There are lots of reasons that companies want a presence in Poland today. The growth of the economy is one of these reasons. Add to that the extensive availability of talented specialists. And finally, consider that Poland will be growing a minimum of 3% in both 2024 and 2025. It’s no wonder that companies are looking at Poland. Many of these companies will be curious to know how personnel outsourcing in Poland works, prior to committing to opening a new business.
There are several types of companies that are looking at Poland as an investment destination. There is still growth in the economy which means that new entrants can still look at creating a local marketplace within the EU’s fifth most populous country. Other companies add their unique culture to the already burgeoning shared services and business process outsourcing sector. Finally, there are companies that just need a small team to help with regional sales activities.
Is it worth investing in Poland?
In 2023 the European Bank for Reconstruction and Development (EBRD) invested a record 1.3 billion euros in Poland. According to Statista, the biggest investment into Poland has been from the Netherlands in recent years. This is followed by Germany, France and Luxembourg. Further down the list is South Korea, Denmark and the UK. The U.S. sits down in fifteenth on the list.
When you look at specific cases of companies investing in Poland over the last few years, these are some examples. Intel, Visa, Volvo and Huntsman.
The list has grown in magnitude over the years as more companies join the likes of Goldman Sachs, Shell, HSBC, Heineken, Moneygram, Schneider Electric, JP Morgan, and a host of other global brands. Today these companies are amongst some of the largest employers in Poland. But how did they make their market entry a success?
Invest Big, Get Big Returns
Over the years the team at Verita HR has helped numerous companies find their feet in Poland. Most of these companies have thrived. A small few have had to rethink their plans. There is risk in every market if you don’t do it properly.
One of the biggest lessons that our teams share with incumbent businesses into Poland is how opening a new business is not an exercise in frugality. You get what you pay for. If you don’t want to pay much. You probably won’t get the return you are seeing others get. Invest in your initial team. Invest in your initial structure. This gives far more guarantees of success. It is also what the successful clients that Verita HR has helped have in common.
When companies like HSBC, Goldman Sachs, or VISA first came to Poland, none of these companies knew enough about the market on their own. Initially they had to hire expertise from the market to help them. Some of them hired consulting firms. All of them hired top legal support. Most of them are using outsourcing of some kind even today.
What is Personnel Outsourcing?
In Poland the employment process can be cumbersome. Many payroll activities haven’t been modernized in living memory. Documents need to be archived for many years, with original signatures in place. Then there are the myriad of laws protecting employee rights. It can be an administrative nightmare. Even with a strong HR team from day one it can cause problems for any experienced international businessperson.
Fortunately there are solution providers in Poland who can ease this administrative headache. These companies can employ, delegate and oversee a Polish and international workforce. Instead of overseeing the payroll run each month, companies can simply deal with invoicing from their supplier.
But it’s not just the employment headache that a personnel outsourcing provider can resolve. There are other benefits to working with this type of company too.
The Benefits of Working with a Personnel Outsourcing Provider in Poland
Using an outsourcing supplier for HR-related topics is commonplace in many countries. Normally the benefits are related to winning thirty days payment terms, or releasing the legal burden to a third party. But these benefits are not the only ones if you want to look at a solution like this in Poland. There are far more.
Corporate Income Tax
In Poland companies need to pay Corporate Income Tax on any unused holiday that employees have accrued. This isn’t normally a problem if you have a legal framework which forces employees to use their holiday in the year that it is accrued for. However, in Poland holidays can accrue for an unlimited time. Some employees can clock up over a hundred days of unused holiday. If you use a third-party supplier, then the tax burden related to this unused holiday moves from your P&L to the P&L of the third party.
Working with Government Inspectors
As mentioned earlier, there are many aspects of the Polish legal framework that haven’t been updated for many years. This means that when an inspection of your workforce takes place this can be extremely burdensome. Much of the inspection is carried out in the company’s offices and can generate substantial paperwork. If you work with a third-party then this administrative burden can be delegated to the supplier.
External Costs
Important for all CFOs and finance people is the local P&L. In Poland, external costs are treated separately to salaries. If you have foreign shareholders, it can be prudent to outsource some of your headcount to gain flexibility with your costs and show a better financial result than might normally be the case.
There are more benefits related to outsourcing. If you want to know more then the team at Verita HR can help. With over 500 full time employees outsourced for a host of international companies in Poland, the team have over 14 years of experience. But remember. Outsourcing is not the same as Temporary Employment. The laws governing the two services have some distinctive differences.
Some of the people who can help you understand the market better include:
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