Employer of Record (EOR) is a service where a third-party provider becomes the employer of the workers, managing everything regarding HR, payroll, and benefits while the client company retains complete control of their work, creating a “shared employment” relationship 1. EOR can help businesses expand globally by providing their clients with comprehensive support that can reduce time, costs, and risks. The benefits of using an EOR service include:
- No Need for Local Incorporation: Establishing a business overseas can be time-consuming and expensive. Instead, an EOR partner will already have a legal entity in place that can handle various aspects of employment and payroll. This can help clients focus on their core business activities 2.
- Cost Savings: Without using an EOR, a client company would have to establish a new local entity for each country they wish to expand into and hire from. The cost of doing so can be significantly reduced by partnering with an EOR service provider 1.
- Faster Expansion and Go-To-Market Strategy: The EOR service allows businesses to enter new markets quickly and streamline their global expansion requirements. This model gives businesses a “plug-and-play” function that allows them to set up shop quickly and efficiently 3.
- Compliance Management: EOR companies possess substantial knowledge and expertise in the regulatory environment they operate. Thus they are up to date with all the compliance requirements, making it easier for businesses to expand without the fear of breaking local laws and regulations. This compliance management feature ensures that businesses are safe, minimizes the risk of legal penalties, and avoids expensive litigation 4.
In general, using an EOR service enables businesses to access economies of scale while expanding into new territories and markets, enabling them to focus on their primary activities. EOR provides comprehensive support that can reduce time, costs, and risks, making it more manageable and palatable for businesses to strategize and launch their global expansion effectively 5.
Sources:
- Business News Daily. “What Is an Employer of Record (EOR) and When Is It Right for Your Business?”
https://www.businessnewsdaily.com/15809-employer-of-record.html ↩ ↩2 - The Polyglot Group. “Grow Your Business Globally with an Employer of Record (EOR).”
https://www.thepolyglotgroup.com/blog/how-to-grow-your-business-globally-with-an-eor/ ↩ - Globalization Partners. “What is an Employer of Record?” https://www.globalization-partners.com/employer-of-record/ ↩
- UniGlobal. “What is an Employer of Record (EOR) and Why is it Important for Compliance?”
https://www.universalweather.com/blog/what-is-an-employer-of-record-eor-and-why-is-it-important-for-compliance/ ↩ - Forbes. “The Pros and Cons of Employer of Record: What You Need to Know.” https://www.forbes.com/sites/forbestechcouncil/2021/10/12/the-pros-and-cons-of-employer-of-record-what-you-need-to-know/?sh=6b3b4cbbd7b5 ↩
Stuart Morris
