For 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.