The Middle East and Africa are home to some of the world’s fastest-growing economies, with the oil and gas sector being a key driver of this growth. However, the COVID-19 pandemic has disrupted many industries, including oil and gas, and many companies are now looking for more flexible and cost-effective ways to manage their workforce as they continue to expand into the region. This has led to a growing interest in the services of Employer of Record (EOR) providers, which can help companies manage their HR and payroll needs more efficiently. Nobuntu Ndlovu, VP of Marketing/MEA, Atlas HXM, explores this emerging trend.
An Employer of Record (EOR) is a service provider that takes on the legal responsibility of employing workers on behalf of a client company. This means that the EOR handles HR-related tasks such as payroll processing, benefits administration and tax withholding, while the client retains control over the day-to-day job duties and management of the workers.
EOR services are particularly useful for companies that need to manage a remote or distributed workforce, as they allow the client to focus on its core business activities without having to worry about HR and compliance issues.
Growth of EOR in the Middle East and Africa
One of the key advantages of EOR services is that they allow companies to quickly and easily expand their operations in new markets. This is particularly important in the Middle East and Africa, where there are many emerging markets that offer significant growth opportunities.
For example, in the Gulf Co-operation Council (GCC) countries, the non-oil sector is expected to grow by around 3% per year between 2020 and 2024, driven by sectors such as construction, tourism and healthcare. EOR services can help companies that want to enter these markets by providing them with a fast and flexible way to manage their workforce, without having to set up a legal entity in each country.
Another factor driving the growth of EOR in the Middle East and Africa is the increasing trend towards remote work.The COVID-19 pandemic has forced many companies to embrace remote work, and this trend is likely to continue even after the pandemic is over. EOR services can help companies manage their remote workers more efficiently, by providing them with a single point of contact for HR and payroll services across multiple countries.
Oil and the EOR industry
The oil and gas sector has historically been a major employer in the Middle East and Africa, and many EOR providers have strong relationships with companies in this industry. However, the industry has been hit hard by the COVID-19 pandemic, which has led to an increase in oil prices and a reduction in demand. As a result, many companies in the industry are looking for ways to reduce costs,and EOR services can be a cost-effective way to manage their workforce.
Additionally, EOR services can help companies in the oil and gas industry manage the unique HR and compliance challenges that they face. For example, many companies in the industry operate in remote or hazardous locations, which can make it difficult to manage payroll and benefits administration. EOR providers can help these companies by providing them with a single point of contact for all their HR and compliance needs, regardless of where their workers are located.
Challenges and opportunities in the Middle East and Africa
While there are many opportunities in the Middle East and Africa, there are also several challenges that companies need to be aware of.
One of the biggest challenges is the complex regulatory environment in the region. Each country has its own set of labour laws and regulations, and it can be difficult for companies to stay up-to-date with all the changes. In addition, some countries in the region are more difficult to do business in than others, due to factors such as political instability, corruption and lack of infrastructure.
Another challenge in the Middle East and Africa is the competition from local businesses. There are also many local businesses that have a deep understanding of the local market and regulatory environment that companies expanding into this region need to compete with. These local providers can often offer more customised services to their clients, which can be an advantage in a market where relationships and personal connections are important.
Despite these challenges, there are many opportunities in the Middle East and Africa. The region is home to many emerging markets that offer significant growth opportunities, particularly in sectors such as construction, healthcare and tourism. In addition, the trend towards remote work is likely to continue, which will create new opportunities for companies that can manage their distributed workforce.
Many of these challenges can be avoided by partnering with an EOR like Atlas, as evidenced by the way EORs are growing alongside local economies and business expansion into the region.
Final thoughts
EORs are set to change the game in the Middle East and Africa as they continue to play a critical role in business expansion in the region. Every company wants to stay one step ahead of its competitors, enter new markets, hire top talent and stay compliant with local laws in today’s borderless economy.
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