Professional Employer Organization (PEO) in Paraguay

What is a Professional Employer Organization (PEO)?

When companies hire overseas via co-employment or outsourcing, they typically undertake an arrangement with a Professional Employer Organization, or PEO. These PEOs can perform any relevant business process related to HR that their partner employers need to implement in the countries where they want to build outsourced teams:

  • Recruitment, hiring, and onboarding
  • Crafting compensation packages and running payroll
  • Statutory and supplementary benefits provision
  • Guaranteeing compliance to local employment regulations

PEOs and their clients enter joint-employment agreements, meaning both parties share the responsibilities and liabilities that come with managing the remote team. Employers partner with PEOs to conveniently perform HR processes and functions where they want to build globally distributed teams in a manner compliant with the labor laws of that market. This allows them to offload the complex legal concerns they would otherwise need to navigate, so they can focus their resources on hiring for the roles they want in their preferred outsourcing markets.

PEOs replace the in-house legal expertise and infrastructure that employers would otherwise need to shoulder to stay compliant with complicated local employment legislation. Finding a trusted PEO is crucial in successfully outsourcing teams.

Approaching a PEO is a preferred strategic option for outsourcing in the Republic of Paraguay. The country relies on its sprawling services sector, which includes business process outsourcing, for over half its GDP. A combination of affordable labor costs, linguistic compatibility, and developing technology infrastructure and services means that Paraguay will continue to be in Latin America’s spotlight as an outsourcing destination that has a lot of room to grow, therefore offering several early adopter advantages.

Of course, to be able to access Paraguay’s highly skilled workforce, you need to constantly be compliant with the country’s labor laws that span every facet of employment practice. This is why partnering with a trusted PEO in Paraguay is a preferred strategic approach.

What are the benefits of using a PEO in Paraguay?

When you're doing business in Paraguay, working with a reliable PEO brings about several key competitive advantages. For instance, employers can offload the development and implementation of HR-related processes and functions.

Working with a PEO in Paraguay lets companies reap the following benefits:

  • Ensuring compliance with the employment laws: From recruitment to onboarding to payroll to termination — labor laws in Paraguay cover nearly every detail of employment practices. Noncompliance with these mandatory regulations may lead to costly legal fees and fines, and PEOs shield their partners from much of that risk.
  • Payroll processing and tax filing: As a significant part of HR, effective payroll and tax filing is crucial for any company, especially when they’re outsourcing and need to adhere to local standards and mandates. A trusted PEO guarantees compliance with local payroll and taxation legislation (including Paraguay income tax and corporate tax), as well as statutory requirements in other areas such as employee benefits and leave administration.
  • Risk mitigation: As PEOs provide legal guidance to their clients and assist in developing fully compliant HR and payroll functions and processes, they inherently mitigate a lot of the inherent risks in outsourcing employees. Through PEOs, employers are guaranteed to perform nuanced HR and payroll-related functions such as filing taxes and providing employee benefits in a manner that is always compliant with local labor laws.
  • Provision of competitive benefits: As a bonus, PEOs not only ensure compliance, but also provide additional perks as well. PEOs often offer compensation packages with competitive, supplementary benefits that exceed locally mandated minimums, helping clients offer more attractive contracts to prospective employees.
  • Employment cost mitigation: Given the complex and comprehensive nature of HR and payroll compliance, there is a lot of overhead costs that go into outsourcing. PEOs offset much of these expenses through developing and implementing cost-efficient processes from recruitment to payroll, not to mention extending their own infrastructure for their clients to leverage.

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What are the differences between an EOR and PEO services in Paraguay?

Where a PEO is a co-employment provider, an Employer of Record (EOR) handles all aspects of outsourcing as the sole employer on behalf of clients. There are naturally overlaps in both working arrangements,  as well as key differences, as illustrated below:

EOR PEO
Sole legal employer of workers on clients’ behalf. Co-employer along with clients who hold joint agreements with shared responsibilities.
Undertakes all HR processes and functions, including recruitment, contract drafting, management, payroll processing, compliance, and more. Shares responsibilities with clients in arrangements that detail to what extent both parties handle which functions and processes.
Does not require clients to outsource to foreign markets without incorporating local entities. As co-employers, clients need to be locally registered to enter joint agreements with PEOs.
Performs contract drafting for clients. Can assist clients in drafting contracts and agreements.

