Small and medium-sized businesses (SMBs) aren’t mere participants in the labor market; they’re actually outpacing large businesses in driving job creation.
The U.S. Bureau of Labor Statistics reports that small firms accounted for almost 53% of the total net job creation in the United States between 2021 and 2024.
And as remote-first, distributed teams become the norm, more SMBs are looking overseas to widen their candidate pool to fill open roles.
However, hiring overseas presents its own set of challenges, including legal compliance, payroll processing complexity, benefits administration, and the costly risk of misclassifying international contractors.
To manage these challenges, SMBs are increasingly turning to Employer of Record (EOR) solutions to quickly and compliantly hire and manage international employees, which in turn is leading to a boom in EOR usage.
Key takeaways:
- Global hiring is becoming standard practice for SMBs thanks to EORs.
- EOR providers eliminate common hiring barriers, such as the costly process of entity creation, and the need for lean HR teams to manage international compliance risks and global payroll.
- For many SMBs, an EOR enables them to accelerate growth and scale to new markets.
The Rise of Global Hiring for SMBs
Global hiring was once reserved for multinational enterprises with large HR teams and dedicated compliance resources. But today, smaller companies are aggressively entering international talent markets for multiple reasons:
Remote Work Is Now Standard for Scaling Teams
The pandemic normalized distributed workforces and accelerated the development of remote worker solutions, such as collaborative video meeting platforms and asynchronous communication tools.
Thanks to cloud-based software and EOR services, small organizations can now support international team members and quickly test new markets, with minimal infrastructure setup or overhead required.
For growing businesses that already offer remote work for local employees, there’s no reason to limit the candidate pool to one country — an EOR can help them expand with ease.
Competition for Highly Skilled Workers Is Rising
With the rise of AI, automation, and other transformative tech, employers must train existing employees or hire new team members with the specialized skills their company needs.
Startups and SMBs often find themselves competing with big tech, finance, and healthcare employers for specialized talent.
Additionally, the talent pool remains tight, and employers are cautious. Just 29% of employers believe talent availability will improve by 2030, while 42% think it will decline.
Looking abroad dramatically increases the chances of finding workers with the right skill set, often at a lower cost.
Global Markets Offer Access to New Specialties
Global hiring also enables growing businesses to build more diverse, resilient teams by sourcing talent from markets with different strengths, training environments, and labor availability.
Emerging global talent hubs, such as Latin America, Eastern Europe, Southeast Asia, and certain parts of Africa, are now home to rapidly growing communities of highly skilled professionals. These regions regularly produce strong candidates in engineering, data science, software development, finance, customer support, and other back-office functions.
In many cases, candidates in these regions bring niche expertise, such as AI/ML, security engineering, multilingual customer support, or advanced analytics, that may be harder or take longer to find locally.
For SMBs that struggle to compete with enterprise salaries in their home markets, these international talent pools offer a wider range of specialized skill sets at a more budget-friendly rate.
But, Global Hiring Also Brings Complexity
Hiring abroad requires navigating different employment laws and regulatory frameworks in every country where you hire.
Employers are required to set up a local entity to legally hire in most countries, a process that can take months and cost tens of thousands of dollars. Many small businesses simply don’t have that kind of cash on hand.
It also doesn’t make financial sense for an SMB to open an entity if they only need to hire one or two employees in a particular country. It can also delay the hiring timeline, which means losing out on promising candidates for competitive roles.
On top of this, global payroll, taxes, employee benefits, labor laws, and worker classification rules vary significantly by country. One mistake can open the business to audits, fines, back payments, or legal exposure, which can be expensive, time-consuming, and damaging to its reputation.
Or, SMBs can work with an EOR and hire internationally without establishing a legal entity at all. The EOR takes on the compliance heavy lifting of managing HR responsibilities for global employees and international contractors.
Why SMBs Turn to EOR Solutions
When it comes to building a global workforce, EORs eliminate obstacles that many SMBS face.
Limited Resources + Small HR Teams = Global Operation Struggles
For many SMBs, the biggest barrier to hiring abroad isn’t the talent — it’s the operational lift required to support international employees.
Opening a foreign entity is slow and costly, often involving months of setup and expenses such as:
- Incorporation fees
- Legal counsel
- Annual filings
- Taxes
- Ongoing compliance management
Large enterprises can absorb these costs, but for smaller teams, they can easily stall hiring plans.
