Expanding your business to foreign markets can be a lucrative venture, but it comes with a myriad of challenges, especially when it comes to hiring and managing local talent. Employer of Record (EOR) services offer a game-changing solution for companies seeking to enter new markets, including Malaysia.
Let's explore the suitability of Emlpoyer of Record services and how they can benefit your business in Malaysia:
1. Small and Medium-sized Enterprises (SMEs):
Example: Imagine a tech startup from the United States eager to tap into the growing Malaysian market. As an SME, they lack the expertise and resources to navigate Malaysia's complex employment laws and regulations. By partnering with an EOR provider in Malaysia, the startup gains access to local expertise to manage hiring, payroll, and compliance seamlessly.
Principle: SMEs benefit significantly from EOR services as it allows them to enter new markets quickly and efficiently without the complexities of establishing legal entities or hiring in-house HR teams.
Citation: According to the Society for Human Resource Management (SHRM), SMEs often leverage EOR services to overcome the challenges of hiring in foreign countries .
2. Companies Expanding Internationally:
Example: A successful British e-commerce company sets its sights on expanding its market presence to Malaysia. Instead of the traditional approach of setting up a subsidiary in the country, they opt for EOR services, enabling them to hire local employees compliantly and start operations in a shorter timeframe.
Principle: EOR facilitates global expansion by offering a fast and flexible way to hire talent and navigate local employment laws without setting up legal entities.
Citation: Globalization Partners and CFO Research found that a whopping 92% of respondents view EOR as essential to their global expansion strategy .
3. Fast-Growing Startups:
Example: Picture a rapidly growing AI startup based in Canada eyeing the European market for new opportunities. Through EOR services, they can effortlessly hire skilled AI engineers in Malaysia without the complexities of establishing a permanent presence.
Principle: EOR streamlines hiring processes, enabling fast-growing startups to access international talent quickly and without significant administrative burdens.
Citation: The National Bureau of Economic Research (NBER) highlights how EOR can help fast-growing firms scale their operations efficiently .
4. Temporary or Project-Based Hiring:
Example: An Australian construction company secures a short-term contract in Malaysia to build a landmark structure. Rather than setting up a local entity, they choose EOR services to employ local construction workers for the duration of the project.
Principle: EOR offers the flexibility needed for hiring for short-term projects, enabling companies to access specialized skills without committing to long-term employment.
Citation: A survey by Randstad Sourceright reveals that 61% of global talent leaders consider using EOR to access specialized skills .
5. Companies Unable to Hire Foreign Employees in Malaysia:
Principle: In Malaysia, companies often need to obtain quotas from the government to hire foreign employees. However, acquiring such quotas can be challenging for many businesses. In such cases, engaging an Employer of Record becomes crucial, as they have Employment Pass Quotas to facilitate foreign hires.
Case Study: A local company in Malaysia or an international company intending to hire a foreigner living or working in Malaysia may engage an Employer of Record to navigate the complexities of obtaining Employment Pass Quotas and subsequently hire the desired employee.
Citation: Taken from Malaysian Government Regulation, most recently quoted in March 2023, on the approval of foreign worker quotas for various sectors.
In conclusion, Employer of Record (EOR) services offer a strategic advantage for businesses venturing into Malaysia's market, providing a reliable and compliant solution for hiring and managing local talent. Whether you are an SME, a startup, or seeking temporary hires, EOR can be the key to unlocking your success in Malaysia.
 SHRM: https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/global-hr-strategy-employing-foreign-nationals.aspx
 Globalization Partners: https://www.globalization-partners.com/resources/eor-whitepapers-research/cfo-research-on-global-expansion-strategies-and-challenges/
 NBER: https://www.nber.org/papers/w23048
 Randstad Sourceright: https://www.randstadsourceright.com/insights/talent-trends-quarterly/q2-2018/why-are-employers-investing-in-workforce-agility/