Early in going global, many companies hit the same dilemma: they want to hire overseas, but don't want to register a company just to do it. EOR exists precisely to solve this.
What is EOR?
EOR stands for Employer of Record. In short, a licensed local third party formally employs the people you need — signing the employment contract, running payroll, paying social insurance and meeting local employment obligations — while you direct the day-to-day work, goals and management.
In a line: legally, the EOR is the "employer"; operationally, you're still the boss.
What problems does it solve?
- No entity needed: skip the time and cost of company registration, banking and tax setup.
- Fast to hire: compliant onboarding typically takes days or weeks, not the months of standing up an entity.
- Compliance covered: a licensed provider carries local labour, social-insurance and tax compliance, lowering risk.
- Reversible: exiting a market that doesn't work costs far less than closing a company.
EOR vs. your own entity
Your own entity gives full control and local organisational depth, but it's heavy, slow and costly to unwind; EOR is light, fast and flexible, at the cost of a potentially higher per-head cost over the long run and less brand/organisational build-up than an entity. So the two aren't opposites — many firms take a "EOR first, entity later" hybrid: pilot with EOR, then set up an entity and smoothly convert the team as they scale.
Where EOR fits — and its limits
EOR is especially good for piloting a new market, small headcount, fast hiring, or short-term project work. But it has limits — as a team keeps growing and needs deep local operations and brand building, your own entity usually becomes more economical. The key, again, comes back to your stage and goals.
One caution: the compliance of EOR depends on whether the provider is genuinely licensed and compliant locally. Choosing a partner with a real local entity and credentials is the prerequisite for using EOR well.