You might have heard a few things in recent times about Employer of Record (EOR) services, including that they can be a powerful and streamlined way of hiring and managing personnel across international borders.
You may have read, for instance, that using an EOR service for the next employee you take on would enable you to quickly take advantage of their services and expertise in the country or jurisdiction where they are, without the need for your company to set up a local entity.
It does, indeed, seem that ever-more organizations are realizing the value of EOR services; recently released statistics indicate that the global EOR market is set for a compound annual growth rate (CAGR) of 6.8% from 2024 to 2032. This would bring the market’s value from US$128.2 million as of this year, to US$ 196 million by the end of those eight years.
What actually is an Employer of Record (EOR) service?
Before we go further in addressing some of the myths frequently associated with EOR services, it is worth reminding ourselves what this service is, and how it operates.
An EOR is a third-party organization that assumes the legal responsibilities of employing workers on behalf of another company (the “client company”). So, those who choose Aspirock as their EOR will know it is Aspirock that manages payroll, taxes, benefits, social security obligations, and compensation for the client company’s workers.
Myths and falsehoods that are sometimes associated with EOR services
Below are just a few of the statements wrongly or inaccurately made from time to time in relation to Employers of Record and their services:
EOR services are only for big multinational corporations
In truth, businesses of all sizes can benefit from EOR services. Indeed, small and medium-sized enterprises (SMEs) might well be especially well-placed to benefit, as partnering with an EOR could allow them to quickly and sustainably expand their global footprint.
EORs don’t comply with laws and regulations of the jurisdictions in which employees are active
If this was actually the case, it would go against much of the whole point of using an EOR service. Fortunately, reputable EORs – such as Aspirock – treat local compliance support as the very highest priority in their delivery of EOR services.
Such trustworthy EOR specialists possess far-reaching, in-depth, and up-to-date knowledge of the employment laws applicable in the parts of the world where employees work. No less importantly, they strive to ensure compliance with these laws at every stage.
EOR services are more expensive than setting up a local business entity
It is important to remember that if your business was to register a new company in another jurisdiction in order to employ people from there, your responsibilities would go beyond the initial registration process.
Managing such associated costs as salary payments, employment contributions, corporate taxes, business insurance, and onboarding and offboarding, requires an investment of time and resources. This compares to the arrangement of simply paying a consolidated monthly margin for an EOR provider, which will be able to deal with all employment duties in the given country.
EOR services are only a temporary solution… or a long-term one
Yes, it is sometimes claimed that any company using an EOR as a means of taking on workers from other parts of the world can only do so for a limited time, before it will effectively be forced into setting up a local entity.
However, as things stand, there are still very few countries around the world that have put in place firm laws on EOR limits. So, in most cases, an EOR can very much be a long-term solution for hiring and managing workers in a streamlined way.
You may have also read the opposite to the above – that EOR services are only appropriate for longer-term staffing arrangements. However, leading EORs are highly flexible in the solutions they can provide, in recognition of client companies’ frequent need to adapt their workforce in line with their project requirements and market conditions at any given time.
To discuss with us why choosing Aspirock as your EOR provider and source of local compliance support could be one of the best decisions you make for your business’s growth ambitions, please contact us today.