Managing a global supply chain has become more complex than ever. According to a 2024 McKinsey survey, 71% of businesses in the supply chain sector face compliance challenges when operating in foreign markets. Moreover, 68% of companies have experienced significant delays due to workforce-related issues while expanding to new regions. As businesses grow their operations globally, managing payroll, taxes, and legal compliance becomes more difficult, with 60% of global companies turning to external partners like Employer of Record (EOR) services to handle HR functions across borders. The EOR model offers an efficient solution to these challenges, allowing businesses to manage their global workforce more effectively while staying compliant and reducing risks.
As companies expand their reach and diversify their workforce, it becomes important to adopt strategies that streamline operations, reduce administrative burdens, and manage global compliance. This is where the Employer of Record (EOR) comes into play, transforming the way businesses operate in multiple markets and enhancing their ability to scale efficiently. In the following sections, we will explore how EORs are helping businesses overcome workforce management challenges and the benefits they bring to supply chain operations.
The Challenges of Global Hiring in Supply Chain Operations
Managing a global supply chain workforce presents several challenges, especially as businesses expand into new markets or navigate different labor laws. These challenges can hinder operational efficiency and increase the complexity of business operations.
- Legal and Compliance Challenges in International Hiring
Labor laws and employment rules differ significantly between countries, including regulations on working hours, termination processes, and employee benefits like paid leave and healthcare. These differences create a complex patchwork of requirements that companies must track and follow. Staying compliant across multiple regions demands ongoing effort and local expertise. Without proper management, companies risk fines, legal disputes, and damage to their reputation. This challenge is especially difficult for businesses expanding into new markets with unfamiliar regulations.
When hiring employees abroad, it’s essential to provide appropriate proof of employment that overseas partners, governments, or banks might request. An effective method is to create a job verification letter that confirms an individual’s role and length of employment. This document is often required during international onboarding, visa applications, or when dealing with cross-border banking institutions. Crafting this letter correctly can help avoid administrative delays and demonstrate your company’s compliance with labor requirements in different countries.
Understanding international hiring challenges often involves navigating complex industry jargon. The Most Complete Supply Chain Terms and Glossary is a valuable reference to decode commonly used terms across global logistics, compliance, and workforce operations.
- Currency and Taxation Complexities
Handling payroll and taxes for employees working in different countries involves managing multiple currencies, tax rates, and exchange rates. This can complicate payroll processing, leading to discrepancies in employee compensation. Taxation systems also vary from country to country, with some countries having complex social security systems, while others may have straightforward tax requirements. This adds a layer of complexity that many businesses find difficult to manage.
- Talent Availability and Skills Gaps
Finding skilled professionals with supply chain expertise can be difficult in certain regions. Some countries may have a shortage of workers with the necessary technical skills or experience. This creates talent gaps that slow down operations or require extensive training. Additionally, cultural differences and language barriers can make recruiting and onboarding more challenging. Addressing these gaps often requires local knowledge and tailored hiring strategies to ensure teams are capable and productive.
- Impact on Supply Chain Efficiency
These challenges can significantly affect the efficiency of global supply chains. Delays in hiring, payroll errors, or non-compliance with local labor laws can disrupt operations, cause financial penalties, and damage relationships with local authorities. This can result in delays in product deliveries, increased operational costs, and a lack of confidence in a company’s ability to manage its workforce effectively.
For readers looking to build or refresh their knowledge of the fundamentals of global logistics and supply chain frameworks, Mastering Supply Chain Management – A Comprehensive Introduction offers a deep dive into the core principles and practices that shape successful supply chains worldwide.
What You Gain by Using Employer of Record Services
What is an EOR? An Employer of Record is a third-party organization that acts as the official employer for a company’s workers. While the client company remains in control of the day-to-day work and responsibilities of its employees, the EOR assumes responsibility for legal and administrative tasks, including payroll, taxes, employee benefits, and compliance with local labor laws. This model is especially useful for businesses operating in multiple countries, where navigating local regulations can be challenging and time-consuming.
EORs allow businesses to quickly onboard employees in new countries without the need to set up a local subsidiary or deal with the complexities of international labor laws. This is particularly advantageous in the supply chain industry, where businesses often require a flexible, scalable workforce to meet demand fluctuations, and operating across borders is a routine challenge.
How EOR Solutions Improve Workforce Operations for Supply Chain Businesses
Employer of Record services offer practical solutions to the unique workforce challenges faced by supply chain companies operating internationally. By shifting legal and administrative tasks to an experienced third party, supply chain firms can concentrate on optimizing their operations and managing logistics, while maintaining compliance across borders.
Faster Expansion into New Markets
Supply chain companies often need to enter new regions quickly to support logistics hubs, distribution centers, or sourcing operations. Setting up a local entity can be costly and slow, delaying critical hires. An EOR enables supply chain businesses to onboard local employees rapidly, allowing them to scale their workforce in new markets with minimal risk and without lengthy legal procedures. This speed helps maintain continuity and meet changing supply demands.
Legal Compliance
Compliance with labor laws is especially important in supply chains where multiple countries are involved. An EOR acts as the legal employer for workers in each region, ensuring that employment contracts, workplace safety policies, and benefits meet local legal requirements. This reduces the risk of fines or shutdowns that could disrupt supply chain operations and damage relationships with partners or regulators.
