Efficient contracting: the key to a successful client–PEO–employee relationship

In a socio-culturally diverse country like India, navigating the labyrinth of labour laws can be a challenge, especially for small-scale businesses and foreign companies that are exploring the market to test the waters before setting up shop in India. For these businesses, professional employer organisations (PEOs) are a boon! They can readily commence business operations anywhere, with the help of instant plug-and-play options in terms of infrastructure and highly skilled talent, and without the burden of establishing an entity, setting up an office, undertaking corporate compliance or employer-related obligations.

Although PEOs have been in existence since the 1980s, the dynamics between businesses, ie, clients and PEOs, have evolved over the decades to cater for the industry’s changing needs. PEOs are increasingly providing tailor-made services to their clients, ranging from basic payroll to more specialised services, such as training related to the prevention of sexual harassment, anti-corruption, global mobility services and translation services, and so on. Clients have the flexibility to choose the services they wish to avail, based on the budgetary constraints and business-specific requirements. The size of certain PEOs enable them to leverage economies of scale and to negotiate with insurers to provide better insurance benefits. This advantage helps to provide lucrative compensation packages and, ergo, attract and retain talent.

Please click here to read the full article by Minu Dwivedi and Shreya Chowdhury, published in IBA.