Business leaders face a perfect storm of challenges — strict budget oversight, supply chain disruptions, breakneck technology adoption, and fierce competition for top talent.
To navigate changes and stay focused on growth, many small- to mid-sized businesses turn to Professional Employer Organizations (PEOs) to outsource comprehensive HR functions like employee benefits management, payroll administration, and compliance in countries where the company already has a legal entity.
PEOs offer a co-employment model: the PEO handles HR tasks while business owners maintain control over day-to-day operations and team oversight.
Outsourcing HR needs and payroll services lets businesses offer a stellar employee experience without the time, cost, and complexity of handling everything in-house.
Key takeaways:
- PEOs help businesses streamline HR administration, payroll management, and compliance functions, but you must establish a local entity in every region where employees are based.
- The pricing and types of PEO services offered vary by provider. The right one for you depends on a variety of factors, including your company's needs and budget.
- If you're hiring internationally in countries where you don't have a local entity, an EOR can help you enter new markets faster, provide you with more flexibility, and lower your risk.
General Overview: Comparing Top PEO Providers
Here's a side-by-side look at five of the best PEO services (listed alphabetically) to help you compare their capabilities and examine potential pros and cons to choose the right PEO for your business needs.
However, a PEO isn't an option if you don't have a legal entity in a specific region where you're hiring. Instead, you'd be better served by partnering with an Employer of Record (EOR).
An EOR, like RemoFirst, enables businesses to expand into global markets and hire and pay international workers while ensuring compliance with local employment and tax laws.
Pros and Cons of PEOs
Whether your business lacks internal HR support or needs to streamline operations, a PEO reduces overhead, ensures compliance, and efficiently manages benefits and payroll.
However, the PEO model isn't necessarily the right fit for all business needs.
Pros of PEOs
HR outsourcing for functions like payroll processing, benefits administration, and compliance internally takes time, money, and specialized expertise — resources that many growing teams simply don't have.
Without that specialized know-how, companies are more likely to run into errors, missed deadlines, and costly compliance violations, which can slow growth and damage employee trust.
That's where a Professional Employer Organization (PEO) can be a game-changer. PEO companies act as strategic partners, handling critical HR operations so your company doesn't have to build out an entire internal HR team.
From staying on top of ever-changing labor laws to ensuring payroll accuracy across different states, a PEO helps reduce risk, streamline operations, and keep your business compliant.
Another significant advantage is that PEO solutions give small and mid-sized businesses access to large-group employee benefits plans that would otherwise be out of reach. PEOs can negotiate better rates on health insurance, retirement plans, and other perks by pooling employees from multiple clients.
And in today's competitive hiring landscape, those benefits matter. A strong, affordable offering helps you stand out to top talent and retain the people who help your business grow without overextending your resources.
Cons of PEOs
PEOs aren't always the best fit for growing businesses. Many require a minimum number of employees to engage their services, making them impractical — or simply not an option — for smaller teams or early-stage companies.
Even when available, the co-employment model, where responsibilities are shared between your company and the PEO, can lead to confusion. It's not always clear who is accountable for specific HR functions such as payroll, benefits, or compliance. This lack of clarity can create risks, particularly if something falls through the cracks.
Outsourcing essential HR functions to a PEO can also reduce insight into employee needs. With a third party managing day-to-day HR interactions, you may miss early signs of dissatisfaction or performance issues, making it harder to address problems proactively.
Another key limitation of PEOs is their inability to operate in countries where your business does not have a legal entity. PEOs are structured around a co-employment model, which requires the client company to be a registered business in the country where the employees are located.
Without a local entity, your company cannot legally enter into the necessary co-employment relationship. This makes PEOs unsuitable for international expansion into new markets where you haven't yet established a corporate presence.
However, if you're planning to hire in countries where you lack a legal entity you may need to consider alternative options, such as an Employer of Record, which can act as the legal employer of global employees on your behalf.
PEO Alternatives
No single model works for every business, especially when expanding globally.
If a PEO's co-employment model doesn't fit your needs, other options on the market may be a better fit.
Alternatives to working with a PEO include:
Opening an Entity
If you plan to scale your business in a new country and establish a permanent presence, then opening a legal entity might be the right choice.
A legal entity gives you complete control over your business, from operations to local employment.
But this autonomy comes with significant pressure, investment, and legal risk. You'll need local legal partners, tax advisors, tools, and resources to manage payroll, HR, and reporting.
You'll also need to navigate cultural norms, employment laws, compensation expectations, and potentially currency or language differences.
Of course, the time, expense, and complexity are worth it if you plan to stake a long-term claim and continue to expand in that region.
Global Payroll Provider
A global payroll provider will help you pay international employees accurately and on time while ensuring you remain tax-compliant with local regulations.
These providers specialize in navigating country-specific payroll laws, tax withholdings, currency conversions, and reporting requirements — all of which can be complex and time-consuming for internal teams to manage independently.
A global payroll provider can be a great choice if you already have a legal entity in the country and simply want to outsource the intricacies of running international payroll. It allows your business to streamline operations, reduce administrative overhead, and minimize payroll errors without giving up control over other HR functions.
