A third-party organization assumes the legal responsibilities of an employer for a company’s workforce. This includes handling payroll, taxes, benefits administration, and compliance with labor laws. For example, a rapidly growing tech company with limited HR resources might utilize such a service to manage its global team efficiently.
Leveraging this type of service offers significant advantages, particularly for emerging businesses. It allows them to focus core resources on growth and product development, while mitigating the complexities and risks associated with employment regulations. Historically, this model was primarily used for international expansion, but its value for streamlining HR processes has made it increasingly popular for domestic operations as well.