Expanding your business globally is exciting, but it’s not without challenges. From understanding local labour laws to managing payroll and employment responsibilities, there’s a lot to handle before you can bring in new talent.
For companies entering new markets, the big decision is whether to:
- Set up a local entity and manage everything yourself (traditional employment).
- Use an Employer of Record (EOR), which acts as the legal employer on your behalf.
This guide explains the difference between these two employment models, shows how EOR management can simplify hiring, and helps you choose the right approach for your global expansion plans.
What is an Employer of Record (EOR)?
An Employer of Record EOR is a company that legally employs workers in a country on behalf of another business. The EOR handles payroll, contracts, onboarding, and compliance management, making sure everything aligns with local labour laws.
While you manage the employee’s daily work, the EOR handles:
- Employment contracts
- Payroll and taxes
- Benefits and insurance
- Work permits and visas
- Compliance with employment regulations
Because the EOR already has a local entity, you don’t need to go through the lengthy entity setup process. This makes it a cost-effective way to hire employees internationally without the risk of non-compliance.
What is a Traditional Employment Model?
In a traditional model, your company creates its own local entity in the target country. This could be a branch, subsidiary, or representative office. Once the entity is registered, you take full control over hiring, payroll, benefits packages, and employment responsibilities.
However, this route means your business must:
- Set up the entity before hiring.
- Understand and follow local labour laws.
- Manage compliance management and reporting.
- Create and maintain benefits packages that meet legal and cultural standards.
While it offers full operational control, it requires more time, money, and legal expertise.
EOR vs Traditional Employment Model: At a Glance
Benefits of Using an Employer of Record
Choosing the EOR model offers several advantages for companies seeking fast and safe global expansion:
- Faster Market Entry – No need for entity setup; start hiring immediately.
- Full Compliance Management – EORs ensure you meet all local labor laws.
- Reduced Risk – The EOR acts as the legal employer, minimising your legal exposure.
- Cost-Effective – Avoids expensive incorporation and ongoing admin costs.
- Access to a Global Talent Pool – Hire employees anywhere without legal obstacles.
- Scalable Employment Model – Grow your team as needed without long-term commitments.
Challenges of the Traditional Model
While a traditional model can be suitable for large-scale, long-term operations in a single market, it has drawbacks:
- High Costs – Registration, office space, HR staff, and compliance add up quickly.
- Time-Consuming Compliance Management – Navigating foreign regulations takes significant effort.
- Legal Risk – Misunderstanding local labour laws can lead to penalties.
- Reduced Flexibility – Harder to scale up or down based on business needs.
When the EOR Model Works Best
The EOR model is the right choice when:
- You’re testing a market before committing to a local entity.
- You want to hire employees in multiple countries quickly.
- You don’t have local HR or legal teams.
- You need flexibility and minimal long-term obligations.
When to Choose a Traditional Employment Model
Opt for a traditional model if:
- You’re committed to long-term operations in one market.
- You want complete control over hiring, payroll, and benefits packages.
- You already have local legal and HR expertise.
- You’re prepared for the costs and timelines of entity setup.
Case Study: Hiring in APAC
For companies hiring in the Asia-Pacific region, the EOR approach can be a game-changer. APAC’s diverse local labour laws and regulatory environments make compliance management complex.
At Talent Offshore, our APAC-focused EOR management services mean you can start building teams in countries like Singapore, Malaysia, and the Philippines in just two weeks. We handle every step—from benefits packages to tax compliance—while you focus on growth.
Related Reading on EOR Services
For a deeper dive into how EOR can simplify your hiring process, see our article: Leveraging Employer of Record (EOR) Services to Simplify Global Hiring.
This guide explains in detail how EOR management helps businesses scale faster while staying compliant.
Frequently Asked Questions
1. What does an Employer of Record actually do?
An EOR acts as the legal employer for your staff, managing payroll, contracts, taxes, compliance management, and benefits packages.
2. Does an EOR replace my HR team?
No. You still oversee the day-to-day work, while the EOR handles the administrative and legal side.
3. Is the EOR model legal worldwide?
Yes. EORs ensure compliance with local labour laws in each market they serve.
4. How is an EOR cost-effective?
It eliminates entity setup costs, reduces legal risks, and speeds up hiring—helping you expand more efficiently.
5. Can I switch from EOR to traditional employment later?
Yes. Many businesses start with EOR for market entry, then move to a local entity once operations grow.
Conclusion: The Best Hiring Model for Global Expansion
The choice between EOR management and traditional employment depends on your goals, budget, and timeline. For most businesses entering new markets or scaling quickly, the EOR model offers a flexible, cost-effective way to hire employees while staying compliant with local labour laws.
With PERSOL Talent Offshore’s expertise, you can confidently grow your team in APAC and beyond—knowing that your employment responsibilities are in expert hands.
Ready to Hire in APAC?
Contact Talent Offshore today to access world-class talent, stay compliant, and accelerate your global expansion without the headaches of entity setup.