You've probably heard about the "war for talent," coined by McKinsey & Company's Steven Hankin to describe the intense competition for experienced professionals. And that competition has real consequences for your business.
If you're not tapping into a global talent pool, you could miss out on the unique skills and fresh perspectives that might give your company the upper hand.
So, how do you stay ahead in a market where everyone is scrambling to find — and keep — quality candidates? By now, you probably have heard that an Employer of Record (EOR) can help you hire internationally. But is it the best option for your business?
Often, there are a lot of misconceptions about the costs, compliance requirements, and day-to-day responsibilities of an EOR — and that confusion can stall your global expansion plans. The reality is that EOR services can be the competitive edge for startups and established enterprises.
Key takeaways:
- Contrary to popular belief, an EOR offers a cost-effective, scalable way for large and small businesses to hire internationally — minus the overhead of setting up an entity.
- An EOR handles administrative tasks (like payroll, taxes, and benefits) while you maintain complete managerial control over your team.
- Whether you're testing a new market or growing in several countries, EOR solutions give you the freedom to expand globally, adjust headcount quickly, and stay compliant over the long haul.
Myth #1: An EOR is the Same as a Staffing Agency
One of the most widespread myths about EOR services is that they're no different from staffing agencies.
In truth, they serve entirely different functions. A staffing agency helps companies find candidates — often for short-term or specialized contract roles — and handles recruitment. Once the agency places a candidate, the arrangement may end or shift into a new contract phase, depending on the nature of the hire.
In contrast, an EOR legally employs your international workforce on your behalf. For example, let's say you're looking to hire an employee in France. You won't need to worry about not being familiar with local regulations because the EOR will act as the legal employer — handling everything from labor law compliance to tax withholdings.
But the crucial difference is that you, the client, maintain managerial control, like assigning tasks, setting performance goals, and guiding day-to-day operations. The EOR simply ensures the backend administration is done by the book in each jurisdiction.
Why It Matters:
Mixing up EORs with staffing agencies can lead companies to overlook the unique value of an EOR — namely, frictionless, globally compliant employment.
Myth #2: EOR Services Are Only for Large Corporations
It's easy to mistakenly assume that robust global hiring solutions are only relevant for major enterprises with vast HR budgets. Yet the reality is that startups, small- to medium-sized businesses, and growth-stage companies regularly partner with EOR providers.
Employers of Record can help smaller businesses looking to expand internationally, but they lack the resources to navigate foreign labor laws, payroll regulations, and tax compliance independently.
By partnering with an EOR, small businesses can quickly and efficiently hire global talent — even if it's only one person — while ensuring compliance with local employment laws, payroll processing, and benefits administration.
EORs provide cost-effective solutions while offering flexibility to test out hiring in new markets before committing to full-scale expansion.
Why It Matters:
This myth can discourage early-stage companies from leveraging a cost-effective, turn-key solution for international expansion. Because EORs scale to fit your needs, whether you're hiring one software engineer or building a regional sales team.
Myth #3: An EOR Is Too Expensive; You Should Open an Entity Instead
Opening a legal entity in another country is rarely straightforward. Incorporation fees, legal retainers, payroll setup, ongoing compliance, and potential audits can drive up costs in ways that are hard to predict — and that's way before you hire your first employee.
Unless you're committed to a significant, long-term expansion (think 30+ employees in a single region), the up-front costs and administrative burden of opening your own entity can easily overshadow the perceived savings. Plus, it's definitely not a fast process.
The good news is that some EORs offer transparent per-employee rates, allowing you to budget confidently. For instance, RemoFirst's EOR pricing starts at $199 per person/month for hiring in over 180 countries. That includes managing contracts, payroll and benefits, onboarding, and more.
Compared to the time, capital, and legal complexity of setting up a foreign subsidiary, the EOR route is usually the most cost-effective option for all but the largest expansion plans.
Why It Matters:
The notion that forming your own entity is automatically cheaper can stall international hiring before it even begins. In truth, an EOR offers predictable pricing and spares you from hidden pitfalls like unforeseen tax liabilities or prolonged legal disputes in unfamiliar jurisdictions.
Myth #4: An EOR Is Only a Temporary Solution
Yes, some companies leverage EOR services as a bridge until they're ready to open an entity. But that doesn't mean you'll inevitably outgrow an EOR. Many organizations never reach the scale in any single country to justify forming an entity — yet they still gain substantial value from global talent pools.
Other companies even go the hybrid route, using an EOR for smaller headcount regions while operating a legal entity in larger markets.
Another benefit of working with EORs is that they enable businesses to scale up or down in different regions without the overhead of forming or dissolving international subsidiaries.
Why It Matters:
Viewing EORs as temporary can limit your international strategy. In fact, an EOR often represents a long-term, agile solution — especially for companies that continually test new regions or don't want to be limited by geography when searching for top talent.
Myth #5: EORs Are Not Compliant with Local Laws
This myth gets it entirely backward. An EOR's core value proposition is ensuring full compliance with local labor laws, tax regulations, and social security requirements.
Partnering with an EOR means they are using their specialized expertise to handle employment contracts, payroll processing, and benefits administration in a way that aligns with each country's legal standards.
Most EORs constantly monitor regulatory changes — whether it's new data privacy laws or holiday leave requirements — so you don't have to. Put simply, partnering with a reliable EOR significantly reduces your risk of non-compliance, fines, or reputational damage.