Efficient Payroll and Benefits Management
Supply chain workforces are often spread across countries with different tax systems and social security rules. EORs centralize payroll and benefits management, guaranteeing accurate and timely compensation for employees regardless of location. This minimizes payroll errors that can impact employee morale or cause operational delays. Additionally, handling local benefits ensures workers receive appropriate coverage, supporting workforce stability.
Reducing Administrative Burden
Managing workforce logistics across multiple countries adds complexity to HR operations within supply chain firms. Legal requirements, payroll schedules, and benefits programs vary widely. Outsourcing these responsibilities to an EOR reduces the administrative workload for internal HR teams. Freed from routine compliance and payroll tasks, HR professionals can focus on strategic workforce planning and supporting operational goals.
Case Study: How Project44 Streamlined Global Hiring Using Deel
Project44, a global supply chain visibility platform, expanded its workforce by hiring 129 employees across 25 countries using Deel’s EOR and Contractor of Record services. This strategic move resulted in annual savings exceeding $500,000 compared to previous EOR providers. Deel facilitated seamless international hiring, payroll processing, and compliance management, enabling Project44 to scale efficiently without establishing local entities.
Factors to Evaluate When Selecting a Workforce Platform
Choosing the right platform to handle global employment requires careful evaluation to match the company’s operational needs. Supply chain businesses should keep the following points in mind:
- Geographic coverage: Verify that the provider supports all the countries where your supply chain currently operates or plans to hire. Broad presence helps avoid gaps in workforce management.
- Local compliance capabilities: The provider must demonstrate strong expertise in labor laws, taxation, and benefits specific to each region. This reduces risks tied to regulatory violations.
- Ability to adapt and grow: Workforce demands can change rapidly in supply chains. The solution should offer scalable options that allow easy adjustments in headcount or contract terms.
- Platform usability and compatibility: Look for providers offering intuitive tools that can connect smoothly with your existing HR, payroll, or finance systems, ensuring efficient workflows.
- Quality of support: Reliable, responsive customer service is vital. The provider should assist promptly with any operational questions or challenges that arise.
- Study competitors: A great way to choose an EOR provider is by studying how competitors in your industry are managing their workforce. Look at how companies similar to yours are utilizing EOR services, particularly Deel competitors and Rippling competitors, to understand the options available and which providers are best suited to your needs. Competitor research can provide valuable insights into what works well and help you make an informed choice.
Careful consideration of these elements will help supply chain companies select a platform that supports their international hiring goals effectively.
When comparing EOR providers or evaluating the financial impact of global expansion, the Cost Breakdown Analysis Template helps you calculate key cost components and make data-driven decisions.
The Future of EORs in Supply Chain Management
The future of Employer of Record services in supply chain management is shaped by the ongoing evolution of the global workforce and the increasing need for flexibility and scalability. Remote work is no longer just a trend but a permanent shift, with businesses now hiring talent from all over the world. This development challenges traditional models of workforce management, as companies face the complexities of managing legal, tax, and compliance issues in multiple jurisdictions. EORs provide a solution to this challenge, enabling businesses to hire employees across borders without the need to set up local subsidiaries or navigate complex employment laws.
As supply chains become more interconnected and digitalized, the demand for efficient, scalable solutions will continue to grow. EORs are expected to adapt to these changes by offering advanced digital HR platforms, automation tools, and enhanced compliance features to help businesses manage a globally distributed workforce. The rise of digital technologies in supply chain operations, such as automation, AI, and data analytics, will only increase the importance of EOR services, as companies will need systems that can support rapid growth and diverse employee needs.
To better understand how digital tools are transforming logistics and workforce coordination, Supply Chain Digitalization – An Introduction provides valuable insights into how companies can adapt to emerging technologies like automation and AI.
Looking ahead, EORs will play a critical role in enabling businesses to scale quickly and efficiently across global markets. By providing seamless, compliant workforce solutions, EORs will help businesses meet the challenges of an increasingly globalized and digital supply chain landscape, ensuring companies can remain agile and competitive in a rapidly changing environment.
Final Insights: How EOR Providers Enhance Global Supply Chain Workforce Efficiency
Employer of Record services are revolutionizing global supply chain workforce management by providing businesses with a cost-effective, flexible, and compliant solution to manage employees across different countries. By leveraging EORs, companies can scale quickly, reduce administrative burdens, and mitigate legal risks. As the supply chain industry becomes increasingly global, EORs will remain a key enabler of operational efficiency, allowing companies to focus on what they do best – delivering products and services to customers worldwide.
Author’s name: Yaryna Kobryn
Bio: A skilled writer with over 8 years of experience, Yaryna specializes in producing clear, engaging content that demystifies global employment and EOR solutions. Her expertise helps businesses navigate the complexities of expanding remote teams. With a strong background in working alongside product and software development teams, Yaryna brings a tech-savvy perspective to her writing, delivering insightful, in-depth analysis for her readers.
LinkedIn: https://www.linkedin.com/in/yaryna-kobryn-8445b091/
