What is a Professional Employer Organization (PEO)?

Companies hiring overseas via outsourcing or co-employment do so under an arrangement with a Professional Employer Organization or PEO. PEOs can undertake every relevant business process required by employers that outsource to other countries, such as:

  • Recruitment, hiring, and onboarding
  • Developing compensation packages and administering payroll
  • Providing statutory and supplementary benefits
  • Ensuring compliance with local employment regulations

PEOs perform their duties by entering joint-employment agreements with their clients. This means both parties share responsibilities and liabilities in managing their remote employees. Through their PEO providers, clients can quickly and compliantly perform HR-related functions in their outsourcing destination of choice, leapfrogging the complicated foundational paperwork they would otherwise need to settle and instead focusing on building their globally distributed teams as fast as possible.

Without PEOs, employers would typically need in-house capability that can guarantee compliance with complex local labor laws (in-country legal expertise). Finding the right PEO is key for successful outsourcing efforts.

If you’re looking to hire employees in the Plurinational State of Bolivia, you’re accessing one of the most attractive outsourcing destinations in Latin America. Bolivia has ramped up digitization in recent years and is steadily catching up with its neighbors in LatAm, along with a heavy focus on tech as an industry. Multiple public and private universities offer degrees and master’s programs in IT, and nearly 12,000 developers work with local or foreign companies in the country. Bolivia offers one of the least expensive rates for software development outsourcing in Latin America—the cities of Cochabamba and La Paz are particularly interesting hubs of tech companies and highly skilled workers.

The caveat: to successfully unlock Bolivia’s talent pool, you need the key component of compliance with local employment laws that govern nearly every aspect of labor practice. This is where a PEO becomes a strategic option.

What are the benefits of using a PEO in Bolivia?

Outsourcing most of the work-intensive background HR processes and compliance concerns are significant competitive advantages. However, looking deeper into the benefits of using a PEO in Bolivia reveals how much genuine value there is in partnering with one to manage remote teams in the country, such as:

  • Ensuring compliance with the employment laws: Employment laws in Bolivia span everything from recruitment and background checks to transfer of intellectual property and termination. PEOs protect their clients from penalties and fines associated with non-compliance with these regulations.
  • Payroll processing and tax filing: Payroll is a significant and critical part of an organization that requires much attention, even more so when outsourcing. On the surface, a PEO in Bolivia simply ensures that their partner employer is able to pay its workers accurately and on time. However, a lot of work goes into even just the compliance concerns alone when it comes to payroll processing that spans mandatory requirements for benefits, taxation, leave policy, and other sensitive financial aspects.
  • Risk mitigation: PEOs reduce compliance risks for their clients by giving them legal guidance and assistance in building HR and payroll processes that abide by local employment regulations. From deducting and filing taxes properly to handling employee-related claims in a manner compliant with Bolivian employment practice, PEOs protect employers from a lot of risks inherent in managing remote teams.
  • Provision of competitive benefits: Aside from meeting locally mandated minimums regarding employee benefits, PEOs also let clients access competitive supplementary employee benefits packages such as private health insurance.
  • Employment cost mitigation: All of the processes and compliances that go into HR-related work translate to a lot of overhead per remote employee. PEOs help their partners save a lot of that time and effort through cost-effective recruitment processes and the provision of strategic HR support.

Partnering with Skuad’s services in Bolivia lets you focus solely on growing your business while staying completely compliant with local labor laws.

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What are the differences between an EOR and a PEO?

Both a PEO and an Employer of Record (EOR) let clients enter employment arrangements for remote teams that simplify their HR needs, with some key differences. From a high-level perspective, some of those differences are explained below:

EOR PEO
Acts as the legal employer on behalf of the client organization. Serves as a co-employer with the client organization.
Handles all HR-related functions such as hiring, onboarding, payroll management, benefits provisions, contracts drafting, ensuring compliance, etc. Shares HR responsibilities with the client organization. The PEO ensures the client organization has more control over HR-related functions.
Allows the client organization to expand its workforce to other countries without setting up an entity. Operations are limited to states and countries the client organization is duly registered and can hire employees.
The EOR drafts contracts for employees on behalf of the organization. The client organization handles contract drafting and agreements.