Why It Matters:
From a risk management perspective, compliance isn't optional, especially for companies operating in multiple jurisdictions. By relying on an EOR to manage compliance, you can focus on growth while sidestepping potentially costly legal entanglements.
Myth #6: Using an EOR Means Losing Control Over Employees
This is one of the most common misconceptions about the EOR model. Legally, the EOR is the employer on paper for international hires.
However, as we covered earlier, managerial control still firmly rests with you. You decide who to hire, set compensation levels, assign projects, and handle performance reviews and daily team communication.
Think of an EOR as your "compliance partner." You direct the work; the EOR handles administrative tasks like drafting compliant employment contracts, processing payroll, and offering statutory benefits. It frees your HR team from the red tape of international hiring so they can focus on strategic initiatives.
Why It Matters:
Fearing a loss of employee oversight can deter companies from exploring EOR options. The reality is that you maintain the same managerial authority over your international workforce that you have over local employees, but now with a reliable compliance infrastructure in place.
Myth #7: EORs Aren't Able to Provide Top-tier Employee Benefits
Far from offering subpar benefits, EORs typically have extensive expertise in local benefits packages, from healthcare plans to pensions and life insurance.
Because EORs work across multiple industries and countries, they often negotiate favorable group rates and pass those benefits on to you and your employees.
EORs also ensure your international hires receive benefits compliant with local mandates, like paid parental leave or statutory holiday pay. This alignment with the law supports employee well-being and protects you from coverage gaps or legal repercussions.
Why It Matters:
Talent acquisition isn't just about the paycheck. Benefits can be a differentiator when it comes to attracting skilled professionals. An EOR can help you create competitive, locally tailored benefit offerings that mirror or exceed standard offerings in the local market.
Myth #8: It's Better to Hire Contractors Than Use an EOR
Hiring contractors might look like a budget-friendly option since you don't have a long-term commitment or need to pay them benefits.
However, misclassifying workers if it's later determined they're really effectively full-time employees can result in severe financial penalties and legal ramifications.
Local authorities worldwide are increasingly cracking down on such misclassifications, as well as on wage theft. It's risky and potentially illegal to rely solely on contractor agreements for roles that function as regular employees, i.e., misclassify workers.
When you partner with an EOR, you have the assurance that each worker is correctly classified according to local laws. This reduces compliance risks, especially in jurisdictions with complex labor regulations and robust worker protections.
Why It Matters:
Choosing to hire contractors for roles that are, in practice, permanent and integrated can lead to tax and benefits violations, potential lawsuits, or forced reclassification. With an EOR, you eliminate that uncertainty and ensure your workforce structure stands on solid legal ground.
Myth #9: You Only Need an EOR if an Employee Is Moving to Another Country
True, companies often first encounter EOR solutions when an employee moves to a new country, and they need a quick, compliant way to keep them on board.
But that's far from the only scenario. EORs allow you to expand globally, source the best talent regardless of location, or bring on specialized experts in niche markets without forming an entity.
So, whether it's a single remote marketing hire in Brazil or a regional customer support team in Poland, an EOR provides the administrative and legal framework to employ people wherever they may be.
Why It Matters:
Limiting EOR usage to relocating employees underestimates its broader strategic value. Opening up global talent pipelines — even if no one is relocating — can give your company access to more diverse skill sets and new market insights.
Myth #10: You Don't Need an EOR if You Have an HR Department
Your HR department might excel at onboarding, payroll, and performance management. However, operating in foreign territories with complex labor codes and evolving regulations is a different ballgame.
When your company ventures into new markets, your HR employees may encounter language barriers, unfamiliar payroll systems, and bureaucratic hurdles. An EOR specializes in international compliance; they're on the front lines of country-specific employment standards, withholding rules, and benefits mandates.
Working with an EOR alleviates this administrative burden so your HR professionals can do what they do best: build company culture and develop talent strategies that drive business growth.
Why It Matters:
Even robust HR teams may lack specialized international employment expertise, which can lead to compliance oversights. An EOR bridges that gap with local know-how and streamlined processes. This frees HR resources to focus on strategic, high-impact initiatives instead.
Myth #11: You Should Only Work with an EOR That Has Its Own Entities
There's a growing misconception — occasionally fueled by competing providers — that an EOR must own and operate its own entities ("direct" model) in every country. In reality, three EOR operating models exist:
- Direct Model: The EOR owns the legal entity in each location.
- Indirect Model: The EOR partners with locally established entities.
- Hybrid Model: A combination of both.
While the direct model has its merits, the indirect model offers flexibility, local expertise, and typically lower costs for companies that don't need an entity in each country.
By leveraging regional partners, your EOR can deliver a more cost-effective service. Meanwhile, compliance is managed by well-established local infrastructures that ensure adherence to regional regulations.
Why It Matters:
Choosing an EOR purely based on whether it owns all its entities can overlook your actual needs — like budget, scale, and agility — which is where the indirect model shines in terms of benefits and cost.
RemoFirst Simplifies International Hiring
With RemoFirst on your team, you can legally employ new hires in over 180 countries without establishing local entities. Plus, you can effortlessly manage and pay contractors in 150+ locations.
Our all-in-one platform handles everything from background checks to payroll and benefits, so you can concentrate on scaling your operations instead of navigating complex labor laws.
Even better, our transparent pricing for EOR starts at just $199 per employee each month, $25 per contractor, and includes a free tier for managing contractors — because international growth shouldn't mean breaking the bank.
Schedule a demo to see for yourself how effortlessly your global expansion can unfold.