Even when the budget allows for entity creation, most SMBs don’t have the internal legal, finance, or HR infrastructure to manage global operations day to day.
Tasks such as onboarding across different countries, running local payroll cycles, administering statutory benefits, and complying with country-specific employment rules require specialized local knowledge that small or overstretched teams often lack.
This is where an EOR becomes an advantage. Instead of building a global operation from scratch, SMBs can hire internationally in days, since they don’t need to establish an entity or shoulder the administrative burden of managing international employment on their own.
Compliance Risks for Growing Teams
Once a company begins hiring abroad, compliance quickly becomes one of the biggest pain points.
Every country has its own rules around:
- Employment contracts
- Notice periods
- Probation terms
- Paid leave
- Employee benefits
- Taxes
- Social contributions
- Termination requirements
Even minor mistakes — such as using a non-compliant contract or miscalculating a statutory benefit — can result in fines, back payments, or legal disputes.
This complexity also makes contractor use risky. Many SMBs lean on international contractors as a fast solution, but misclassification laws vary widely and can expose companies to significant penalties.
EORs reduce that risk by handling all local compliance requirements. They ensure that each hire is classified correctly and that contracts comply with the country’s legal standards, and payroll accurately reflects tax and social contribution obligations.
By acting as the legal employer, an EOR shields SMBs from compliance errors and ensures international employees receive the correct protections and benefits.
Need for Predictable and Transparent Global Hiring Costs
Global hiring costs can vary dramatically from country to country — from employer taxes and mandatory benefits to paid leave, social contributions, and required insurance.
Without accurate country-specific calculations, SMBs often struggle to forecast actual employment expenses, making budgeting and growth planning difficult.
An EOR can simplify this, but not all providers offer the same level of clarity. Some add onboarding charges, compliance costs, or other hidden fees that make international hiring even harder to predict.
RemoFirst offers a transparent, flat monthly rate per employee, giving SMBs a clear path to budgeting, testing new markets, and global expansion without financial surprises.
The Broader Impact of SMB Adoption
The growing number of small businesses relying on EORs to hire quickly and compliantly is contributing to the overall EOR market’s expansion, which is on track to reach roughly $7.8 billion by 2033, with a projected CAGR of 6.5%.
Instead of stitching together multiple vendors or platforms, SMBs want a single solution that centralizes onboarding, payroll, benefits, and local compliance.
EOR platforms meet that need by combining all the essential components of international employment into one system — making global hiring more accessible and operationally manageable for smaller teams.
SMBs are pushing the EOR industry forward and fueling platform innovation, accelerating the shift toward a global, distributed workforce model.
When SMBs Should Consider Using an EOR
An EOR makes cross-border hiring accessible to small, busy, and scaling teams.
SMBs should think about partnering with an EOR when they need to:
- Hire one or more employees in a new country quickly, without waiting months to establish a legal entity.
- Test new markets or expand into a region with minimal risk, avoiding long-term commitments.
- Convert international contractors into full-time employees to reduce misclassification risk and improve retention.
- Ensure compliance with local labor laws, taxes, benefits, and notice periods, especially when hiring in unfamiliar markets.
- Access specialized talent in emerging markets, where the required skill sets may be more available or cost-effective.
- Support global remote workers who wish to relocate abroad, without creating new entities to keep them on payroll.
- Maintain predictable hiring costs, using flat-rate EOR pricing.
- Reduce administrative burden on small HR/finance teams by outsourcing administrative and operational HR tasks.
Many internal teams lack the time and specialized knowledge to manage global hiring, and establishing a legal entity abroad can be both costly and time-consuming.
EORs provide SMBs with a faster, more reliable, and affordable path to building an international team.
Accelerate the Growth of Your SMB With RemoFirst
Small to medium-sized businesses are becoming major drivers of the EOR market because they need flexibility, predictable costs, and reliable compliance support.
RemoFirst enables organizations of all sizes, from SMBs to enterprise-level corporations, to hire talent in 185+ countries in days, not months. We handle everything, including:
- Compliant employment contracts
- Onboarding
- Equipment shipping
- Payroll and taxes
- Employee benefits, including private healthcare plans
- Contractor management and payments
We handle the heavy lifting of HR and compliance, ensuring every hire is fully compliant — no legal entity required.
Schedule a demo to see how RemoFirst can help your company expand quickly and compliantly.
