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Employment outsourcing benefits in latin america

20th Aug 2018
CEO Tweakbiz
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When it comes to business outsourcing, the term has not always been looked upon as a favorable or business-friendly option. From sub-par quality services and products to the removal of jobs and consumer business from local markets, outsourcing has long been seen as a negative notion. To combat this, companies that are looking to expand globally are choosing to use “nearshore” destinations for several reasons. Not only do these countries have a similar infrastructure, time zones, and workday overlaps but because of their close geographic proximity, companies are more willing to take risks.

What is a PEO and Why Should My Company Use One?

A professional employer organization works with your business to help manage employer-related administrative functions. This can be the management of payroll and related taxes, any type of human resource needs, employee health benefits, and retirement plans, workers’ compensation insurance, compliance issues, and employee training.  When you choose to use a PEO to outsource, all you have to do is focus on the growth of your business, while the PEO does the rest.

Here is what a PEO actually does:

  • Due to the fact that a PEO manages thousands of employees, they can handle any insurance and health benefit plans you need but with significant cost savings. This can allow you to offer higher-quality plans to your employees.
  • A PEO will ensure that human resource policies and procedures are maintained within compliance regulations.
  • They are experienced in benefits, payroll, risk management, and employee administration tasks. If you want additional perks like flexible spending, retirement accounts, or discounted gym memberships, a PEO can set these up for you.
  • A PEO provides compliance support which can include tax forms, reporting forms, new hire reporting, workers’ compensation, liability insurance and unemployment insurance filings. Beyond this, a PEO can provide effective management for sick-time accruals, personnel data, and vacation time.

Using a professional employer organization allows your company to contractually allocate and share employer responsibilities. This gives a professional employer organization the ability to hand employer responsibilities like tax filing, payroll, and HR support while your company retains the responsibility of day-to-day operations and employee management. In using a PEO, companies are able to scale quickly and leverage the global economy.

How Your Company Can Benefit from Employment Outsourcing

  • By outsourcing employee benefits, you can save your company a lot of money in extra fees by getting a total support package.
  • By outsourcing your staff orientation, benefit packages, claim processing, and dispute resolutions, your in-house human resource department can focus on helping you grow the business.
  • Your company will benefit by gaining market knowledge and sector-specific experience when utilizing a PEO within the region you are expanding to. This will, in turn, boost how efficient your company is.
  • Your company can feel a little bit more comfortable with regards to liability issues as outsourcing puts the responsibility on the third-party company.

So Why Should You Expand Into Latin America?

In addition to having a similar timezone to the United States and Canada, Latin American countries have not been impacted by wage inflation, have had massive global companies invest in them, and have some of the highest quality IT talent in the world. According to Everest Group in an interview with Flatworld Solutions, there are four main factors that put Latin America above other developed outsourcing sectors like the Philippines.

First, Latin America offers cost-effective pricing structures, Spanish and Portuguese language skills, and domestic opportunities. Here is how these four factors are laid out.

  • When it comes to cost-effective pricing, the total cost of outsourcing employment is quite affordable due to the lack of inflation impact.
  • In the larger countries like Argentina and Brazil, there is a huge presence of global companies, which makes the domestic market quite large with regards to regional and business opportunities.
  • Latin American countries have a similar time zone to Europe and the United States making the implementation of their employment services rather easy.
  • Latin America has both Portuguese and Spanish languages, making it one of the only regions in the world to offer this combination on a large scale at an affordable rate. Plus, for American companies, there is a huge Spanish population present in the United States, which makes hiring in Latin America advantageous.

Beyond these four main factors, there are several other employee-related reasons as to why your company should expand into Latin America. One of the most prominent reasons is the fact that there is a massively talented technical workforce of highly qualified and experienced developers, programmers, and engineers. Second, is that the region is comprised mainly of English speaking nations which ensures that your workforce and your consumers can understand one another fluently. Finally, there are cultural similarities as Latin American countries have been heavily influenced by European work styles and tend to view business relationships more like business partnerships than worker/client relationships.

One of these nearshore destinations in Latin America, whose redefinition of outsourcing has caused many global companies like General Motors, American Express, and Citi Bank, to establish partnerships with Argentina, Brazil, Colombia, Chile, and Brazil for their best-in-class resources and quality-focused solutions.  With this said, let’s take a look at what benefits your company could gain from employment outsourcing in Latin America and how a PEO like Biz Latin Hub can help you achieve this type of business expansion.

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