Global expansion and hiring talent in new markets present complex challenges. Businesses must navigate local labour laws, payroll compliance, and tax regulations – all while maintaining control over their core team.
Increasingly, companies look to either outsource or adopt the Employer of Record (EOR) model as a solution. In this article, we aim to clarify the differences and help you determine which approach is right for your global strategy.
Defining the Key Terms for Global HR
Understanding the distinction between these models is the first step towards global growth.
What is HR and Payroll Outsourcing?
HR outsourcing involves contracting a third-party company to perform a specific HR-related service or function. This is a business-to-business (B2B) relationship where the vendor manages a defined administrative process or task.
For instance, payroll outsourcing (where a vendor runs your payroll using your company’s name and entity) or general HR compliance advice. This means that your company remains the legal employer and is responsible for all employment liabilities. The vendor performs a task for you.
What is an Employer of Record (EOR)?
On the contrary, an Employer of Record (EOR) is a third-party organisation that legally employs a worker on behalf of your company in a foreign country. The EOR takes on all legal responsibilities for the employee.
Put simply, the EOR is the legal employer for tax, payroll, and compliance purposes, but your company manages the worker’s day-to-day duties, performance, and management. This approach allows you to hire a full-time employee immediately without needing to establish a local legal entity.
The Critical Differences: Control, Risk, and Purpose
The differences between outsourcing and using an Employer of Record lie primarily in who holds the legal risk and who controls the operational work.
| Aspect |
Employer of Record (EOR) |
HR Outsourcing / Payroll Outsourcing |
| Legal Employer |
The EOR is the legal employer. |
Your company remains the legal employer. |
| Risk & Compliance |
EOR assumes all employment-related legal and compliance risk (contracts, benefits, termination). |
Your company retains all legal risk. The vendor only manages the process. |
| Control over Work |
High control: Your company manages the employee’s daily tasks, strategy, and performance. |
Low control: The vendor manages the service delivery and often dictates how the work is performed. |
| Purpose |
To legally hire a dedicated, full-time employee in a new market without an entity. |
To offload a specific administrative process (e.g., running payroll) within your existing entity. |
For companies looking to hire full-time international talent quickly, engaging an Employer of Record is generally the faster, safer path, as they mitigate the risk of setting up a foreign entity.
Choosing the Right Solution for Your Global Needs
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Selecting the appropriate model depends entirely on your goal:
Choose HR/Payroll Outsourcing if…
- You already have an established legal entity in the country.
- You need to offload a specific, ongoing administrative burden (like payroll processing) to an expert vendor.
- You need general compliance advice without transferring legal employment liability.
Choose an Employer of Record (EOR) if…
- You want to hire a full-time employee in a new market immediately, but do not have a local legal entity.
- You need to retain full control over the employee’s daily work and strategy.
- You require a compliant, end-to-end framework for contracts and benefits where the EOR manages the statutory employer obligations.
BIPO’s Integrated Solutions for Global Success
Whether you require a vendor for global payroll outsourcing or a full Employer of Record, BIPO offers compliant, end-to-end solutions supported by advanced technology.
BIPO’s Employer of Record services are processed directly through our all-in-one platform. This tech-driven approach ensures a holistic experience: the EOR service handles legal, tax, and benefits compliance using our in-house payroll engines, while our HRMS provides your HR team with a single view of employees’ data, attendance, and expenses. This combination of expert legal service and HR automation software simplifies global expansion.
Talk to our experts to determine the best approach for your global hiring strategy!