Hiring in Paraguay with a PEO

A couple of years before the pandemic hit, Paraguay had been identified as a rising star in outsourcing in Latin America, and local administration is taking steps to spur recovery and regain its lost foothold. As a developing economy with ongoing increasing demand for ICT-related infrastructure and services, Paraguay expects to devote more and more workers to tech roles to complement its bustling manufacturing industry and already massive services sector that includes outsourcing.

The services sector has absorbed the lion’s share of total employment in Paraguay from 2015 to 2020, almost always exceeding the 60% mark. Paraguay’s labor force is also in the best state it’s been in the past 12 years, with over 3.7 million workers expected in 2022.

While an appealing prospect, successfully outsourcing teams in Paraguay requires compliance with local labor laws and employment practices in the country. Leverage Skuad’s services in Paraguay to launch your globally distributed teams today.

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

While running payroll can be tedious, it obviously requires due diligence and careful consideration due to the involvement of financials and sensitive information. Furthermore, payroll is the fundamental metric upon which a company’s relationship with its employees is founded. Inaccuracies or delays in pay hurt employee relationships and also puts employees at risk of noncompliance with employment legislation in Paraguay.

When setting up a business in Paraguay, it's crucial to note that its labor standards include several payroll-specific details, including taxation, benefits, and compensation for different types of leaves. To effectively run payroll processing for remote employees in the country, employers need to have a firm understanding of the different regulations that govern its components, risking potentially hefty penalties for noncompliance.

Managing all of this through in-house resources exhausts a company’s potential for growth. Finding a trusted PEO in Paraguay is a strategic workaround that lets you navigate the country’s complex labor laws while also streamlining payroll processing.

Request a demo from Skuad’s experts today to learn more.

What a PEO in Paraguay can and cannot do for you

Choosing to share responsibilities and liabilities relating to the hiring, management, and payment of remote employees is a huge decision to make. You should clearly understand how much control you and your partner have over key processes and functions, and how your arrangement is going to work in detail. Below is a high-level overview of what a PEO in Paraguay can and cannot do:

A PEO can

  • Run payroll processing and management for your globally distributed teams, including proper tax filing and benefits administration, all of which are compliant to Paraguay’s labor laws.
  • Assist in the recruitment, hiring, and onboarding of Paraguayan talent.
  • Reduce otherwise costly overhead of outsourced employee management, and at the same time, mitigate inherent risks associated with Paraguay’s compliance requirements.

A PEO cannot

  • Function as a sole legal employer and hire employees for your company.
  • Take full control of your company.
  • Hire and terminate your employees without your involvement.

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

It’s no exaggeration to say that your ability to comprehend and comply with local labor laws in Paraguay can make or break your efforts in building a globally distributed team in that market. Unfortunately, not every organization can shoulder this responsibility with in-house resources. Indeed, even larger companies can be bogged down by complex compliance requirements and employment practices in Paraguay. This problem multiplies with the number of markets in which employers want to build outsource teams.

Partnering with the right PEO in Paraguay can be your launchpad to continue to aggressively scale your organization without worrying about noncompliance with local labor laws. Offload the otherwise in-house resources you would require to handle compliance concerns to a trusted PEO so you can focus on growing your business. Better yet, a trusted partner can provide you with streamlined infrastructures and platforms to assist with your outsourcing efforts in Paraguay and beyond.

Skuad’s global HR and payroll platform removes the stress from hiring, managing, and paying remote teams in Paraguay. It offers streamlined HR processes all under one dashboard so you can easily onboard, manage, and compensate employees in Paraguay without running the risk of noncompliance. Book a demo with Skuad today.

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