Working With EORs (Employers Of Record): The Advantages And Drawbacks

Working with an Employer of Record, or EOR can be an ideal solution when your business has a need for international operations or wants to start expanding into global markets. An EOR allows businesses to instantly gain access to foreign markets and experienced local workforces by partnering with an established local entity. Your business retains full control of local operations, but you are not obliged to go through the time-consuming bureaucratic process of establishing a new entity of your own in your target market.

The speed of set-up makes working with an EOR very tempting for any organisation looking for fast international expansion. EORs come with their own potential drawbacks, though, and these must be carefully weighed against the advantages. To help you make a well-informed decision regarding EORs, we’ve itemised some key positive and negative points to consider:

Advantages Of Employers Of Record

* Speed Of Access To Global Markets
Your company can expand much more quickly when you can expand and take on new staff in a different country without worrying about subsidiary registrations. This makes working with an EOR ideal for small businesses that are looking to expand internationally but lack the resources for establishing overseas subsidiaries.

* No Need For Company Registration
In many countries, foreign businesses and individuals seeking to do business locally will have to register a company. This can have complicated administrative and taxation effects. When you work with an Employer of Record, the registration process is already handled and the EOR is your locally registered entity. You’re spared the expense (in time as well as money) of deciphering and going through the registration process. And what’s best of all is that the EOR takes responsibility for legal, regulatory, and administrative responsibilities. This allows you to concentrate on operations instead of bureaucracy.

* Local Expertise Is Available
Most Employers of Record are based entirely within their home country. They’re fully familiar with local employment regulations, local language(s), and local customs. All of this expertise is there waiting for partner organisations as they navigate the pitfalls and possibilities of new markets. An employer of record India can often provide strategic advice that partners will find invaluable in nations where employment and business laws are complicated.

* The EOR Relationship Is Casual
While you’ll be in close contact with your appointed EOR for day-to-day operations, the relationship can be severed very quickly. This can be valuable if your organisation wants to pivot toward a different opportunity or cease operations in the relevant country. If you need to withdraw, you can trust the EOR to handle responsibilities like redundancies and other administrative tasks.

Potential Disadvantages Of Employers Of Record

* Spreading Your Goals/Culture Takes Longer
Even though a good EOR strives to align themselves to your brand, your values, and your preferred organisational methods, your Employer of Record partner needs your help to do so. It may require time, money, and labour to embed these attributes into your local partner. On the bright side, in most EOR relationships, it is the local partner, not the foreign one, that takes responsibility for aligning the local organisation’s goals.

* Advantages Diminish Over Time
Working with Employers of Record is great for operations and investments with short, well-defined time limits, or for kicking off the first phase of a permanent international expansion. If your organisation intends on maintaining a long-term or potentially permanent presence, though, it is more sensible to establish a local entity of your own. A proper subsidiary organisation is particularly useful in cases where you expect to see fast and lucrative local growth.

Additional potential disadvantages, in brief: Operating with an EOR partner costs money, and that money isn’t being invested in your own organisation. And while working with an EOR, you are inevitably a step removed from your local operations.

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