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One In-Country Partner is Not Like Another: Differences Between ICPs & Why it Matters

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Erez Greenberg
January 27, 2022
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When you’re choosing an in-country partner (ICP) to manage overseas employment on your behalf, you don’t want to walk in with your eyes blindfolded. This partner will be the on-paper employer for your new hires, and will be managing their monthly salary, their benefits, their data privacy and more. It’s a critical role, and shouldn’t be approached as simply a check-box item to allow you to compliantly hire with speed in a new location.

We’ve dealt with hundreds of in-country partners as a global PEO provider, and so we can say with some certainty that there is no such thing as a “one size fits all.” If you’re considering working with an Employer of Record who owns direct entities in each country, read this first.

The costs and terms can vary dramatically – and sometimes should

Most ICPs charge your business for their services in one of two ways. They either take a flat-fee per employee, or they charge a percentage of each employee’s salary. As employee salaries change regularly, the second option can add a lot of complexity to your monthly bill.

What’s more confusing though, are the fees and terms that a lot of ICPs have hidden in the small print. For example, you might be held to a minimum term of employment, so that if you are opening your own entity or you need to let the employee in question go, you’re still left paying the ICP their fee. There could be VAT charges to consider, or a fee or mark-up for foreign transactions, which can be different between countries.

In many cases, a wholly-owned EoR will have a single set of benefits that they offer to all employees in all regions, even if seniority or expertise varies. If these terms don’t work for you, or you need greater flexibility to attract the right talent, a wholly-owned network means you have no choice but to comply.

Instead, when you’re not locked into a single ICP, you have a lot more leverage on your side to dictate your own terms, whether that’s asking for a per-employee flat fee for the ICPs services, or negotiating a shorter minimum term for the employment relationship.

Expertise and relationships in-region can make all the difference

No ICP is an island – that’s how the expression goes, right? Your in-country partners will need support from other service providers, such as lawyers, tax experts, or MSPs. If you have a specific request for a niche topic like global equity management, or you know that there will be complex laws around a particular employee getting the right visa or paying accurate tax to the relevant authorities, you want an expert on board.

When you only have a single ICP to choose from, if they don’t have that expertise, you’re stuck. The advantages of the aggregator model, where there is a trusted network of ICPs in-region you can speak to as many as necessary until you find the skills and talent you’re looking for.

What ICPs provide for your employees can be like night and day

When choosing in-country partners, you want the freedom to be as hands-on or hands-off as necessary. For example, does your business already have its own relationship with an insurance or pension provider who works in the new location? If so, you won’t need the ICP to handle these benefits on your behalf.

If however you are starting from zero with your knowledge of the complexities of a new location, it could be a relief to have the details taken off your hands. For example in the Philippines, employees are given a monthly rice subsidy as a mandatory part of their compensation.

In Portugal, it’s now illegal for employers to contact employees outside of working hours, even by email. Each country has its own laws and cultural norms, and these change all the time.

When starting a relationship with a new partner in an unknown location, you not only want to be informed about all the details of working in that region, you also want to be able to hand over responsibility for compliance and action where necessary.

As this can vary depending on the location, the employees, and the nature of the regulations and laws – you want to be able to take each decision on a case by case basis. The last thing you need is to be tied into a relationship with an Employer of Record only to find out that their ICP in Switzerland doesn’t handle mandatory pension contributions, so you need to manage this on your own.

Accessibility and customer support will make or break a relationship

Ultimately, the most important thing to know is that you get on well with the ICP who is managing your employees. There are likely to be cultural differences, and there might be practical considerations as well, such as the time zone they are working in, or the way they fill out their reports compared to your own internal systems. These can be streamlined by working through a single partner who acts as an intermediary or ‘translates’ documentation and data.

However, when the single partner owns the ICPs – there’s a clear conflict of interest going on. If you’re not happy with the relationship, you have concerns about errors or data privacy, or you simply don’t like their terms, the ICP can’t be replaced, and so they aren’t held accountable for their service in the same way as they would be if they were fully external.

In an aggregator model, your vendor is working for you and serving your requirements. Where the EoR has a wholly-owned infrastructure, they are always on the team of the ICP – they are one and the same.

Won’t multiple ICP relationships make it all so much more complicated?

The freedom to choose between various ICPs is essential for your business, but the last thing you need is dozens of relationships with different partners in each region. If this leaves you feeling like you’re stuck between a rock and a wholly-owned infrastructure model – don’t fear! Papaya Global’s EoR solution was built with this exact challenge in mind.

At Papaya, we have skilfully created a network of ICPs to provide the best possible service, and to ensure vetted, tried and tested expertise to suit varied customer requirements. If you’re not happy with one ICP, we make it easy to move to a better fit without gaps in service or organizational disruption, and you can continue to manage them all through us as a single vendor relationship.

We guarantee the same flat fee per employee, with no hidden costs, we work in your time zone, language and currency, and we take on the complexity associated with working with multiple partners on your behalf. It really is the best of both worlds.

Your business deserves more than one-size-fits-all. Talk to us about our network of trusted ICPs anywhere in the world.

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