More companies are expanding globally and learning that hiring across borders doesn’t have to be complicated or risky, thanks to Employers of Record (EORs). EOR services enable any business to streamline global hiring, ensure compliance, and access top talent worldwide without establishing local entities in every country where they wish to hire.
In this post, we'll examine why EORs are essential partners for modern businesses — particularly tech firms, financial and professional services, and startups — and how they enable companies to scale globally while maintaining compliance and cost efficiency.
Key takeaways:
- Tech companies often partner with EORs because these firms require highly specialized talent — such as AI engineers, cybersecurity experts, and blockchain developers — that aren’t always available locally.
- Financial institutions utilize EOR providers to strike a balance between growth and strict compliance requirements, thereby reducing the risks of fines, legal issues, and reputational damage.
- Startups rely on EORs to fuel fast, efficient growth, enabling them to scale into new markets quickly without investing in costly international infrastructure.
Why Tech Companies Lead the EOR Charge
Tech companies require a skilled workforce to enable them to build fast and stay competitive. From AI engineers and blockchain developers to cybersecurity experts and programmers fluent in niche languages, it can be challenging for tech firms to find the talent they need in just one country, let alone in a single location.
Partnering with an EOR enables these companies to employ people anywhere in the world — easily and compliantly — without having to establish a local entity in every country where they want to hire.
While setting up a local entity has its advantages, such as giving businesses more direct control over operations, the time and costs associated with doing so simply aren’t feasible for many fast-moving tech companies. Just the financial cost of establishing a foreign subsidiary can be as high as USD 150,000, which includes legal, registration, and administrative fees.
Tech firms need to focus on writing code, iterating features, deploying software, and providing customer support. Diverting talent and budget to learn international employment law, run global payroll, and maintain various local legal entities isn’t an effective use of resources when they can offload those tasks to an EOR.
In addition to assuming the legal responsibility of employing people in numerous countries, EORs also manage local labor compliance, employment contracts, payroll taxes, benefits, statutory leave, and other related matters. And EORs like RemoFirst can even assist with visas and work permits, as well as localized healthcare insurance and shipping equipment to new hires.
Financial Institutions: Embracing EOR for Growth & Compliance
Financial services companies — such as banks, investment firms, and fintech businesses — are known for being risk-averse due to operating in highly regulated environments. They also have a growing need for both skilled talent and global reach. An EOR can help them employ the workers they need as well as navigate complex international compliance laws.
Expanding into a new country exposes financial institutions to numerous risks. Navigating unfamiliar employment laws and individual countries’ taxes, payroll, and benefits obligations can be challenging, and a single misstep can lead to hefty fines, legal battles, and significant damage to the company’s brand.
Because they must navigate a large number of regulations, financial institutions also have to contend with data privacy regulations like GDPR or CCPA, Know Your Customer (KYC) guidelines, Anti-Money Laundering regulations, and more, further complicating global employment.
It's no surprise then that financial firms frequently turn to EORs to avoid the costs of setting up a local entity and to hire global talent quickly.
Perhaps most importantly, though, partnering with an EOR ensures that financial institutions comply across countries. In regulated sectors like banking and finance, the cost of noncompliance isn't only economic, but also reputational, affecting their ability to attract not only customers, but also employees.
Professional Services: EORs Help Creativity Meet Global Opportunity
As demand for professional skills such as marketing, design, copywriting, consulting, and other creative fields grows, more firms are hiring globally to support clients, manage international campaigns, and deliver around-the-clock service.
However, this global reach comes with challenges. Project-based work and cross-border teams involve navigating various jurisdictions, different laws, and potentially costly consequences.
For example, let's say you hire a consultant in Germany as a contractor, only to learn that local labor law actually classifies them as an employee. In Germany, where misclassification laws are strict, this could result in fines as high as EUR 500,000 — in addition to back payments for taxes and employee benefits.
There’s also the issue of intellectual property (IP) to contend with, since the laws on who owns the IP created by a contractor on behalf of a company vary by country. The United States, for example, recognizes "work for hire," which grants the employer copyright ownership of a work. However, in other countries, it is necessary to ensure that a clause in the contractor's contract expressly grants IP rights to the client.
All of these variances in employment law are why many businesses find it beneficial to work with an EOR.
Instead of establishing a local entity or navigating various countries’ employment laws — while also running your company operations — the EOR ensures that your IP assignments and contractor/employee contracts are structured correctly under local law, helping your company avoid fines and legal complications.
Read more: Misclassification Penalties for Global Employees and Independent Contractors
Startups: Fueling Hypergrowth with EORs
Startups need to move fast, and every new hire counts. However, hiring across borders, especially when resources are limited, comes with challenges that can slow startups down.
EORs enable these businesses to avoid the costly and time-consuming task of establishing local entities in foreign countries, which is especially beneficial since many startups don’t have HR, legal, or payroll teams with international experience. Instead, companies can outsource the logistics of international employment to an EOR.
EORs also level the playing field, empowering startups to compete with larger, more established companies in the war for top global talent. They also help startups quickly and easily test new markets and scale headcount as needed.
Read more: Why Startups Should Consider an EOR for Global Expansion
Why These Industries Choose EORs
Clearly, there are numerous benefits to partnering with an EOR. Let's recap why so many companies — particularly tech firms, financial services, and professional services firms, as well as startups — turn to EORs for their global hiring needs.
- Speedy, cost-effective hiring: EORs enable organizations to hire talent in another country within days or weeks, rather than the months it would take if they needed to set up a legal entity first.
- Access to a global talent pool: Working with an EOR means you can hire anywhere, giving your company access to talent worldwide without geography acting as a barrier.
- Reduced legal and compliance risks: EORs assume the complex and high-risk responsibilities of complying with employment laws, taxes, social security, and benefits in each jurisdiction — mitigating risks such as misclassification, fines, and legal issues.
- Simplified payroll, benefits, and HR management: With an EOR handling employment contracts, payroll taxes, statutory leave, global payroll, benefits administration, and more, your team is freed up to focus on your core business.
- Scalability flexibility: Because you’re not tied to a local entity in each country where you hire, you can more readily adjust international headcount as needed and enter or exit markets with less overhead.
- Lower upfront investment and faster market entry: Rather than investing in local infrastructure, legal entity registration, and navigating the complexities of local compliance laws, you leverage the EOR's infrastructure and expertise to quickly and easily enter new markets.
- Reduced risk of permanent establishment: EORs ensure that your company doesn’t run the risk of being considered to be operating a permanent establishment in another country.
Expand Your Global Team With RemoFirst
Whether you’re a fast-scaling tech company, a highly regulated financial institution, a professional services firm managing global projects, or a startup focused on international growth, an EOR can be your key to seamless and simplified global hiring.
With RemoFirst, you can employ workers in 185+ countries — and manage and pay contractors in 150+ countries — without the need to set up local entities, saving your time and money.
We take on the administrative burden and risks associated with international hiring, handling payroll, tax compliance, benefits, onboarding, compliance, and more.
Ready to go global? Book a demo.
