EOR Basics
More small and medium-sized businesses are adopting a global aspect to both marketing and talent recruitment.
The concept of an international business is changing. Opportunities that were once thought to be the reserve of large corporations are now being explored by small and medium enterprises. Driving this change is a desire for more growth, diversification and new opportunities, but what’s really opened the door has been the evolution of technology and increasing regulatory alignment across much of the world. These two factors are breaking down barriers, allowing small businesses to cast their net beyond their borders.
The rise of international business
Small businesses are going international in two ways:
- Seeking out new markets: Finite markets at home provide limited growth opportunities, especially as customer spending power comes under pressure. Those businesses that can are looking for other international markets to open up new revenue opportunities.
- Recruiting new talent: Businesses today have to be multi-skilled with the ability to adapt to new technological innovations such as big data, AI, and machine learning. Finding people with the talent to do this can be difficult. Skilled professionals are in short supply and tend to be captured by the larger corporations. For many firms digital transformation is vital to keep up with the competition but making it work is simply unaffordable.
- Put simply, the challenges of modern business often can’t be met simply within a company’s home country. Technology has reduced the barriers to market expansion, giving people the chance to look abroad both for talent and new revenue.
Hiring in South Africa with an EOR
For both these goals, South Africa represents an exciting opportunity. The country’s economy is on the up with first-class technological infrastructure, a rising middle class, and a diverse and highly educated workforce. Universities are churning out a plentiful supply of talented professionals across a wide range of disciplines.
South Africa’s main cities have developed a global reputation in sectors such as retail, technology, and finance, and are attracting investment from overseas.
South Africa’s government is actively courting international investment with incentive schemes for any foreign company that can generate jobs within the market. South Africa has become one of the rising stars of the Business Process Outsourcing market, with the sector reporting double–digit growth over the past decade. As technology continues to develop, further growth is expected for the next ten years.
For all this growth, though, South Africa’s economy remains a work in progress. Unemployment remains high as the country struggles to provide enough jobs for this new generation of professionals.
On top of that, South Africa has multiple natural advantages that boost its prospects. English is widely spoken across the country, and a time difference of only a couple of hours provides a good match with Europe and the UK.
All of these factors create a fertile ground for any company looking to hire in South Africa. The workforce is high on ambition but low on opportunities. Wages remain about half the levels of the UK, and talented professionals are readily available across the spectrum.
From a market perspective, South Africa is also a tempting proposition. It boasts the third-largest economy in Africa and is often seen as a gateway to the rest of the continent. Its culture represents an unusual blend of European and African, which firstly gives European brands a fighting chance of success but also gives them a solid foothold for the rest of the continent. Make it in South Africa, and the rest of Africa could become available.
The cost of hiring in South Africa
The biggest barrier to SMEs remains cost and risk. Expanding into South Africa represents a major business risk. Costs will be front-loaded with setting up a subsidiary, building a network, and laying the foundation for market entry. Revenues will be inherently uncertain. The last few years have seen plenty of examples of businesses that have entered into South Africa with high hopes only to exit a few years later.
For SMEs, expansion is only viable with a low-risk approach, which is why many can benefit by working with an Employer of Record (EOR) company.
The big advantage of an EOR is that it avoids the need for a foreign entity to manage South African-based employees. The EOR is the legal employer in the country and handles all key tasks such as onboarding, managing PAYE, paying employer–side taxes, providing employee benefits, and filing reports with the tax authorities. From a legal perspective, all legal liability for all employment-related matters rests with the EOR.
As the hiring company, therefore, you don’t need to invest in a foreign subsidiary, and you don’t need to fully staff it. You can just pay the EOR fees and get going. Likewise, there is no need to spend weeks sourcing and recruiting talent. An EOR enables you to quickly build a team and get to work.
The speed and affordability of this approach reduce the risks of entry and allow companies to work much more quickly. It’s a great way to seize a market opportunity or to test the waters to see if there is demand for a product. The flexibility of an EOR enables you to adapt quickly to fluctuating market fortunes. If business is better than expected, you can scale operations up. If it’s less good, you can cut back.
Sourcing talent with an EOR
An EOR can also help you source talent in South Africa, whether you’re looking to benefit from lower labour costs or access new talent. EORs provide full support and legal protection covering all employees within South Africa. They can assist with worker classification, helping to manage teams of full-time employees and locally based contractors.
As companies’ talent demands become more complex, EORs are evolving their service offering to provide much more support in the recruitment process and more transparency in the management of day-to-day employment activities. Rather than focusing on a single operation, such as a call centre, businesses can now build complex multi-disciplinary teams through an EOR with the ability to provide services across multiple sectors.
An EOR, therefore, can be seen as a key that unlocks global business markets for companies of all sizes. It can reduce the risk of market entry, open the door to new opportunities, and provide access to quality talent at a more affordable rate than back home. For businesses looking for a low–cost or low–risk way to hire employees in South Africa, an EOR can be just the thing they need.
