Effective Hiring Solutions in Indonesia: Recruiting Talent Without Establishing a local Entity

Compliant hiring via PEO solutions without establishing a PT PMA.

A European SaaS company planned to test the Indonesian market by hiring local sales and support staff. As the company did not have a legal entity in Indonesia, it needed a way to recruit employees quickly while avoiding employment, payroll, and regulatory risks.

Dezan Shira & Associates was engaged to design a compliant hiring solution that would allow the client to build a local team, manage costs transparently, and validate the market before committing to full incorporation.

Challenge

The client had no PT PMA in Indonesia and therefore could not employ staff directly. Establishing a local entity would have required time, capital commitment, and multiple statutory registrations, which conflicted with the client’s objective of testing market demand quickly.

At the same time, Indonesian employment regulations impose strict obligations even at an early stage. Employers must comply with labor law requirements, register employees with BPJS social security, manage payroll and income tax withholding, and provide statutory benefits such as the religious holiday allowance (THR). Budgeting was challenging, as the client lacked visibility over hidden employment costs and compliance risks, increasing the likelihood of errors and penalties without local expertise.

Solution

We assessed the client’s hiring objectives and proposed a tailored Professional Employer Organization (PEO) solution. Under this model, employees were hired through our Indonesian entity, while the client retained full operational control over their roles and performance.

Our HR and Payroll team provided bilingual, fully compliant employment contracts and advised on probation periods, working hours, statutory benefits, and termination practices under Indonesia’s Omnibus Law. We onboarded employees into BPJS Health and Social Security, managed monthly payroll processing, calculated and filed Article 21 income tax, and issued compliant payslips.

To support internal reporting, we delivered monthly payroll summaries in English, detailing total employment costs, taxes withheld, BPJS contributions, and employee status updates. This ensured full transparency while reducing the administrative burden on the client’s internal teams.

Impact

Within two weeks, the client successfully hired six local employees through our PEO service, achieving rapid market entry while maintaining full compliance with Indonesian labor and tax regulations. Payroll, tax filings, and BPJS contributions were managed end-to-end, allowing the client to focus on sales execution and customer support.

After nine months, having confirmed market viability, the client established a PT PMA in Indonesia. With our continued support, employees were smoothly transitioned from the PEO structure to the newly incorporated entity, completing a controlled and compliant market entry journey.

Strategic significance and key takeaways

This case highlights how PEO solutions can reduce risk and cost for companies entering Indonesia without immediate incorporation. Structured employment models allow businesses to test the market while maintaining full regulatory compliance.

Key takeaways:

• PEO enables rapid hiring without establishing a local entity
• Employment compliance applies from day one, even without a PT PMA
• Transparent payroll and statutory cost visibility supports better decision-making