As Latin American countries such as Colombia, Peru and Chile become more attractive options for brands in other countries, more are investing in Professional Employer Organisation services to hire talent, without having to register a business and incur the risks and costs associated.
In today’s post, we’re peeling the lid off of PEO in Colombia, Peru and Chile, and demonstrating the reasons why you should consider a similar strategy if you want to take your business global.
Why expand into Colombia, Peru or Chile?
With a population of 48,653,419 and a gross national income (GNI) of $6,310 US per capita, Colombia is an attractive option for Western companies looking to expand into Latin America. Not only has the country saw strong economic growth, but cities such as Manizales, Pereira and Bogotá have consistently implemented reforms, with many other cities, such as Valledupar, also making huge improvements and becoming truly valuable parts of the Colombian economy. What’s more, the country’s government is committed to improving business relations Colombian and overseas businesses, implementing a set of changes designed to make it easier to set up business, to apply for construction permits, to register property, and to file and pay taxes online.
Peru is another option to consider. With the highest GDP average growth and low inflation when compared to other South American countries, Peru has sound fiscal policies, ever-increasing domestic demand, and investment growth within the extractive industry, amongst others. The International Monetary Fund ranked Peru as a ‘rising star’ when listing exciting emerging markets, thanks to a growing middle class with an appetite for quality goods and services.
Finally, there’s Chile. There are a large number of market opportunities for businesses in the United States and further afield, especially in energy, where costs are amongst the highest in South America. As such, the country is on a mission to find new technology to increase their energy supply, both from new power plants and renewable sources of green energy. Healthcare, security, and environmental technologies will also perform well within the market.
Understanding Professional Employer Organisation
Professional Employer Organisation, also known as PEO, is a service that allows businesses to expand into new markets and gain access to personnel in a foreign country, all without having to form a company within the territory. In simple terms, businesses like yours can outsource all of their employer responsibilities, like paying salaries, handling of human resources, paying taxes and adhering to local employment laws, saving time and allowing you to enter a market quicker.
As an employer, you’ll have full control over your employee, their working hours and tasks and responsibilities, and you’ll be the person that the employee reports to, but you won’t ‘legally’ be hiring the employee under your own company, which cuts administration and running costs.
The benefits of using a PEO
There are a great number of reasons why you should think about using a Professional Employer Organisation to handle hiring new talent within Colombia, Peru or Chile. The biggest and most obvious benefit is that you will be able to save time. Flying out to a country to meet with potential employees, work with translators and build relationships with hiring partners and recruitment agencies takes up a lot of time, and if you’re a busy entrepreneur with plans to expand around the world, you cannot afford to be flying to and from Latin American companies in order to find talent, so outsourcing and handing over the responsibility to a PEO is the most sensible idea.
In short, choosing a PEO to handle your employee gives you more time to do your job. You will be able to manage your employees working abroad, and the administrative and support burdens will be handled by a third party company. After all, why should you be wasting time worrying about sick days and time off when you should be focusing on the growth of your company?
Money is another reason why many businesses choose PEO when expanding in Latin America, as the costs associated with forming a legal entity can be great, even more so when other employees, like a marketing, administration and human resources department are required.
Finally, there’s localised support. Overcoming the obstacles associated with hiring new talent, like translations, conforming to local laws and regulations, and paying necessary benefits, can take a lot of time to get your head around. A PEO increases efficiency and ensures compliance.
Why PEO makes more sense than forming a company in Colombia, Peru or Chile
If you want to take advantage of the new opportunities in countries such as Colombia, Peru and Chile, then you can either work with a PEO or form a company within the country. The truth is that there are upsides and drawbacks to both. By establishing a presence within the country by registering a business, you’ll be fully compliant with local laws, and you’ll be able to maintain more of a permanent and professional image, complete with a company office and address.
For most businesses, however, the costs associated with launching a business in another country is just too great, and so working with a Professional Employer Organisation is the more cost-effective option. So long as you carefully establish the terms of conduct with your PEO and find the right employees to work for your company, you’ll quickly be able to expand and grow your business. Craig Dempsey, CEO at Biz Latin Hub, adds that “there has been a huge jump in the number of businesses working with a professional employer organisation, and I predict that this number will continue to rise as more understand the benefits and low levels of risk”.