficial. PEO providers enable small- to medium-sized businesses to outsource their administrative needs to enhance productivity.
Considering the PEO definition, the most common tasks that PEOs do include payroll, human resource functions, and insurance assignments. Not only does this relieve the stress on employees, but it also allows businesses to focus on growing. The National Association of Professional Employer Organizations (NAPEO) recently published some incredible statistics regarding the PEO industry. They found that the industry is flourishing and that increasingly more businesses are investing in PEO services.
These statistics also found that businesses that use PEOs grow 7% to 9% faster compared to businesses that do all tasks in-house. It also showed that these businesses save up to 35% on administrative costs. With these benefits, it is predicted that the PEO industry will grow by 2.7% in 2021 alone. This growth comes from startups and small businesses in countries such as the United States, Germany, the United Kingdom, Switzerland and the Netherlands.
Although using PEOs have unmatched benefits for businesses, many business owners and managers still do not know exactly what it is and which services it includes. Let’s consider some of the types of PEO outsourcing services and what it entails.
Types of PEO Services
- The full-service PEO
This type of PEO is often called the classic PEO. It involves a company that works alongside a business to complete a range of tasks. They typically manage all HR functions, which includes handling taxes and HR tasks. They usually also work with businesses to source the best insurance and benefits packages for staff and ensure all of their HR needs are met. This type of PEO is valuable to businesses, as it saves them time and capital.
- The Administrative Services Organization (ASO)
This organization is similar to the full-service PEO because they also handle many of the HR tasks businesses have to deal with. However, the ASO differs in that they do not take any liability with regards to employment. They may handle a business’ taxes, but it is done so under the business’ Employer Identification Number. Therefore, the business keeps all rights.
- The Human Resources Outsourcing Organization (HRO)
The HRO is designed to offer businesses HR solutions exclusively. This is the most ideal model for businesses with many SW developers that want to save time and costs on hiring in-house HR staff. Some of the services that HROs offer include attendance monitoring, managing employee benefits, assisting with recruitment and onboarding and administering payroll.
There are slight differences between the administrative services organization, professional employer organization, and human resources outsourcing company, however, all of them offer incredible benefits to businesses, big and small.
The Pros and Cons of Using a PEO
While there are countless benefits involved in businesses that use PEOs, there are also a few pitfalls. These can easily be overcome, however, it is important to consider all of the pros and cons before a business hires a PEO operating in Europe or the United States.
The Pros of Using a PEO
- Saving valuable capital
Probably one of the biggest benefits for businesses using a global professional employer organization is the cost-saving involved. Businesses do not have to hire in-house staff, but can still get tasks done at the fraction of the cost with the right PEO.
- Improving the employee experience
PEOs are trained to handle HR tasks and other employee functions most effectively. This means the best benefits, insurance and care can be sourced to ensure satisfaction for both staff and businesses.
- Enhancing productivity
When outsourcing certain tasks to PEO software providers, businesses can focus more on growing the company. Employees are also more available to focus on their core tasks, which leads to improved productivity.
- Better recruitment
Recruiting the right candidates can be a time-consuming task. When businesses work with global PEO providers, they can leave the recruitment tasks to the organization, knowing they will find the most skilled and experienced candidates through IT staff augmentation services.
- More peace of mind
Professional employer organization services companies specialize in administrative tasks. These tasks are essential for any business to operate efficiently. So, when working with a PEO provider, businesses can rest assured knowing their admin is in good hands.
The Cons of Using a PEO
- Sharing of valuable information
Working with a PEO staffing company means a business has to share some sensitive information about its company and employees. Even though this does not commonly lead to security issues, it can make businesses feel vulnerable.
- Loss of control
PEO firms are designed to take over many of a business’ administrative tasks. This can leave company owners, managers and leaders to feel like they are losing control over their business.
There are certainly some challenges when working with a PEO for small business, but most of the difficulties involved can easily be overcome through proper communication and effective structures and processes in place.
PEOs Compared to Staffing Agencies and Employee Leasing
When a business wants to outsource certain tasks, it is advantageous to consider the differences between PEO employment outsourcing, developers staffing agency and employee leasing. These differences can include cost, paperwork and flexibility.
|PEO||Staffing agency||Employee leasing|
|How it works||Certain business tasks are outsourced to a company that offers PEO services.||The agency acts as a middleman between companies and workers. They match qualified candidates with available positions in the company.||Employees are leased to companies on a (as a rule) short-term contract basis and usually work onsite.|
|The costing structure||The PEO will charge the business a fixed rate, which can be per contract or per month, for services provided.||Companies pay the staffing agency once a suitable candidate is placed. This is usually 25% to 100% per successful hire.||Employees are leased at a fix rate for the duration of the contract.|
|Extra costs||All costs are typically included in the fixed rate.||Recruitment and other HR costs may be included.||Extra costs may be involved when overtime is requested, or the employee is required for a longer period.|
|Tasks involved||PEOs usually take care of all administrative tasks.||Workers are placed in a specific position with specific roles.||Workers are leased to work in a specific position with specific tasks.|
|What flexibility is involved?||PEOs are typically highly flexible and can complete tasks as and when required. Reports are provided as proof of productivity.||Workers work specific hours as agreed upon by the employer and agency. Productivity can be monitored.||The employer and worker will agree upon specific hours and productivity is monitored.|
|What paperwork needs to be done||Very little paperwork is required when using a PEO. Mostly it is done by the PEO itself.||Most staffing agencies will share the paperwork involved with the new hire with the employer.||Paperwork is usually handled by the employee leasing company.|
|Termination of services||Once the contract has come to an end, it can be renewed or terminated.||When the worker is no longer required, the contract needs to be terminated by both the employer and the staffing agency.||When the worker is no longer required, the contract will be terminated, and the employee can be leased to another employer.|
Considering the above table can help a business to decide which solution is best for its specific needs: signing up for PEO services, using a staffing agency or lease a development team through employee leasing.
Mobilunity – Your Reliable PEO Provider
Mobilunity is a reliable Ukrainian professional employer services company with more than 10 years of experience in sourcing highly skilled developers and covering all HR queries for businesses big and small. We take pride in having access to a talent pool of over 160,000 Ukrainian IT workers, including PEO software engineering candidates, that can provide a large range of services.
As an international professional employer organization company, we are globally recognized and serve clients in over 20 countries. Some of these include esurance in Switzerland, XPLG in Israel, Paidy in Japan, BYG-E in Denmark and Buttonorder in Germany. Companies want to use us for PEO hiring in Ukraine because we are affordable, offer high-quality solutions and work alongside our clients to ensure the very best PEO employment services Ukraine.
Our success is due to our simple yet highly effective process. If you’re wondering how to find reliable overseas outsource PEO, let’s take a look at our approach:
- We select the right candidates
We recruit highly skilled and experienced candidates that meet our clients’ ideal candidate profiles. These candidates then complete a test task and go through a series of interviews. Once successfully passed, we make offers to the candidates that are approved by our clients.
- We help with onboarding
Once the right candidates have been selected, we assist with the onboarding phase. We ensure our workers are set up with the right tools and resources for maximum productivity.
- We assist with the retention of staff
We need to ensure both our clients and workers are happy and satisfied with the partnership. Therefore, we go out of our way to motivate staff, to ensure contractual obligations are met and to meet the needs of our clients every step of the way.