Hiring in Bolivia with a PEO

Bolivia has been characterized as the “ benchmark of economic growth” in LatAm and the Caribbean. While economic progress was stumped by the pandemic for well over a year, Bolivia’s government expects to invest roughly 33.19 billion US dollars in domestic projects to kickstart a period of growth that will last well into the next half-decade. The country’s labor force is in its busiest state for the last dozen years, with over 6.5 million workers in 2021.

Bolivia has also recently closed massive development programs that uniquely position its incoming generations of workers to be highly attractive as talent. Expect Bolivia to grow even further as a preferred outsourcing destination in LatAm.

Of course, one intrinsic challenge in outsourcing teams to Bolivia is staying compliant with relevant labor laws and practices in the country. Skuad’s services in Bolivia are your launchpad for building your outsourced team in full compliance with local employment regulations.

Payroll in Bolivia is challenging. It’s easy when you use a PEO.  

Payroll processing is both tedious and critical work. Not only does it deal with sensitive information and financials, but it also forms the bedrock on which the relationship between employer and employee is founded. Inaccurate or delayed payroll strings employee relationships while also opening up companies to the risks associated with non-compliance to Bolivian employment regulations.

All of this can be understandably overwhelming for any company that manages payroll on its own.

Bolivia’s statutory guidelines relating to payroll include several elements of employee compensation packages. Some of these include mandated minimum wages, taxation computation, social security contributions, and mandatory benefits, among others.

To run payroll processing efficiently in Bolivia, companies need to understand what parts of compensation are taxable and by how much, how much contributions to social insurance schemes amount to, and what data inputs need to be gathered and validated—among many other concerns. Noncompliance in any of these areas may result in potentially costly legal fees and penalties.

Handling all of this in-house often results in companies getting bogged down in compliance concerns, slowing down progress and growth. Outsourcing to a PEO is one preferred strategy to address the complexities of local labor laws while maintaining aggressive business growth. Skuad’s global HR and payroll platform streamlines and manages payments while staying 100% compliant with Bolivia’s labor laws. Request a demo from Skuad’s experts to know more.

What a PEO in Bolivia can and cannot do for you

Partnering with a PEO and sharing HR responsibilities and liabilities is a significant business decision. You need to clearly understand the extent of control your potential PEO is likely to have over what is essentially your HR functions and processes. Here’s a brief overview of what PEOs can and cannot do:

A PEO can

  • Maintain effective payroll processing and management for your globally distributed teams, which includes proper tax filing compliant with local labor laws.
  • Assist in the recruitment, hiring, and onboarding of Bolivian talent.
  • Help reduce overhead costs of remote employee management while also reducing inherent risks associated with compliance requirements.

A PEO cannot

  • Hire workers as the sole legal employer for your company.
  • Take full control of your company.
  • Solely be responsible for the hiring and termination of your employees

Businesses big and small can find value in partnering with a PEO in Bolivia.

Building a successful outsourced team in Bolivia relies on a firm and in-depth understanding of local employment regulations and practices. Not every organization looking to create globally distributed teams can shoulder that responsibility in-house, greatly limiting what they can achieve alone. Even larger organizations can be overwhelmed by the nuances in Bolivian labor laws, not to mention the employment regulations of other markets once they begin to aggressively scale operations and teams.

Partnering with a trusted PEO in Bolivia is your ticket to avoid this unfavorable situation where you need to leverage outsourcing but cannot implement in-house expertise for compliance concerns relating to HR and payroll. A PEO in Bolivia shields you from non-compliance risk while also extending your HR infrastructure to better support hiring, managing, and paying remote team members.

Skuad’s unified HR and payroll platform makes building remote teams in Bolivia stress-free, empowering your organization to easily hire, onboard, manage, and pay Bolivian employees while staying 100% compliant with local labor laws. Book a demo with Skuad today.

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