Scaling Your Remote Team: How Much Does an Employer of Record Cost for Global Hiring?

Remote work is no longer an unusual arrangement. It has become a preferred way for many organizations to access a larger talent pool, reduce overhead costs, and keep their operations agile. An Owl Labs report found that 62% of workers want to work remotely at least occasionally. Additionally, the technology sector leads globally, with over 67% of its workforce operating fully or mostly remotely. However, hiring internationally comes with challenges like compliance, payroll, and local regulations.

To navigate these complexities, many companies are turning to Employer of Record (EOR) services. The global EOR market has experienced significant growth, more than doubling in value between 2020 and 2022, and is projected to reach over $12 billion by 2030.

What Is an Employer of Record and How Does It Work?

An Employer of Record is a third-party provider that oversees local employment for businesses seeking to hire workers in regions where they do not have an established entity. By acting as the official employer on paper, the EOR handles payroll, tax withholding, social contributions, and other legal obligations. In short, EOR services allow companies to onboard talent abroad without forming a subsidiary or branch office.

EOR services are especially appealing for organizations that want to expand their remote teams across multiple countries at once. For instance, if you want to hire developers in Poland, marketing specialists in Brazil, and designers in Singapore, an EOR can simplify this process. The EOR signs employment contracts, deals with local laws, and ensures compliance with labor regulations. Meanwhile, you retain day-to-day management control of the employee’s workload, projects, and performance. This model helps you sidestep the costly process of registering separate entities in every target country, which might require months of paperwork and potentially large legal fees.

Why Use an Employer of Record for Scaling a Remote Team?

Scaling a remote team quickly can be demanding. Each new country brings unfamiliar labor laws, payroll taxes, and administrative procedures. EOR services help businesses move forward with less risk. Here are some core reasons why organizations choose an EOR when planning to grow an international team:

• Time and cost efficiency

You can avoid administrative tasks like setting up a local entity, securing business licenses, or registering with local tax authorities. This often saves months of preparation and tens of thousands of dollars in legal and accounting fees. EOR services step in to manage these details so you can concentrate on building your remote team.

• Faster global expansion

When you employ an EOR, you can hire talent in multiple countries without waiting for legal paperwork or entity registration. A provider with an existing presence in your target regions often takes just a few days or weeks to onboard new hires. This speed enables companies to stay competitive as they scale worldwide.

• Compliance and risk management

Each country has different employment regulations, social security requirements, and termination policies. EOR providers keep track of local labor laws and make sure your business stays compliant. This approach helps you avoid fines or potential legal problems due to unintentional missteps.

• Focus on growth

Building a remote team involves a lot of work, from sourcing talent to onboarding and training. If you also need to handle foreign entity formation, you might not have enough internal resources to do so. EOR services remove that burden, letting you invest time in core business growth rather than administrative duties.

Factors That Impact EOR Cost

How much does an Employer of Record cost? The cost of an Employer of Record service depends on several factors, including the type of engagement, the scope of services, the number of employees, and the geographic location. These elements determine how much a company will pay and whether an EOR is a cost-effective solution for international hiring.

1. Engagement type

Hiring full-time employees through an EOR typically involves payroll processing, tax compliance, benefits administration, and legal support, making it more expensive than contractor management. Independent contractor arrangements can be more affordable since they often exclude statutory benefits, but additional fees for contract compliance may still apply.

2. The scope of services

Some EORs provide only payroll and compliance support, while others include HR management, legal assistance, and benefits administration. Companies requiring additional perks such as private health insurance, retirement plans, or equity options will generally pay higher fees. The level of support included, such as assistance with employment contracts or labor law compliance, can also affect the overall cost.

3. The number of employees a company hires through an EOR

Smaller businesses with only a few employees may face higher per-employee costs due to a lack of volume discounts. In contrast, larger organizations may benefit from tiered pricing, reducing costs per employee. For long-term hiring in a single country, setting up a local entity might eventually be more economical than relying on an EOR.

4. Geographic location

It is another key factor, as labor laws, payroll taxes, and employer contributions vary by country. Countries with complex regulations, such as Germany or France, tend to have higher EOR costs than those with more flexible labor markets. Wage levels also play a role, as percentage-based pricing models can make hiring in high-income countries more expensive than in lower-cost regions.

By evaluating these factors, businesses can determine whether an EOR aligns with their budget and hiring strategy. While EORs simplify global expansion, companies planning long-term operations in a specific country should also compare costs with establishing a local subsidiary.

Top EOR Providers Pricing

The cost of using an Employer of Record can vary based on several factors mentioned earlier, such as the location, the number of employees, and the services included. Below, you’ll find a table with the top EOR providers and their pricing to give you an idea of what to expect. The pricing information below reflects the rates available at the time of writing this article. Please note that EOR companies may update their pricing over time.

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Comparing EOR Costs to the Costs of Other Hiring Approaches

When expanding internationally and building a nearshoring team in particular, businesses typically have three main options: using an Employer of Record, setting up a local entity, or hiring independent contractors. Each approach comes with different cost implications, making it essential to compare their financial impact before deciding on the best hiring model.

EOR vs. Local Entity Setup

Setting up a legal entity in a foreign country requires significant upfront investment and ongoing administrative costs. Legal registration, accounting, tax compliance, and HR management can cost anywhere, depending on the country. Additionally, businesses must allocate resources for ongoing payroll processing, tax filing, and regulatory compliance.

By contrast, an EOR eliminates these setup costs, offering a predictable monthly fee per employee. EORs provide a turnkey solution for hiring, payroll, and compliance, making them ideal for companies that want to scale quickly without legal complications.

EOR vs. Independent Contractors

Hiring independent contractors can seem like a cost-effective alternative, especially for project-based work. However, misclassification risks and lack of employment benefits can lead to legal complications. Some countries have strict labor laws that require businesses to provide benefits or convert long-term contractors into full-time employees, which can result in fines and back payments.

While contractors don’t require employer tax contributions, they may demand higher rates to compensate for a lack of benefits. An EOR, on the other hand, ensures full compliance with local employment laws while handling payroll, taxes, and benefits, making it a safer long-term choice for companies hiring permanent remote workers.

Comparing EOR Costs to Alternative Hiring Approaches

For businesses looking to hire internationally without legal complexities, an EOR offers cost predictability and compliance assurance. However, for companies planning long-term, large-scale hiring in a single country, setting up a local entity might be more cost-effective in the long run. Independent contractors remain an option for short-term or specialized projects, but companies must carefully manage legal risks.

Closing Remarks

The cost of an Employer of Record depends on factors like employment type, services required, team size, and location. While setting up a legal entity may be cost-effective for long-term hiring in a single country, it involves high upfront and administrative costs. Independent contractors offer flexibility but come with compliance risks.

For companies expanding quickly across multiple regions, an EOR provides a cost-effective, compliant, and hassle-free solution. Choosing the right hiring model depends on your budget, growth strategy, and long-term needs.