Emmanuel BisiFor companies that have established a subsidiary abroad to enter a local market, the costs of management and administrative complexity can quickly become burdensome. Over time, some companies opt to streamline their international operations by reducing the size of their local presence while retaining strategic employees on-site. In this context, EOR (Employer of Record) services emerge as an ideal solution for cutting subsidiary-related costs while maintaining a local team.
1. Why close a subsidiary and opt for EOR Services?
1. Reduction in operational costs
Managing a subsidiary in a foreign country involves significant expenses: office rental, payroll and social contributions, legal and administrative compliance, local accounting, etc. By choosing EOR services, you can close your subsidiary while continuing to benefit from the local presence of key employees. This way, you transfer administrative and legal management to an EOR provider, significantly reducing your structural costs without compromising efficiency.
2. Administrative simplicity
Running a subsidiary requires constant attention to comply with local employment, tax, and HR laws. By switching to EOR services, you delegate these responsibilities to a specialized firm that manages these aspects for you. You no longer have to worry about tax audits, social declarations, or local legislative changes—these are all handled by the EOR provider.
3. Increased flexibility
Closing a subsidiary does not necessarily mean ending your local market presence. With EOR services, you can maintain smaller teams, adjust your workforce according to market needs or projects, and even recruit new local talents if necessary. This flexibility allows you to adapt your operations based on demand, without the rigid constraints associated with managing a subsidiary.
4. Simplified legal and tax compliance
Each country has its own tax, legal, and social requirements, which can vary from region to region. EOR services ensure that your employees are hired in compliance with local laws while reducing legal risks for your company. The EOR provider ensures that everything is compliant with current regulations, helping you avoid penalties or fines for non-compliance.
2. Steps to transition from a subsidiary to an EOR model
1. Assess your human resource needs
Before closing a subsidiary, it is crucial to evaluate which employees you wish to retain locally. This may include salespeople, project managers, or other key resources. Identify the roles that are essential for maintaining your business in the local market and discuss the best way to integrate them into an EOR model.
2. Choose a Reliable EOR Provider
Once your needs are identified, it is essential to select an experienced EOR provider capable of managing the legal specifics of the country where your employees are located. Expandys specializes in international EOR services, offering a comprehensive solution that allows you to close your subsidiary smoothly while maintaining an effective local team.
3. Transition Contracts
The transition from a subsidiary to EOR services requires requalifying your local employees' contracts. The EOR provider will draft new employment contracts in compliance with local laws while ensuring that your employees retain their benefits. This step is crucial for ensuring a smooth transition for both the company and the employees.
4. Optimize Management Costs
By outsourcing payroll, social contributions, and tax obligations to an EOR provider, you achieve substantial savings. The management services provided by EOR services streamline your internal processes while maintaining compliance with local regulations.
5. Monitoring and Adjustment
Once the transition is complete, it is important to closely monitor the performance of your new setup. With the flexibility offered by EOR services, you can adjust the size of your team based on market needs, while minimizing the risks and costs associated with managing a subsidiary.
3. Benefits of EOR Services for companies reducing their international presence
Testimonial 1: A technology services company
A technology services company had established a subsidiary in a European country to support its growth in the market. However, due to declining demand, the company decided to close the subsidiary to cut costs while retaining a local sales manager through EOR services. This solution allowed the company to maintain an active market presence while achieving significant cost savings.
Testimonial 2: A consulting firm
An international consulting firm had a subsidiary in Asia with several consultants on-site. Due to the pandemic, demand fell, and the firm chose to close the subsidiary to limit losses. However, it was able to keep two strategic consultants through EOR services, thus maintaining ongoing projects and preparing for future recovery without reopening an expensive subsidiary.
4. Why Expandys is the ideal partner for your transition to EOR Services
Expandys offers proven expertise in assisting companies with closing their subsidiaries while maintaining a local presence through EOR services. Our international experience and understanding of local regulations enable us to provide tailored solutions perfectly suited to your needs.
- Cost Reduction and Simplified Management: We handle all administrative formalities, thus reducing your overhead costs while ensuring legal compliance.
- Tailored Solutions: Whether you want to maintain a small team or a key employee, we adapt our solutions to your specific needs.
- Flexibility and Adaptation: You can adjust the size of your team according to your business needs, without the constraints associated with hiring or managing a subsidiary.
5. Conclusion
Transitioning from a subsidiary to EOR services is an effective solution for companies looking to reduce costs while maintaining a local presence. This approach allows you to keep essential employees on-site, streamline your administrative burdens, and adjust your workforce based on market needs. If you are considering closing a subsidiary and streamlining your operations, Expandys is the ideal partner to guide you through this transition while ensuring smooth and compliant management of your human resources.
