Professional employer organisation services, or the shorter PEO as its usually called, is rapidly heading towards being the next business trend As more companies expand into new markets, it's often a way for them to improve staff benefits and administrative processes that they would not be able to otherwise PEO also allows companies access to a range of support services that facilitate business growth, expedite the hiring process and give an increased access to expert support

1. Why PEO delivers
for businesses in
Saudi Arabia

2. Using a PEO is most suitable for
businesses of between 5 to 200
employees

3. Introduction
Professional employer organisation services, or the
shorter PEO as its usually called, is rapidly heading
towards being the next business trend. As more
companies expand into new markets, it's often a way
for them to improve staff benefits and administrative
processes that they would not be able to otherwise.
PEO also allows companies access to a range of support
services that facilitate business growth, expedite the
hiring process and give an increased access to expert
support.

4. The core services provided by PEO companies are
general across all services; payroll, HR, recruitment,
but the specialties of each have to change with each
country and understanding the local requirements are
essential to delivering successful services. Companies
need to partner with local providers to ensure that
they are tapping into this expertise and not left in the
dark without information on the local area, its licenses
and regulations and also its cultural standards.

5. We have seen an increase in the interest in PEO
services in Saudi Arabia as more businesses look to
expand, whether new to the Kingdom or already
established in the country and looking to grow. PEO
allows companies to meet their expansion targets
quickly with reduced risks and increased expertise.
In this white paper, we examine PEO in Saudi Arabia,
the specifics for the country including regulations and
the benefits for companies looking to utilize PEO
services.

6. The first steps to implementing PEO into your business
is to fully understand its meaning and the potential it
creates for your company. To examine PEO in more
detail allows companies to fully understand its benefits
and make more informed decisions.
The PEO co-employment business model connects your
workforce to a larger employee benefits and
administrative employment company. Using a PEO is
most suitable for businesses of between 5 to 200
employees as the PEO gives access to better benefits
that are usually only available to large companies as
well as provide support from a much larger teams
handling HR, payroll, recruitment, marketing or any
other function.
What is PEO?
Using a PEO is most
suitable for
businesses of
between 5 to 200
employees

7. The number of services that a PEO will provide has
expanded out to include talent acquisition,
performance management and training as well as the
original services of payroll, tax compliance, healthcare,
employee benefits, and local government compliance.
From an employee management perspective, the PEO is
either large themselves or groups together the
employees of many client companies, creating a large
group that results in the PEO being able to negotiate
better insurance rates and benefits for all in the group.
It also provides small to medium sized businesses with
human resource services, specifically employment or
people management related services.
For HR, PEO is successful as managing staff is almost
never the reason why the company is in business, but
it's an essential element of keeping a business running.
Rather than small companies handling the burden of
people management, distracting them from their
selling their product or service, they are able to
outsource and leave these tasks to an expert.

8. Marketing, research and
development, go to
market strategy and IT
support are all newer
additions to the PEO
industry but are just as
easily outsourced
Other areas such as accounting, payroll, immigration
processing, or other systems based activities, also give
companies multiple benefits from PEO such as getting
access to additional manpower, increased knowledge or
skills and software that may have not been a viable
option before. PEO enables smaller companies to take
advantage of the economies of scale that the larger
organizations have access to, maximizing resources
whilst keeping costs manageable.
Marketing, research and development, go to market
strategy and IT support are all newer additions to the
PEO industry but are just as easily outsourced as the HR
and finance elements of the business. The key element
in all areas is the expertise of the company that the
tasks are being outsourced to.

9. Outsourcing vs PEO vs Employer of Record
Depending which country or industry you are in, you
will hear a number of different names for what is the
same thing. All of the terms, outsourcing, PEO,
employer of record, is the action of contracting out
tasks from one company to another.
All services allow a company to quickly set up in Saudi
Arabia, establish a team on the ground, hire employees
and run regular payroll cycles without having to legally
establish the company. Employees are hired by the
company that is providing the services, in accordance
with Saudi labour laws and can be onboarded in a much
shorter time, often days for the process to be
completed. Although the person is hired by another
company, they act like an employee of the business
taking the service.

10. What PEO provides
PEO’s provide a number of human resources services
but is not a manpower provider or a staffing company,
even though it is common for PEO’s to provide
outsourced experts or talent acquisition services. A PEO
exists to provide its clients with services, just like any
other service provider so it does not control the day to
day management or direction of the company it is
providing the services for.

