Businesses operating in the globalized economy are no longer confined by geographic boundaries when it comes to growth or hiring. Companies across major markets like the UK, US, Spain, and Poland have already adopted a proactive approach to international expansion through strategic market entry or global recruitment.
According to recent data, 28% of businesses in the UK, 56% in the US, 39% in Spain, and 38% in Poland are planning cross-border business activities in the next three years. Interestingly, many are opting to remain in their home country while accessing global talent through Global EOR services.
Employer of Record (EOR) is a tactical approach that broadens the talent pool and helps organizations avoid the complexities of setting up a foreign legal entity.
What is the EOR Model?
An Employer of Record is a third-party service provider that employs workers legally on behalf of a business in a different jurisdiction. With this arrangement, companies can hire an Employee without setting up an entity. EOR significantly saves time, cost, and administrative burden.
The EOR assumes all legal responsibilities as the employer. These include:
- Employment contracts
- Payroll
- Tax filing
- Compliance with local labor laws
- Statutory benefits
However, businesses shouldn’t confuse the EOR model with a PEO (Professional Employer Organisation), which typically co-employs the worker with the client company. An EOR, in fact, has a full legal responsibility for the employee. It allows businesses to operate in countries where they do not have a legal presence.
Over the years, the EOR model has gained popularity globally. The EOR market is projected to expand from $4.2 billion to $6.8 billion between 2021 and 2028. This trend is primarily driven by the rise of remote work, which demands hiring models to be more agile.
The Business Case for Global EOR Services
During the pandemic, remote work had become mainstream in several jurisdictions. This opened up fresh opportunities for both employers and workers. Since then, many organizations have embraced this shift, using global EOR services to recruit employees from diverse backgrounds and geographies.
In fact, over 56% of firms across the US, the UK, Germany, and Australia have either hired or plan to hire international workers remotely. Beyond cost-effectiveness, businesses look to gain access to expertise and perspectives that the local workforce lacks.
The benefits of global EOR services are significant. Employers can:
- Test new markets without establishing a local entity
- Reduce overheads
- Scale their international operations quickly
Legal and Operational Considerations
Although the EOR model presents several advantages, businesses must approach it with caution. At times, they may face complexities due to jurisdictional differences.
A 2022 survey across 90 countries reveals:
- 48 countries explicitly allow EOR arrangements
- 26 prohibit them
- 14 fall under a caution category due to legal ambiguity or restrictions
- Immigration sponsorship
- Taxation
- Limitations in business travel
- Licensing and employment compliance
In certain jurisdictions, an EOR cannot sponsor visas or may only be allowed to lease employees temporarily. Also, certain roles, particularly those generating revenue or involving senior leadership, may expose businesses to permanent establishment risks. This can potentially trigger corporate tax obligations and regulatory scrutiny.
Data protection and intellectual property issues also require close attention. Since EORs handle sensitive information of employees and clients, businesses must ensure that their EOR partner remains compliant with data security standards. They must have contractual safeguards in place to address ownership of intellectual property created during employment.
Strategic Use Cases for EOR Services
Now, let’s have a look at some scenarios where global EOR services are particularly useful:
- When businesses need to hire talent quickly in new markets
- During M&A activity while acquiring companies without a local entity
- For hiring in low permanent-establishment risk roles
- To scale down foreign operations but retain key local staff
- As a transitional model while establishing a local entity
Why Choose IMC Group for Global EOR Services?
In a world where global teams are becoming the norm, an Employer of Record streamlines your path to international hiring, addressing the common risks.
The IMC Group continues to be a reliable team of professionals offering global EOR services, combining international legal expertise with a human-first approach. Experienced professionals in our team deliver high-quality solutions, and we believe that compliance, efficiency, and empathy can go hand in hand.
Businesses partnering with can transform their operations with several benefits:
- Full legal and operational compliance in multiple jurisdictions
- People-led onboarding and support, with real human assistance
- Scalable solutions customized to the size and goals of their business
- A transparent and collaborative working relationship with every client
- Security protocols that protect both talent and business data
Author Bio
Poornima is a seasoned professional with hands-on experience in Employer of Record (EOR) services. She supports businesses in managing international hiring, payroll, and compliance across borders. Her approach combines practical knowledge with timely execution to simplify global workforce management.
IMC Group