Entity Establishment vs Surrogate Employer

Surrogate Employer

Surrogate Employer Services are also known as Employee Leasing, Manpower Services, or PEO (Professional Employer Organization). Under this structure, the client outsources certain work to our organization. To perform this work, we establish and maintain an employer relationship with suitable individuals identified by our client, assuming certain employer rights, and responsibilities towards them. The assigned employees then provide consulting services as part of our organization, to meet objectives originally envisaged by our client.

This structure enables client companies to effectively outsource the work required, with Accounting Asia GMS supporting employment, ongoing management and provision of services for the related individuals in a particular location. This may include visa, immigration, and relocation services, local enrollments, and ongoing management of payroll, tax and employee benefits for the employees.

It is estimated that over 2 million workers are currently employed under this model, which is particularly popular with corporations in the Energy and Telecoms industries.

Advantages of Surrogate Employer Services

Surrogate Employer Services are generally adopted to meet local staffing needs in foreign jurisdictions where a local subsidiary is not desirable because of:

  • Lack of long term visibility of requirements
  • Insufficient financial and human resources available for set up and management of local operations
  • Mitigation of risk from exposure of the corporation to potential liabilities in an unfamiliar jurisdiction
  • Management of local immigration, corporate and individual compliance, and related services and expertise seem daunting

This model can give smaller companies a competitive edge by allowing them to offer corporate-quality HR support on an entrepreneur’s budget. Additionally, it frees businesses from the task of building and maintaining internal resources to provide local in-house HR, immigration, accounting and tax professionals. This reduces cost and enables executives to focus on growing their core business instead of managing personnel issues.