PEO Services

The PEO handles all of the HR administration.
PEO Services

Professional Employer Organizations, or PEOs, can provide many benefits to the client companies that hire them. PEOs allow client companies to grow exponentially without worry about the administrative functions associated with a growing team. Like anything in business, though, there are pros and cons to working with a PEO. To decide whether this model is right for your business, learn more about the advantages and disadvantages of a PEO. 

SERVIAP can help with your global expansion needs. Contact us today to learn how you can expand your business with PEO in South America and Latin America. 

What is a PEO? 

A PEO serves as a co-employer with the client company. The client company still maintains control of the recruiting, onboarding, and training of all employees. They also maintain the day-to-day management of their employees. 

What the PEO does is take over all the responsibility of administrative HR functions. They process payroll, handle taxes and compliance, and deal with issues such as workers' compensation and employee benefits. In essence, a PEO is a full-service solution for HR to help you expand your company quickly.  

Advantages of a PEO 

There are many advantages a PEO can provide a client company, including: 

Cheaper Employee Benefits 

Client companies often have difficulty obtaining good rates for employee benefit plans, simply because they don't have a large enough employee pool. When a client company hires a PEO, they get the advantage of being able to combine their employees with all the other employees under the PEO umbrella. 

Through their relationships with all their other clients, PEOs provide client companies with substantially better rates for employee benefits. This saves both the client company and their employees a nice chunk of money. 

PEO International

Administrative functions often hold client companies back from being able to grow at a rapid rate. Managing new employees takes a lot of time and effort from an administrative standpoint. That's why many client companies add employees on a rolling basis rather than large hiring blocks. 

By working with a PEO, client companies have the opportunity to grow at a much faster pace. This is because they can focus on the general operation of the revenue-generating side of the business, while the PEO handles all of the HR administration. 

Peace of Mind 

Administrative functions can cause a lot of headaches. One wrong move here or there could be disastrous from both a financial and regulatory standpoint—even if the mistake was inadvertent. 

It's not always easy to understand exactly how to follow all the tax regulations and local business codes properly, especially when operating in multiple countries. And if you make a mistake, your business could pay dearly for it. 

A PEO has the expertise necessary in these fields to ensure that you never miss a beat when it comes to compliance. This is especially important if you're working with a PEO overseas, where regulations can be quite different. 

Disadvantages of a PEO 

Here are some of the possible disadvantages of a PEO: 

Liability 

As the official employer, the client company still retains most of the liability when it comes to their employees. Even though the client company and PEO will be co-employers, it will not remove legal and financial liability should something be done incorrectly. 

It's true that the PEO will provide guidance and expertise, but it's incumbent on client companies to ensure they're working with reputable PEOs so they know they're covered properly. Some of the best PEOs, like SERVIAP, will also provide access to attorneys who can help mitigate your employment-related risks. 

PEO cost

PEO services can be costly, depending on the size of your workforce. Most PEOs will charge a fee that is based on either the number of employees who will be covered under the contract or a range of employees.  

While there are many benefits to hiring a PEO that can be well worth the cost, client companies should make sure they understand what services the PEO will provide and the associated fees before beginning. This is why PEOs are usually a better fit for midsized to larger client companies rather than smaller startups. 

Employee Morale 

Employees at your company may feel as though you are outsourcing all of your work when you hire a PEO. They will see that a department in the company has been eliminated—if it exists already—or isn't being created in favor of a foreign company. In addition, employees might be confused when they get their paychecks and their benefits. Since those will come from the PEO and not the client company, the employees may believe they're actually not under your purview at all anymore.  

The good news is that employee morale and confusion can be resolved through communication. Make sure your current employees understand why you have hired the PEO and how the move may or may not impact their roles. 

Expand Your Business

SERVIAP is a leading Professional Employer Organization (PEO) ready to help your business expand operations throughout the Western Hemisphere. PEO is a model of co-employment, where we assume total responsibility for your talent, allowing you to focus on the strategic activities of your organization. Contact us today to learn more about how you can expand your business in South America and Latin America. 

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