EOR Basics
Looking for talent? South Africa has everything you need, and with an EOR, you can hire quickly, affordably, and safely.
As a business, finding the right people at an affordable price can be difficult. Top talent is in short supply, and the most experienced professionals in highly technical roles can be unaffordable. To solve this, many businesses are looking overseas to hire highly skilled professionals and benefit from lower labour costs than back home while building a talented multidisciplinary team to drive their business forward.
One of the most attractive countries is South Africa, which has a combination of factors making it one of the most popular places to hire employees in the world.
- Cheap labour costs: South Africa’s wages tend to be 50% the levels of Western countries such as the UK, which can reduce costs across all business operations. This discount has seen South Africa become an increasingly popular option for business process outsourcing, but companies can also benefit from hiring people on a case-by-case basis.
- High–quality talent: South Africa’s workforce is young, diverse, and talented. Graduate levels are on the up with a healthy supply of talent across all sectors, particularly areas such as technology and finance. With unemployment levels remaining high, the market is full of highly capable professionals who are available and eager to find the next opportunity. If you’re struggling to find professionals with the skills you need in your home market, there’s a good chance you can find them in South Africa.
- Language skills: Hiring professionals overseas often comes with considerable language barriers. That has been a major problem in countries such as India, where heavy, impenetrable accents have posed a major barrier to communication. English is widely spoken across the country with a clear, neutral accent that is easy to understand.
- Top-class digital infrastructure: South Africa has invested heavily in its infrastructure. High-speed internet is common across all areas of the country, which allows for instant collaboration and communication. With companies becoming accustomed to remote and hybrid workforces, you can communicate with your South African workers as easily as those at home.
- Government support: The South African government is eager to attract talent into the country and, as such, has created a highly favourable regulatory environment. Companies that promise to create jobs in South Africa can benefit from a range of government incentives and grants.
Hiring talent in South Africa
For many companies, the first step involves hiring freelancers. Jobs boards such as PeopleperHour and Upwork connect freelancers with clients from around the world. This can be relatively simple and can normally be done directly. You contact the freelancer online, manage the workflow, and once each assignment is completed, they simply submit an invoice, which you pay. It’s a quick and simple way to work on an ad hoc basis.
However, if you’re actively seeking to recruit in South Africa, you may want to invest a little more time in talent acquisition. Having people with local expertise can help you unearth the talent you need.
Furthermore, if you intend to work with South African freelancers on a long-term basis, it helps to do so with a structure such as an Agent of Record (AOR). These companies can manage teams of freelancers overseas, offering help with onboarding, screening, recruitment, and processing invoices.
Hiring employees with an EOR
Once you’re ready for more regular working relationships, you may want to move to an employer of record. An EOR avoids the need to set up a legal entity in South Africa by serving as the legal employer. It will handle payment of salary, onboarding, contract management, and all the administrative duties of your HR department, leaving you to focus on the work. It’s a fast and effective way to bring new talent into your business without the need to employ them directly.
As the legal employer, the EOR has all legal responsibility, which protects you from any accountability for breaches. You will simply have to pay the EOR’s fee, which will generally cover the passed-on costs of employment alongside an EOR fee. This might be between 10 and 20% depending on the type of employees you hire.
For each employee, therefore, you will pay a premium, but for this, you get the peace of mind of knowing all compliance requirements are taken care of and benefit from the expertise of the EOR’s team of recruitment specialists. You also avoid the costs of a subsidiary and building a full support team to go with it.
If you continue to work with freelancers, you may want to continue using the AOR to manage the contractor relationship. Some companies will offer both AOR and EOR services, allowing you to manage complex hybrid teams consisting of different professionals working on different contracts. The company can provide you with the benefit of its expertise by advising you on the correct classification of workers and notifying you if a freelancer should be classified as a full–time employee. This can help you avoid any potential compliance questions from the authorities about the correct classification of all workers.
The role of technology
From a recruitment perspective, therefore, an EOR simplifies the entire process, allowing you to concentrate on your company’s strategic objectives. With the arrival of new technologies
such as instant messaging and video conferencing, it’s now easier than ever to collaborate with your team on an ongoing basis. Work can be commissioned and reviewed the same day. Your South African employees can be integrated with your domestic team, supplementing the skills and expertise you already have.
An EOR can be a game-changer for any company looking to hire people in South Africa. It cuts down the barriers to entry, reduces costs, and simplifies processes. These organisations have played an important role in bringing new jobs into the South African economy while helping Western companies access the skills and expertise they need more quickly and easily. As technology continues to grow, EORs can pave the way to new talent, new revenue streams, and new business opportunities across South Africa.
