Hiring Directly vs. Hiring Through an Employer of Record

When assembling a skilled team of professionals, both local and remote, your business has an important decision to make. You can hire workers directly, managing their payroll, benefits dispensation, and compliance internally. Or, you can partner with an Employer of Record (EOR) that manages the complexities of compliantly hiring and paying a global team.. Your decision will be based on several factors: growth goals, internal resources, comfort with risk exposure, and more. 

The purpose of this blog post is to guide your business toward the right decision for you. However, please note that this article is not intended to replace professional consultation; for a strategy tailored to your unique business, speak with professionals. 

Here is an overview of the two options, accompanied by pros and cons for each. 

Hiring Directly: An Overview

Hiring directly is precisely as it sounds. The model requires a business to oversee every step of the hiring and employee management process, from drafting agreements to onboarding, payroll to benefits dispensation. Some benefits of hiring directly include:  

• Control Over the Process: Some businesses hold employee control in high regard. They believe that top-down consistency is vital to a cohesive company culture and organizational synergy. They are willing to leverage time and resources to achieve that consistency across several international teams. 
• Trust and Employee Retention: This point is related to the one above; some companies have difficulty ceding control because they trust their internal processes more than an external provider. Further, they believe that, by offering a personal touch in their hiring and payroll processes, they can foster employee satisfaction and drive retention. 

Meanwhile, the drawbacks of hiring directly include assuming the administrative weight of legal compliance, settling for limited access to talent, straining internal HR resources, and suffering higher employee management costs. 

Hiring with an EOR: An Overview

An EOR assumes the HR responsibilities for hiring, managing, and paying international employees while you maintain control over the day-to-day of your global team. The best EOR platforms, like Borderless AI, leverage innovative technology to ensure their processes are accurate and compliant across countries and regions. The benefits of partnering with an EOR include: 

• Broader Talent Pool Access: Because you can hire in several locations worldwide (without having to establish subsidiaries), you access a much broader talent pool. 
• Cost-Effectiveness: For the same reasons as above, your business can also access lower-cost talent in various parts of the world, reducing operating costs and driving growth. 
• Diversity: By building a diverse, respectful global work environment, you can strengthen your company culture. 
• Streamlined Compliance: Building out an international team requires adhering to complex legal regulations in various countries/regions. A global EOR handles legal compliance with international labor laws for your distributed teams, shielding your business from risk and potential lawsuits. 

Meanwhile, the drawbacks of using an EOR may include a lack of direct employment relationships and a dependency on an external provider to offer an exceptional employee experience. 

When deciding on a model, discuss it with your executive team and internal HR department. Then, reach out to a trusted, highly-rated EOR to learn more about what they offer.

Interesting Related Article: “Managing Commercial Achievement: Utilizing Employer of Record Services in Dubai“