The Advantages of Using an Employer of Record for IT Hiring

The Advantages of Using an Employer of Record for IT Hiring

  • InCorp Editorial Team
  • 2 May 2023
  • 6 minute reading time

Companies increasingly turn to global talent pools for IT hiring nowadays. This is because many businesses believe that global talent pools offer top talents that fill IT positions in today’s highly competitive job market. 

However, when hiring international employees, companies must know how to navigate complex legal and administrative requirements that can be costly and time-consuming. 

It is where the Employer of Record (EOR) model comes in. EOR provides a streamlined solution for managing payroll, compliance, and other HR functions for international hires. 

The EOR model can be especially beneficial in IT hiring, allowing companies to access the best IT talent worldwide while minimizing legal and administrative risks.

The Importance of IT Hiring

Every industry and organization considers information technology (IT) vital. From small to large businesses, they all depend on IT experts. 

Over the past few years, IT hiring requirements have steadily risen due to the introduction of various tools and software in the workplace. Consequently, the demand for IT has shot up, making it one of the most stable and secure jobs. 

As a result, IT professionals play a significant role in helping organizations achieve their goals.

What is an Employer of Record? 

An Employer of Record (EoR) is a designated company that takes legal responsibility for managing some or all of a company’s employees, including recruitment, payroll, and work permits.

Employees hired through an EoR service become employees of the service provider, but the EoR does not have supervisory functions. However, your company retains decision-making authority over compensation, job titles, work scope, projects, and termination. 

In essence, EoR services outsource the management of Indonesia’s labor law and regulations, making it a valuable tool for companies seeking to enter new markets or expand their workforce cost-effectively. 

EoR is included in a Professional Employer Organization (PEO), Local Employer, Back-office Staffing, or Foreign Enterprise Service Company (FESCO).

Read more: The Effective Ways to Improve Talent Retention

What is The Role of EOR in IT Hiring?

Why is the Employee of Record is Essential for IT Hiring?

Nearly every aspect of modern business requires high technology, creating many opportunities for software engineers. In addition, various industries are seeking developers for specific applications and systems. 

1. Financial Sector

The financial sector needs developers to create e-commerce websites, budgeting programs, online banking, tax management, and economic forecasting. 

2. Healthcare Service

In healthcare, there is a demand for systems related to electronic health records, telehealth, patient engagement, and clinical trial management, among others. 

3. Manufacture

Custom applications are required for supply-chain management, inventory management, and preventative maintenance in manufacturing. 

4. Automotive Industry

Developers can also work in the automotive industry to build applications related to vehicle safety, dealership management, and fleet management. 

5. Insurance Sector

Developers can help with fraud detection, automation of claims management, and data analytics.

6. Tech Industry

Moreover, despite recent workforce reductions, companies in the tech sector continue to be the largest employers of software developers, accounting for 80% of job postings. 

The remaining 20% of job opportunities are spread across various industries, including business and support services, manufacturing, engineering, education, healthcare services, financial services, and science.

How the Employer of Record Functions in the IT Industry

An intense job description is crucial when looking for the right EoR for your company. To create a compelling post, start with a summary of your company, the available position, and the expected impact of the EoR individual. 

The job description should clearly describe the duties and responsibilities, along with the preferred qualifications of the ideal candidate. 

Avoid lengthy lists of requirements and instead focus on providing relevant details concisely and straightforwardly, which will help attract top-notch candidates.

Practical interview questions can assist in evaluating an EoR candidate’s hard skills, behavioral intelligence, and soft skills. Likewise, use questions targeting soft skills to assess a candidate’s personality and cognitive skills.

Use questions on hard skills to determine a candidate’s technical knowledge and abilities. To understand how a candidate handled previous situations, use questions that focus on behavioral intelligence. 

How the Employer of Record Supports Recruitment and Talent Acquisition in IT Hiring

EoRs are especially helpful in acquiring talent for the IT department, which is essentially the organization’s backbone. In that, an EoR helps: 

  • Enhance the candidate experience by providing a unique and memorable interview experience and marketing your job postings to attract top IT talents.
  • Recruit and train more interns by offering IT apprenticeships and accelerated ten-week IT internship programs. It will help you fill skill gaps, balance the correct mix of experts, and identify the ideal team collaboration and communication personality.
  • Dive into networking by hosting meet-and-greet events in the local community, sponsoring events, and implementing employer referral programs.
  • Provide remote work opportunities to tap into a larger pool of qualified candidates, save time and money during recruitment, and compete with other businesses.
  • Explore the gig economy by leveraging the on-demand workforce to quickly and effectively perform crucial projects without requiring extensive recruitment procedures or other time-consuming chores.
  • Think outside the box by hosting hackathons, coding challenges, IT meetups, boot camps, and other opportunities for enthusiastic learners to broaden their skill sets and solve problems.
  • Utilize social media platforms to connect with potential candidates and promote job postings, leveraging paid and unpaid marketing strategies.

The Advantages of Hiring through Employer of Record

The Advantages of Using an Employer of Record for IT Hiring

Using an EoR service can be beneficial due to the setup process’s cost, time, and resource requirements. In addition, EoR services ensure compliance with federal, state, and provincial laws and regulations, which can be challenging for companies unfamiliar with Indonesia’s company and investment law. 

EoR providers also handle all aspects of human resource management since only Indonesian citizens can work in HR. In addition, local employees must have their payroll issued by a company registered in Indonesia. I Corp Indonesia (formerly Cekindo) EoR services include recruitment and candidate shortlisting. 

Our service will take appointments and employment agreements, payroll processing and salary adjustments, income tax calculations and reporting, employee benefits and insurance, and visas and local sponsorship applications.

Having established the importance of a strong workforce, involving an EoR may be a smart move for businesses in the future. Enabling access to the top talent in their respective industries creates an environment for businesses to flourish, promoting growth and efficiency.

By leveraging the advantages of the EoR model, businesses can focus on their core operations and leave complex administrative tasks to a reliable partner. For more information on EoR, feel free to talk with one of our expert consultants.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequent Asked Questions

You will need your employee’s personal documents (KTP, KK, BPJS cards) as well as employee benefits information such as salary and other benefits.

A comparable service to EoR is Professional Employer Organization (PEO). EoR’s and PEO’s are similar in that they both assist with outsourcing human resources services, but differ in legal responsibilities. While a PEO may also assist you in recruitment, your company will still hold employee contracts. This means your company will still bear all legal liabilities when hiring but a PEO takes on your employees and are responsible for anything HR-related. In contrast, an EoR is the legal employer of those your company hires, meaning they hold employment contracts - EoR’s put your business and employees on their payroll.

Before entering into any agreement with our clients, we sign a data protection agreement to ensure that all data are kept confidential across all involved activities.

According to the Indonesia’s Manpower Law employers can hire the Indonesian talents either under a temporary or a permanent contract.

  • Prohibit any form of discrimination and provide equal opportunity for Indonesians and expatriates
  • Increase the competence of the workers by giving or encouraging job training
  • Follow the procedures of termination (Terminating an employee in Indonesia can be a long, tedious, and expensive process.)
  • Observe the working hours, holidays, and overtime regulations
  • Give mandatory employee benefits including social security and health insurance
  • Withhold only the right amount of income tax on behalf of the employees
  • Follow the wages and other benefits outlined by the law
  • Process the work permits for foreign employees