11. PEO provides
companies with:
Increased ability to offer
competitive employee benefits
packages
Decreased risk and improved
compliance practices
Access to HR and employment
experts
Improved productivity and
efficiency

12. Payroll and Commission
Payments
Medical Insurance Talent Acquisition
The services usually covered under PEO are;
Employee Performance
Management
Employee Training Tax Compliance Local Government
Compliance

13. Talent Acquisition
The PEO can support or design the ideal
recruitment process that meets the
companies short term goals and long term
plans. It will work with companies to
develop job descriptions and either support
hiring manager through the recruitment
process or handle the talent acquisition for
the company depending on the need. The
PEO also looks at the Saudization strategy to
ensure compliance and handles the on-
boarding of new employees.
Medical Insurance
With benefit plans provided by the PEO
company, employees usually have access to
a much wider number of benefits than they
could obtain. This can include medical,
dental and vision cover, life insurance or
personal accident cover and short-term and
long-term disability insurance.
Payroll and Commission Payments
The PEO processes payroll for employees,
including managing the WPS portal and GOSI
contributions, along with payroll records,
compliance, management reports, expenses
and bonuses.

14. Employee Training
Many PEOs can offer training and employee
development programs mostly through
online platforms although the PEO can
sometimes provide in person or virtual
training seminars, this very much differs
from one company to another.
Employee Performance Management
The PEO supports companies through the
performance appraisals on a monthly,
quarterly or annual basis, this is especially
helpful if the company is new to the region.
In addition, the PEO will also support the
company with the KPI or reward program
including the issuing of bonuses.
The PEO also looks
at the Saudization
strategy to ensure
compliance

15. They also have an expert support system
without having to invest in a specialized
team or additional tech. This support system
can provide help with all areas of the
employee life cycle, including talent
acquisition, terminating employees, staff
handbooks and training and employee
retention.
A PEO should be able to manage all the HR
jobs that you would usually have to
outsource to multiple service providers,
enabling companies to spend less time
managing various vendors.
Local Government Compliance
The PEO ensures that the company stays up
to date with licence and regulation changes,
visa processing and attestations, Iqamas,
medical insurance and that new hires or
terminations are processed correctly.
The PEO service enables companies to hire
employees and run payroll in Saudi Arabia
whilst people management, including
updates to local employment regulations,
tax and compliance management, are
handled by the PEO company.
Tax Compliance
Supporting the internal finance team, the
PEO helps companies manage your tax
requirements including VAT, transfer
pricing, Zakat and GOSI through record
management, yearly tax filings, payroll
management and bookkeeping services.

16. Current state of PEO
in Saudi Arabia
PEO is changing both globally and regionally. With new
technologies available, the business models are
evolving from pure cost efficiency to flexible and value
adding. The need for PEO services has been growing in
Saudi Arabia with the new tech transformation giving
considerable opportunities for both providers and
beneficiaries alike.

17. All Middle Eastern countries are undergoing major
economic transformations and Saudi Arabia is at the
front of pack targeting non-oil growth. Recent
innovations including cloud computing, robotic process
automation and artificial intelligence that have high
added value for PEO are seeing increased interest in
Saudi Arabia as the business transformation value is
widely realized.
With the increased need for new tech around
innovative product or service provision including the
need to be continuously ‘on’ local PEO providers are
now therefore exploring the potential for disruptive
technologies resulting in talent shortages and rising
costs.

18. Although the UAE is the largest provider of PEO services
in the region, Saudi Arabia only slightly lags behind its
neighbor for industry revenue. In 2018, outsourcing
suppliers in the UAE and KSA earned an estimated US$
2.38 billion mainly in onshore revenues with US$1.38
billion estimated to have been earned by the UAE, with
Saudi Arabia the remaining US$1 billion.
Double digit growth (12-13% CAGR) has been predicted
by analysts over the next few years meaning that UAE
and KSA PEO providers will potentially earn over US$
4.31 billion in annual onshore revenues by the end of
2023.

19. Saudi Arabia is the second most popular destination for
PEO providers and is also the fastest growing. Almost a
quarter of the MENA region’s shared service centres
and most outsourcing providers are KSA-based, making
Saudi Arabia a significant emerging PEO market.
Combining this with PEO gaining significant recognition
in KSA of its potential as a key non oil industry
alongside the IT, telecom and leisure industries, there
is much room for PEO growth.

