For today’s growth-focused leaders, the question is no longer if you should expand globally, but how and how fast. The opportunity to tap into international talent pools and enter new markets is immense, but so are the obstacles. 

A main challenge that comes with expanding into new markets quickly is adapting the hiring strategy. The volatility of the global market combined with the legal, financial, and administrative burdens of adjusting the workforce expansion plans have executives proceeding with trepidation. In fact, only 27% of organizations in one study believe there’s an opportunity to adjust growth plans or workforce expansion due to economic uncertainty. 

It’s a resource-intensive process that can take months, drain capital, and divert focus from a company’s core business. For leaders, it looks like balancing the strategic imperative for growth against a significant human resource dilemma. But what if you could access global talent and activate international teams without this additional strain?

Cross-border talent expansion can alleviate pressure as long as you have the right strategy and partner. 

What is an Employer of Record (EOR) and Why Does it Matter for Your Global Expansion?

An EOR acts like a strategic partner to facilitate all the legal and administrative aspects of global workforce management. They allow you to hire exceptional talent around the world, so that you can maintain operational efficiency and budget control to keep your business on an even keel. 

EORs streamline the burden and compliance risk by providing the expertise and localized knowledge to hire and manage employees legally and compliantly. 

Defining the Employer of Record (EOR) Model

An Employer of Record (EOR) is a third-party organization that acts as the legal employer for a company’s international workforce. 

Payoneer Workforce Management’s solution, for example, offers an EOR in countries where a company wants to hire but lacks a legal presence. The EOR assists with employer-related responsibilities, allowing you to build and scale a globally distributed team on a single, unified platform.

Think of an EOR as a readily available, outsourced HR and legal department, already established in every country a business wants to enter. This model allows you to compliantly engage full-time employees, contractors, and other staff while the EOR supports with the local administrative and legal complexities.

How Does an EOR Actually Work? The Core Responsibilities

Legal Compliance and Risk Management: 

According to a report in an Economic Times article, 35% of organizations from one study face compliance hurdles. An EOR’s primary function is to serve compliance support. The provider assists with responsibility for adhering to local labor laws, so that hiring practices, employment contracts, and operations are audit-ready.

Global Payroll and Tax Administration: 

An EOR helps handle the entire process for any payroll, including processing payroll in different currencies, managing tax withholdings, so that the statutory deductions are handled correctly and on time.

Benefits and Social Contributions: 

An EOR offers guidance to navigate country-specific benefits packages, including mandatory health insurance, pension contributions, paid time off, and other reimbursements as required by local law.

Employment Contracts and Onboarding: 

An EOR helps streamline the employment lifecycle. This begins with generating locally compliant digital employment contracts and managing the signature process. It extends to digitally onboarding new hires, collecting all relevant documentation, and even provisioning work devices to get personnel up and running quickly.

When Does Your Business Need an EOR? Key Scenarios for Growth Leaders

Testing a New Market: 

Before making the significant capital investment required to establish a foreign entity, an EOR allows you to hire a small team on the ground. You can validate market demand, build initial traction, and gather intelligence, all without the long-term financial commitment.

Accessing Specialized Global Talent: 

Your next key executive or a world-class engineering team might be in a country where you have no physical presence. An EOR helps access local talent, so companies can hire a person for the role, regardless of location, and integrate them into the company quickly and compliantly.

Supporting a Global Workforce: 

According to the same Economic Times article, 51% of organizations struggle with remote team management. For companies embracing a globally remote-first or hybrid model, an EOR may offer the critical infrastructure support for long-term scalability. It allows you to offer employees the flexibility to work from different countries while their engagement remains compliant with local employment regulations. 

Accelerating Time-to-Market: 

The 6-12 month process of entity setup can be too slow when you need to hire a critical role to launch a product or seize a market opportunity. An EOR enables you to hire and onboard talent typically, in a matter of days, not months.

Choosing a Strategic Partner for Global Employment

Choosing the right EOR partner is a critical business decision. You need a solution that offers more than just basic HR functions; you need a reliable partner that provides a transparent, cost-effective, and truly global platform.

Payoneer Workforce Management’s solution is uniquely positioned to help businesses scale global teams while reducing the cost and complexity of establishing legal entities. Our solution is built to address the core concerns of business leaders:

• Transparent, Cost-Effective Pricing: We offer a clear pricing structure, with transparent fees for onboarding or off-boarding. This stands in contrast to other providers who often start at a much higher rate and include variable fees that obscure the true cost.
• A Unified, Secure Platform: Payoneer Workforce Management strives to be a safe and secure platform that integrates with and unifies EOR, AOR, and contractor management. With recent enhancements like single sign-on, companies can manage the entire global workforce through one seamless experience.
• Seamless Experience: With the ability to integrate with your existing financial and operations systems via API, you can handle all aspects of managing international team members, including global payroll.  

Dedicated Support

We provide reliable, dedicated support with a one-click Help Center and quick resolution time, so that your questions are promptly answered with consistent support.
When planning global expansion, move beyond the old playbook. Embrace a modern, strategic approach to building your international team. Discover how Payoneer can accelerate business growth. Learn more today.

FAQs

1) How does using an Employer of Record accelerate global market entry?

Payoneer Workforce Management’s Employer of Record (EOR) solution may help accelerate global market entry by allowing a company to engage talent in a new country without undertaking the lengthy process of establishing a local legal entity. This model is valuable for testing new markets or seizing opportunities quickly, as it enables hiring and onboarding typically in a matter of days rather than months. This allows the business to focus on validating market demand and core strategy.

2) What legal and administrative risks does an EOR solution mitigate for international employers?

An EOR offers compliance support to mitigate legal and administrative risks. Payoneer Workforce Management assists with the responsibility for adhering to complex local labor laws so that employment contracts, hiring practices, payroll, and benefits are compliant. This includes managing statutory tax withholdings, social contributions, and locally required benefits.

3) What functions does an EOR handle that a standard international payroll provider does not?

A standard international payroll provider only processes employee payments and related taxes. In contrast, Payoneer Workforce Management goes further by acting as the legal employer on behalf of the client company. Our EOR service assists with managing employment responsibilities including executing compliant local employment contracts, administering country-specific benefits packages, and managing legal and tax compliance in line with local labor laws.

4) What is the difference between an EOR and a PEO?

An Employer of Record (EOR),  like Payoneer Workforce Management, helps companies engage employees in other countries where they don’t have a legal entity. The EOR helps handle payroll, taxes, and compliance on the company’s behalf.

A Professional Employer Organization (PEO), on the other hand, partners with companies that already have a legal entity in the location. The PEO manages HR functions through a co-employment model, where both the company and the PEO share employment responsibilities.

5) How is an EOR different from a payroll?

A payroll provider only processes employee payments and related taxes. An Employer of Record (EOR) goes further by becoming the legal employer on behalf of a company. An EOR manages payroll along with employment contracts, benefits, tax filings, and compliance with local labor laws.