How to build or expand in Asia under a headcount freeze

By Scott Thomson – Chief Operating Officer, Links International

I’m not reading any more Hong Kong HR bulletins or updates this week. I don’t think I can scroll through any more sensational headlines reporting the latest headcount freezes in Hong Kong or businesses in Asia cutting staff.These headlines, combined with every uncle in Hong Kong eagerly telling me of an apparent economic apocalypse in Hong Kong, is not a great combo for an opportunity-seeking mind-set!

I’ve got good news: we’re all going to be OK.  This incredible city won’t crumble into the South China Sea!

However, I appreciate this promise doesn’t help managers who are trying to grow their businesses in Hong Kong or Singapore, given frozen or reduced headcount that a lot of companies in Asia are experiencing. BUT there is a solution that most managers and employers don’t know about that can help you build business under headcount freezes or caps: Secondment or PEO Outsourcing.

What is Secondment or PEO Outsourcing?

Secondment or PEO Outsourcing essentially involves an employer shifting the employment of potential or existing headcount to a Secondment Outsourcer, who then seconds the employees back to the employer under a services agreement.  In short, the Secondment Outsourcer takes on the headcount, handles the payroll processing of the employees and provides the employees as onsite resource for the client under a services agreement.

As per the above, two business growth situations in which Secondment or PEO Outsourcing in Asia would be perfect are:

Secondment or PEO Outsourcing as a solution for headcount freezes and headcount caps

Secondment is a perfect solution when a manager or employer has resource to employ but a limited ability to maintain or add headcount (this is a surprisingly common situation during headcount freezes due to lag in budgets).  If a headcount freeze is put in place on a rigid, no exceptions basis across a whole company, a manager can be unable to maintain or add headcount despite having the budget to do so.  This results in a frustrating outcome, as the headcount cap prevents the manager utilising their resource/budget to achieve their targeted business outcomes.

In this situation, using Links’ PEO Employment enables the manager to move their existing or potential employees that they have identified under Links’ headcount, ensuring that the manager can use their budget to achieve the business outcomes, despite the headcount freeze. Links employs and payrolls the employees and seconds them onsite to provide services to the client.

Secondment Outsourcing as a solution for overseas expansion

Another situation in which secondment or PEO is useful is for overseas companies that are looking to expand in Asia, but don’t have the headcount or a legal entity set up locally to employ the employees they want to hire in Asia.  Using Links’ PEO Employment service, Links can contractually employ the identified staff members in Hong Kong or Singapore, for example, and second those staff members to the client, enabling the client to benefit from the services of the local staff, without having to physically set up an office in Hong Kong or Singapore.  The upside of this approach is that the client can test a foreign market without having to make the various commitments associated with setting up a local legal entity, e.g. minimum capital requirements, administration costs, corporate approval, and so on.

Secondment or PEO outsourcing results in a flexible, low commitment approach without having to take on additional headcount.

Now is tomorrow’s golden days!  Identifying the right solutions and keeping a positive mind-set is key in order to take advantage of opportunities and build business during an economic slowdown.

Interested in growing your business with Secondment or PEO Outsourcing in Asia?  Links International specialises in HR Outsourcing and Solutions in Asia – Get in touch with us now!