However, as the name suggests, global payroll providers focus solely on payroll. They won't assist with employee onboarding, drafting employment contracts, managing benefits, or ensuring labor law compliance; they just do payroll processing.
If you're looking for broader HR support, especially in unfamiliar markets, you'll likely need to pair global payroll with internal resources or additional third-party providers to cover the full employee lifecycle.
Human Resources Outsourcing
Human Resources Outsourcing (HRO) providers handle various employee-related services, such as payroll processing, recruiting, onboarding new hires, training, benefits administration, and performance management.
Services can be tailored to meet your business's specific needs, giving you the flexibility to outsource only the most time-consuming or resource-intensive functions.
However, it's essential to understand that while an HRO can take over operational HR tasks, your company remains the legal employer and is still fully responsible for tax filings, employment law compliance, workplace policies, and other legal obligations.
An HRO works well if you already have an internal HR team and want to reduce their administrative burden, allowing them to focus more on strategic initiatives like employee engagement or organizational development.
It's a scalable solution that can grow with your company, offering expertise and support without relinquishing control over your HR strategy.
Administrative Services Organization
An Administrative Services Organization (ASO) enables businesses to outsource specific administrative tasks related to payroll, benefits, and other HR administrative needs without entering into a co-employment relationship.
Unlike a PEO, an ASO does not share employer responsibilities. The business remains the sole employer and retains complete control over all HR policies, hiring decisions, and compliance obligations.
This model especially appeals to businesses with in-house HR expertise but want to offload the administrative burden and focus more on growth initiatives.
Because the ASO doesn't assume any legal or employment liability, scaling services up or down is often easier as needs change.
Employer of Record
An Employer of Record (EOR), like RemoFirst, acts as the legal employer of international employees on behalf of your business. EORs manage employment contracts, payroll, benefits administration, tax withholding, and ensure compliance with local labor laws.
While your company directs the employees' day-to-day work, the EOR assumes the legal and administrative employment responsibility in each employee's respective country.
EOR services are ideal for companies that want to hire talent globally without the cost, complexity, and time investment required to establish a legal entity in every country where they plan to operate.
The EOR model is especially beneficial for startups, scaling companies, or businesses testing new markets, as it allows them to onboard employees quickly and legally without long-term infrastructure commitments.
EORs offer significantly more flexibility than PEOs when expanding into multiple regions, particularly in countries where a business has no established presence.
Unlike PEOs, which require companies to already have a local entity to enter a co-employment relationship, EORs can fully support hiring in countries where businesses have no footprint. This enables companies to build global teams faster, reduce risk, and maintain compliance across diverse regulatory environments with a single partner.
When an EOR Might Be a Better Fit than a PEO
If you're scaling your business and testing new international markets, an EOR is a better choice for hiring and paying employees and contractors.
That's because a PEO requires you to have a legal entity in the region you're hiring in — a costly, complicated, and time-consuming investment that only makes sense when you plan to establish a permanent presence in that region.
Meanwhile, an EOR doesn't require you to establish entities. It provides the necessary infrastructure to hire and manage employees in multiple countries, acting as their official employer and protecting your business from risk.
By partnering with an EOR, you can test new markets and build an international team across many different regions without worrying about learning the ins and outs of the various tax obligations, employment laws, and compliance requirements of each country where you hire.
Ultimately, if you're not committed to a long-term presence in a region, an EOR offers greater flexibility than a PEO.
How to Choose the Best EOR
EORs reduce the legal and compliance risks of expanding into new markets by providing expert advice and resources for hiring and managing international employees.
But choosing the right EOR for your business is a nuanced decision. You want to find a partner you trust, with extensive expertise in the target regions you're hiring, and competitive rates that fit your budget.
To find the right EOR partner for your business, you'll first want to consider their:
- Compliance expertise: The EOR must possess in-depth knowledge of local labor laws and regulations to help you stay compliant and adapt to changes in local regulations.
- Geographic coverage: Ensure the EOR serves the countries where you plan to hire and has local expertise to guide you through regulatory concerns, cultural norms, and any other regional concerns.
- All-in-one technology platform: A comprehensive, user-friendly platform can significantly streamline your HR processes. Prioritize solutions with robust functionality across payroll, benefits, compliance, and onboarding to consolidate multiple tools into a single system. This simplifies operations and reduces the need to manage multiple vendors.
- Dedicated customer support: Confirm what levels of customer service will be available to you, as you may need responsive support or quick issue resolution as challenges arise.
- Pricing: Rates and models for pricing vary across EORs. Make sure you receive transparent and competitive pricing that also fits your budget.
Don't settle when it comes to your EOR. Find a partner that prioritizes your relationship and offers the global expertise you need to scale your international business.
Hire & Pay Your International Team with RemoFirst
Whether entering a new market, scaling your international team, or managing a distributed workforce, RemoFirst is your trusted HR partner.
We help companies hire, pay, manage, and onboard full-time employees in 185+ countries and independent contractors in 150+ countries — all while ensuring compliance with local labor laws, tax regulations, and employment practices.
Schedule a demo today to explore our all-in-one global employment platform and learn how RemoFirst can simplify hiring and managing your international team.
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