20. Saudi Arabia is the second most
popular destination for PEO
providers and is also the fastest
growing in the region.

21. The PEO arrangement provides a business with a
number of competitive advantages and allows them to
set their company up with a shorter time frame and
with reduced risk. Depending on the support required
the company gains access to a number of areas that
benefit from the local knowledge that the provider has.
The company not only can gain access to broader
employee benefit options but also to expertise on GOSI,
Zakat, the Wage Protection System (WPS) Iqamas and
visas. They can also access consulting and advice on
matters such as Saudization and its related compliance
benefits, hiring strategies, country specific talent
acquisition and corporate immigration.
How PEO helps companies
in Saudi Arabia
For any government related matters, the GRO or
government relations officer needs to be a Saudi
national, this is not always readily filled position for
companies new to the Kingdom, the PEO is easily able
to provide GRO support so that the company gets
access to the information it needs.

22. There are many benefits to having a PEO business
model in place which can be have a positive effect on
both the employer and employee.
PEO Clients Grow Faster
Companies using PEO spend less for more employee
benefits, services and expertise. The benefits and
services provide competitive improvements for
businesses including more ability to attract and retain
talent. By removing the HR management elements that
they are not experts at, companies are able to
concentrate on their core business and this focus
results in improved growth.
PEO employees are happier
The employees of companies using PEO services have
more access to benefits, improving their working
environment having the knock on effect of making
them more efficient and with increased productivity.
Why use a PEO?

23. Employees
Staff training, handbooks and
guidance
Expert employment supportAccess to comprehensive employee
benefits previously not available
Improved payroll services More efficient claim processing

24. Employee support for talent
attraction and retainment
Business Owners
Improved benefits for employeesExpert assistance with local
legislations (Tax, Zakat, GOSI)
Access to experienced HR
professionals
Professional support with HR
compliance issues, corporate
immigration, visas and Iqamas

25. Areas that create improvement for
business and employees

26. Next steps
Once a company has decided to partner
with a PEO, there are a number of
elements to ensure that they are the
right fit for that company’s size, goals,
and needs.
Expertise
Although an obvious one, the expertise
required to successfully consult, advise
and provide services for companies new
to Saudi Arabia is extensive. Situations
around corporate immigration,
Saudization and payroll are often
complex and local knowledge is
essential to ensure the company does
not end up in a negative situation or
facing unexpected invoices.
Partnering with a PEO is how smaller companies are able to offer more
competitive benefits, but if the PEO provider is not offering anything additional
then companies are wasting their budgets. By comparing the packages, it
ensures no resources are wasted.
Benefit plan options

27. Next steps
Another obvious area but setting out clear SLAs for what is expected from each party
will ensure that there are no misunderstandings about what will be performed. By
meeting with the account manager either in person or a video call, companies can ask
what the service process is and how it is handled, that then lets them plan out
internal processes.
Customer service standards
Technology
Often the PEO gives access to platform
or systems not available to the
company previously, however not every
system integrates with existing ones so
companies need to check for
compatibility in software and processes
to avoid costly clashes.
Get the PEO to provide you the details
about their clients and referrals, you
can also look for reviews online.
References

28. PEOs give businesses access to the Saudi market in an
effective and timely manner whilst also providing
benefits usually only available to larger businesses.
With the ever increasing interest in Saudi Arabia, the
number of companies requiring PEO services will also
increase having the knock on effect of more PEO
providers being established.
Companies will have more choice in the provider they
choose but they will also need to ensure the quality of
service as with any industry growth, lower quality
companies will increase also. Thorough research and
due diligence will protect against unexpected issues,
fines and costs and ensure a smooth business process.
Conclusion

29. Contact
Moon Tower 3rd Floor, 7586
King Fahd Branch Road - Ar
Rahmaniyah, Riyadh
Phone: +966 11 411 1127
Saudi Arabia
Office 3601
Jumeirah Business Centre 1
Cluster G
Jumeirah Lake Towers
Dubai
Phone : +971 4 450 8208
United Arab Emirates
Innova Pearl No 17, First Floor
5th Block Koramangala Industrial
Layout, Bangalore, Karnataka
560095
Phone: +91 080 43944873
India
4th Floor Holden House
57 Rathbone Place
W1T 1JU, London
Phone : +44 203 603 6516
United Kingdom
info@proven-sa.com
proven-sa.com