Owned Entity vs. In-Country Global Employment Model

Hiring globally opens you up to a larger talent pool and new markets. By looking beyond your borders, you discover workers with unique perspectives, diverse skills, and fascinating stories.

However, not all hiring arrangements are equal. When you partner with a global employment platform to build an international workforce, they’ll typically rely on one of two models to assemble your team: owned entities or in-country partners.

Each approach has advantages and drawbacks. We're explaining the differences to help you decide which route to take.

What Is an Owned Entity?

An owned entity is a company in another country owned by an employment service provider. The entity is essentially an international subsidiary of your hiring partner.

Owned entities offer some significant benefits:

• They allow for more control – Since the entity answers directly to your service provider, you have an unbroken line of communication with your global workforce. 

• They are efficient – With a single point of contact, there’s no network of third-party partners to deal with, so everything can happen faster.

• They represent a long-term investment – An employment business with owned entities in other countries is in it for the long run.

Of course, there are downsides. Owned entities can cost more to set up—and those costs will likely be passed on to you. You may also run into compliance risks, as an outsider-controlled company may not understand labour laws as well as a native organisation.

What Is an In-Country Partner?

An in-country partner (ICP) is an existing organisation within a specific territory. Under the ICP model, your employment service provider contracts a third-party company.

These local entities are already established in the region and can provide several distinct advantages: 

• They speed up market entry – ICPs allow you to go into a new market quicker since they have established on-the-ground networks.

• They have local expertise – ICPs are staffed and run by residents of the country, so there’s a top-to-bottom understanding of regional workplace culture and nuances.

• They protect you from penalties – Thanks to their in-depth local knowledge of regulations, ICPs can reduce your overall liability.

Still, there are some drawbacks. In-country partners give you less control over who you work with and how they operate. There’s also more risk: You’re putting your reputation in the hands of a third party and hoping they comply with local laws.

Key Factors to Consider When Choosing a Global Employment Model

So, how should you choose an employment model? It depends on what you value most.

There are four factors to examine:

• Compliance and legal risk – Navigating every country’s unique regulations is crucial, as failure to comply with laws can result in fines, legal penalties, and more. Your priority should be engaging an on-the-ground partner that understands—and respects—the region’s rules.

• Cost and financial considerations – As with any growing business, your finances are one of your greatest concerns, so choosing an affordable partner is vital. At the same time, you don’t want to under-spend—after all, you get what you pay for.

• Scalability and business growth – The last thing you want is for your out-of-country partner to hold you back. Whichever solution you choose should be able to expand (and shrink) as needed, seamlessly supporting your growth.

• HR and payroll management – Finally, your people need to be paid properly and on time. Simplicity is the key to doing effective payroll management, so avoiding third parties can be wise. 

Is There a Better Alternative? Employer of Record (EOR) Explained

As you can see, there’s no perfect answer between owned entities and in-country partners. The former may be more cost-effective and straightforward, but the latter enables scalability and compliance.

So, is there a middle ground that meets all the requirements? As it turns out, there is.

An Employer of Record (EOR) combines the benefits of both models. EORs handle all the complexities of hiring internationally on your behalf, including:

• Hiring
• Onboarding
• Payroll
• Compliance
• Taxes

Many businesses opt for EORs over owned entities and ICPs because they operate in countless countries worldwide, providing seamless support throughout the employee lifecycle. They prioritize compliance and hands-off simplicity, yet can still scale as needed—all for a reasonable fee.

Making the Right Choice for Your Business

Ultimately, no single solution is right for every organisation. The “right choice” may vary depending on your needs.

You may like working with an owned entity if:

• You want more control over the day-to-day
• You appreciate streamlined communications
• You’d like to spend less in the long term

However, you may prefer an in-country partner if:

• You value local expertise above all
• You expect your workforce demands to fluctuate
• You have fast-approaching deadlines

Partner with Omnipresent for the Best of Both Worlds

If you want it all, consider engaging an Employer of Record. Compared to ICPs and owned entities, EORs offer a faster, more flexible solution to your global hiring needs.

To learn more, book a consultation with one of our experts.