The common challenges of global hiring—such as legal and tax compliance—have held many leaders back from experiencing the benefits of building a global team. With the right EOR (Employer of Record), you can access the benefits of global hiring without facing any of the challenges yourself. Instead, you go straight to:
- Hiring employees without risking non-compliance or misclassification
- Increased hiring efficiency while cutting costs
- Providing better international employee experiences
- Achieving your global expansion ambitions
A global EOR is a third-party company that hires international employees on behalf of a client company, creating an employer-employee relationship with your team members. The EOR becomes the full legal employer of the employees and takes on the legal and financial liabilities of that employee. You retain control over the employee’s workload, schedule, and performance. And for the employee, the experience is no different than if you were to hire them directly.
How companies benefit from using an EOR
Pursuing global expansion introduces various legal challenges that often deter companies from hiring international employees, which stunts their growth. With an EOR, you can avoid the bureaucratic obstacles of global employment, comply with local labor laws, and reduce the strain on your HR and legal teams–all while providing an improved employee experience.
More hiring flexibility
With an EOR, your talent pool becomes as broad as the EOR’s reach–wherever they have a foreign subsidiary, you can hire employees. You can freely hire the best talent for your team without being held up by entity set-up, navigating legal requirements, figuring out visas, or relocating employees.
Shorter time to hire
An EOR enables you to hire new employees anywhere in the world in days instead of months. You don’t have to:
- Train HR and recruiting teams on legal matters
- Outsource legal counsel
- Obtain legal permits to hire foreign employees
Your team spends less time managing payroll, compliance, onboarding, and HR admin duties and more time building great products, culture, and employee relationships.
“[Before Deel,] setting up a legal entity in a new location took a lot of paperwork, bureaucracy, and time. [Since using Deel] we’ve saved a lot of time and money but also reduced the team’s administrative load for a quicker turnaround.”
Established in-country expertise
An EOR provider has a network of legal, tax, and employment experts who ensure your employees operate compliantly wherever they are. And if a legal issue should arise, you’re protected: As the employee’s legal employer, the EOR takes full responsibility for non-compliance penalties.
According to Damon Berkhaug, Deel’s Global Head of Talent, hiring globally can result in substantial financial savings for a company, as recruiters can target locations with a higher talent supply and less competition. “In some cases, a company can hire as many as four to five employees for the cost of one employee in a high-cost location such as San Francisco, New York, or London.”
When should you use an EOR?
Everyone from small, agile teams to large enterprise corporations can benefit from using an EOR to hire employees abroad. Here are the four most common motivators for companies to use an employer of record:
Hire employees without setting up foreign entities
The cost of setting up and running a new legal entity can cost over $100,000 per entity, depending on the location and maintenance costs, which can include:
- Formal registration fees (national and possibly state/regional)
- Recurring office expenses (some countries require a physical office address)
- Minimum capital requirement
- Ongoing legal consultation fees to ensure local compliance
- Ongoing administrative costs (payroll, insurance, and tax filing)
- Hiring costs for a Resident Director
- Entity teardown fees (if your company leaves the country)
Whether you want to hire one employee abroad or set up teams worldwide, an EOR is the easiest solution. Your EOR will manage the entire legal process, payroll management, and administrative tasks for you—it’s as simple as hiring domestically with all the advantages of hiring globally.
By definition, Luxembourg is a country that needs to hire beyond its country’s borders. We’ve broken down the estimated costs associated with hiring an employee in different countries versus using Deel:
- $250,000 hire directly
- $25,000 through Deel’s EOR
- $330,000 hire directly
- $20,000 through Deel’s EOR
- $250,000 hire directly
- £20,000 through Deel’s EOR
“I can’t imagine having to open up an entity in a certain city just to be able to hire someone. We’re hiring based on finding the right people, not finding the right location that people happen to be in.”
— Elias Ek, Keego Co-Founder.