EOR Cases and Success Points
EOR (Employer of Record) is gaining attention for utilizing Indian talent. This article highlights Japanese companies’ EOR case studies and clearly explains its key benefits and success points.
Contents
What is EOR - A recap
EOR is a system that allows companies without a local presence to hire local talent. EOR providers act as the 'legal employer', handling payroll and social insurance procedures, allowing companies to secure talent without establishing a local corporation.
• Speedy recruitment
• Reduction of labor risks
• Relatively low initial costs
Reasons why Japanese companies chose EOR
2-1. The Need to Secure Highly Skilled IT Personnel in a Short Period
As the shortage of IT personnel in Japan becomes more serious, many companies that want to increase their development speed, both large enterprises and startups, are emerging. In cases where there is insufficient time or funds to establish a local corporation, it is possible to deploy Indian engineers in less than a month by utilizing EOR.
2-2. Balancing Compliance and Business Speed
India's labor laws and tax systems are complex, and when a company becomes a direct employer, the risk of compliance issues increases. With EOR, the business takes on the responsibility for legal procedures and employment contracts, allowing companies to focus on their business, which is attractive.
2-3. Indian Talent as a Test Market
Before establishing a base, companies may first want to test hire a small number of individuals to assess the market and work style—such needs are well suited for EOR.
Successful case (case study)
Case 1: IT Venture Company A
Overview: Hired 3 engineers from India for in-house product development.
Challenges:
Even if domestic engineers are hired, the company brand is weak and there are few applicants.
There is no budget to establish a significant overseas entity.
Choice: Implement EOR at the initial stage and completed hiring within a few weeks with support from the EOR provider.
Results:
Secured experienced Indian engineers at about 2/3 the cost of domestic engineers.
Strengthened communication via online meetings and chat tools, resulting in a development period shortened by one month from the original schedule.
Case 2: Mid-sized Manufacturer B
Overview: Hired several overseas engineers to develop a new software product.
Challenges:
1. There are no personnel within the company knowledgeable about overseas labor.
2. There is a possibility of establishing a local entity in the future, but we want to start tentatively first.
Options: Contract with an EOR provider and local engineers participate fully remotely in the system development of Company B.
Results:
• The EOR provider handled all procedures, minimizing Company B's labor risks.
• Smoothly progressed with hiring and secured the release timing of the new product.
Case 3: Major Consulting Company C
Overview: Wants to leverage multiple Indian consulting talents for new service development.
Challenges:
1. As a consulting firm, there is a high client demand for global talent.
2. Establishing bases in multiple countries is too costly.
Options: Utilize Indian EOR to place local talent on a project basis.
Results:
• Rapidly secured Indian consultants strong in global projects, successfully winning large project orders.
• This led to improved proposal capabilities to clients and was a step towards enhancing presence in the Indian market.
Key to success
4-1. Establishment of Communication System
Even when utilizing EOR, the company's side will conduct daily business instructions and communication. To smoothly cover time differences and language issues, it is important to establish online meeting tools, chat applications, project management tools, etc., and to clarify the responsible persons.
4-2. Confirmation of Contract Terms with EOR Provider
• Scope of payroll and social insurance procedures
• Trouble handling and support content
• Setting of initial costs and monthly fees
By clarifying these, you can prevent troubles later on. In particular, make sure to understand the responsibilities in the event of labor issues (such as when there are business instructions from Japan) and the procedures for resident status.
4-3. Team Management
Although Indian personnel generally have high English proficiency and technical skills, there may be differences in culture and business customs. Establishing onboarding support and internal communication rules is key to ensuring that the entire team can collaborate smoothly.
4-4. Linkage with Future Plans
While EOR is suitable for quick and small-scale hiring, if you plan to increase the number of employees and aim for large-scale expansion in the future, there may be timing advantages to establishing a local subsidiary on your own. It is advisable to first test with EOR and then develop strategies such as transitioning to corporate establishment.
Summary
For Japanese companies to secure excellent talent in India in a short period while mitigating labor risks and advancing global expansion, India EOR can be an effective means.
• Establishing a communication system and onboarding process,
• Clearly defining the scope of the contract with the EOR provider,
• Creating an operational plan that takes into account future expansion
will significantly increase the chances of success.
What has become clear through case studies is that companies adopting EOR prioritize "speed," "risk management," and "minimum necessary costs". In today's world of globalization, the attention towards EOR will continue to rise as one option to flexibly utilize India's talented workforce.
Phinx leverages its extensive know-how in recruiting talent and utilizing EOR in India to fully support your business expansion. We can provide comprehensive support from local research to contracts, labor management, and onboarding.
Whether you want to "test introduction with a small number of people first" or "are unsure about establishing a local corporation in the future," please feel free to consult us about any concerns.
Phinx will strongly support your global strategy.
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