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If you’ve been thinking about expanding your business internationally or into new markets, you might have come across Employer of Record (EOR) services. An EOR can make the whole process of hiring employees in new countries so much easier—but sometimes, misconceptions or myths can hold businesses back from exploring this great option.
We’re here to set the record straight! In this post, we’ll debunk some of the most common EOR myths and show you the real benefits of using one. By the end, you’ll have a clearer understanding of how an EOR works and why it might be exactly what your business needs to grow.
The Reality: You maintain control over your team while the EOR handles the admin.
Many businesses worry that working with an EOR means they’ll lose control of their employees. However, the reality is that you remain in charge of your team’s day-to-day work, goals, and performance management. In fact, a study by Globalization Partners found that over 80% of companies using EORs reported no loss of control over their team management.
While the EOR takes care of the legal and administrative tasks—like payroll, benefits, and taxes—you still manage the overall strategy and operations of your business. This partnership actually gives you more time to focus on your team and business growth without being bogged down by paperwork.
The Reality: EORs are flexible and suitable for businesses of all sizes.
It’s easy to assume that EORs are only useful for large corporations with massive teams, but that’s not the case. In reality, 64% of businesses using EORs are small and medium-sized enterprises (SMEs), according to a report by the Employer of Record Association.
For smaller businesses, EORs provide an affordable way to expand into new markets without the significant upfront costs of setting up a legal entity. This makes EORs especially useful for startups and growing companies looking to hire their first international employees.
The Reality: EORs actually simplify the process of international hiring.
While it might seem like using an EOR would add complexity to your operations, it actually does the opposite. EORs are designed to simplify the process of hiring and managing employees in different countries. In a survey by Velocity Global, 85% of companies said that using an EOR made it easier to expand into new markets.
The EOR handles everything from contracts and onboarding to payroll and taxes, ensuring compliance with local labor laws and freeing you from the headache of navigating multiple regulatory systems. This reduces administrative burdens, making your global expansion smoother.
The Reality: EORs offer both short-term and long-term solutions.
One of the most common misconceptions is that EORs are only useful for short-term projects. However, many businesses use EORs as a long-term solution for managing their international workforce. According to Global Workplace Analytics, 71% of businesses using EORs have been partnered with their provider for over two years.
Whether you need to hire employees for a specific project or establish a permanent presence in a new country, EORs provide the flexibility to scale your workforce up or down based on your business needs. If you eventually decide to set up a legal entity, the EOR can help with that transition too.
The Reality: EORs reduce the risks of misclassifying employees and offer long-term commitment.
Many businesses think hiring contractors is simpler and cheaper than using an EOR, but this can lead to legal complications. Misclassifying employees as contractors can result in fines and legal action, especially in countries with strict labor laws. In fact, 33% of companies faced fines due to employee misclassification issues in 2022 (EY Global).
By using an EOR, you can hire full-time employees while ensuring compliance with local labor laws. EORs also help you build a stable and committed workforce, as full-time employees tend to be more engaged and invested in the company’s success than contractors.
The Reality: EORs can save you money compared to setting up a legal entity.
Setting up a legal entity in a new country is costly and time-consuming. The World Bank estimates that establishing a business in a foreign country can take between 6 to 12 months and cost upwards of $30,000 to $50,000. In comparison, an EOR allows you to start hiring employees in new markets much faster and at a fraction of the cost.
A report from PwC showed that companies using EORs saved up to 60% on costs related to setting up and managing legal entities. EORs take care of all the administrative and legal requirements, allowing you to avoid the costs of compliance, payroll setup, and ongoing legal fees.
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Now that we’ve debunked the common myths surrounding Employer of Record (EOR) services, let’s dive into the benefits that make EORs a valuable solution for businesses expanding into new markets. Here’s a closer look at why so many companies are choosing EORs:
Expanding into a new country can be a lengthy process if you go the traditional route of setting up a legal entity, which can take months. With an EOR, this process is significantly sped up. You can start hiring in new markets within weeks instead of months, as the EOR already has the legal framework in place.
A report by Globalization Partners shows that businesses using EOR services can enter new markets 90% faster than those setting up legal entities themselves. This speed is crucial for companies that need to act quickly to take advantage of market opportunities or fill critical roles.
One of the biggest challenges of expanding into foreign markets is navigating the complex web of local labor laws, tax regulations, and compliance requirements. A wrong move could result in fines, legal penalties, or damage to your business reputation.
An EOR takes that worry off your plate by ensuring full compliance with all local regulations. In fact, 88% of companies cite compliance as a major benefit of working with an EOR, according to a survey by Velocity Global. This confidence allows businesses to expand without the fear of legal complications.
Whether your goal is to hire a small team for a short-term project or to build a long-term workforce in a new region, an EOR provides the flexibility you need. EORs offer scalable solutions that can adapt to your business’s changing needs, allowing you to hire employees on a temporary, part-time, or full-time basis.
This flexibility is especially important for businesses looking to expand into new markets without making permanent commitments until they’re sure the market is right for them.
Setting up a legal entity in a new country comes with significant costs—legal fees, compliance setup, and ongoing administrative expenses. By using an EOR, businesses can avoid these hefty costs while still expanding globally.
According to a PwC report, businesses can save up to 60% on expansion costs by working with an EOR instead of setting up their own entity. This makes EORs a more affordable solution for businesses that want to enter new markets without draining their resources on legal and administrative requirements.
Administrative tasks—like managing payroll, taxes, and employee benefits—can eat up valuable time and resources, especially when expanding into multiple countries. By outsourcing these HR and compliance tasks to an EOR, businesses can focus on what really matters: growth and strategy.
According to the Employer of Record Association, 79% of businesses reported that using an EOR allowed them to focus more on strategic growth initiatives. This means less time spent worrying about administrative headaches and more time spent scaling your business and driving success.
Now that we’ve cleared up the myths and shared the real benefits of using an EOR, it’s time to take the next step. If you’re considering expanding your business into new markets, an EOR can help you hire employees quickly, ensure compliance, and save you money in the long run.
To get started, download our EOR Checklist. This guide will walk you through everything you need to know about working with an EOR and how it can benefit your business.
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