Did you know that 78% of business leaders believe using Employer-of-Record services can help their companies go global? And that’s why it’s no surprise that the global EOR market is projected to reach an impressive $6.6 billion by 2028. But how exactly can you find a reliable EOR company that will become your trusted partner and help you conquer international tech markets?
My name is Viktoriia Keliar, and I am the COO at Alcor. With Alcor, you don’t need to worry about finding an Employer of Record provider in Latin America or Eastern Europe. We provide Western tech product companies with comprehensive R&D center solutions, spanning a comprehensive EOR service and the recruitment of Valley-caliber senior teams from 0 to 100 developers in a year.
In this article, I will explain the features that distinguish an ideal EOR company, how prices for basic services are usually formed, and the key factors to consider when searching for an EOR partner. On top of that, I’ll answer the questions concerning everyone who wants to find an Employer of Record provider that will not only meet their business needs but also offer a comprehensive approach to managing international employment challenges.
So, let’s get to the first question – who is the ideal EOR provider?
Perfect Employer of Record Provider’s Portrait
An Employer of Record (EOR) is a provider that employs international developers on behalf of its clients, so the latter don’t have to set up legal entity abroad. They handle payroll, taxes, employee benefits, onboarding and offboarding, and more.
But when you choose an Employer of Record vendor, what key traits will ensure they become a crucial partner in your global growth strategy?
Scope of services:
- Conducting background checks: Thoroughly assessing candidates’ credentials and employment history.
- Handling employment contracts: Drafting, negotiating, and renewing different types of employment contracts on the client’s behalf, eliminating the need for the client to establish a legal entity abroad.
- Onboarding and offboarding developers: Establishing sole proprietorships or equivalent entities for new hires, facilitating bank account setup, overseeing the closure of these entities, and ensuring the return of company equipment to clients after the conclusion of employment, both for international and local hires.
- Payroll processing and remitting: Efficiently transferring funds from the client to the provider for employee salaries, taxes, and service fees, handling HR payroll and accounting tasks, as well as submitting payroll taxes, employee deductions, and employer contributions to the appropriate government agencies.
- Managing tax obligations: Providing tax planning, making tax payments, preparing tax returns, and offering tax compliance advisory services. For instance, if your US-based product company seeks to hire top engineering talent overseas, navigating taxes in Poland and Romanian taxes can be challenging. In such cases, partnering with a skilled Employer of Record provider can simplify the process.
- Administering employee benefits: Managing employee benefits, including health and life insurance, gym memberships, educational opportunities, English courses, stock options, and more.
Specialization
The best-case scenario for technology companies is to work with an Employer of Record provider that has deep expertise in the tech industry. Vendors specializing in this field have a better understanding of the specifics of work, needs, and challenges tech companies face. And, most importantly, they will help you choose the most beneficial hiring model and take advantage of government tax incentives for tech companies in your chosen location.
Infrastructure
The ideal Employer of Record provider should have a well-established infrastructure in the countries where your business plans to expand. This implies having a legal entity, local representatives, and contracts with local agencies providing back-office services at lower prices to save you money. Plus, previous experience with clients in your chosen country or nearby countries will indicate a deep understanding of local laws, cultural peculiarities, and the market condition. Such local presence ensures not only full legal compliance but also the prompt resolution of issues related to regional peculiarities of doing business.
Work without intermediaries
It is essential that the Employer of Record provider offers all the services mentioned earlier in-house, without the need for additional intermediaries. The involvement of third-party companies can complicate synchronization between them, requiring more control and resources from you. It is better when the provider has internal departments responsible for different aspects of the services, ensuring a well-coordinated and efficient operation. However, if your provider does need to engage other companies for specific services (procurement management, office leasing, insurance processing), they shouldn’t burden you with it but will manage everything themselves, delivering a ready-made solution seamlessly.
Account management support
An efficient EOR provider should ensure that there is an individual account manager who is always in touch with you and able to respond promptly to any request. This person plays a key role by acting as a bridge between the client and various departments of the EOR company and providing effective communication and quick resolution of any issues.
Availability of cooperation cases and customer reviews
Constructive feedback and reviews from clients on independent platforms such as Clutch and GoodFirms will help you make an informed decision. By reviewing real cases of cooperation and customer reviews, you can assess the level of satisfaction with the services, support, and communication, and evaluate the efficiency of problem-solving by the provider for their customers.
Employer of Record Costs
On top of the above characteristics, an important feature of an ideal international EOR company is a fair price—a reasonable fee for high-quality and comprehensive solutions. For this reason, our team has prepared a detailed analysis of the main pricing models and factors that may affect the cost of EOR provider services:
| Pricing models | |
| Type | Description |
| Flat monthly fee per employee | Charged regardless of the developer’s salary. It can usually range from $200 to $2,000. |
| Percentage of payroll | Involves charging a percentage of each employee’s salary for EOR services, usually 5-20%. It directly depends on the salary level, making it cost-effective for low-paid positions but potentially expensive for highly paid employees. |
| Fixed pricing model | Presupposes a pre-determined, fixed fee that covers all EOR services for a certain period, regardless of the number of employees or changes in salaries. |
| Custom pricing | Designed to meet the unique needs and conditions of the business, taking into account factors such as the number of employees, location, and complexity of services. This model provides flexibility, although it often involves more complex negotiations and higher costs. |
| Factors affecting the price | |
| Geography | Impacts EOR costs due to varying labor laws, tax regulations, and social security requirements. Higher living costs and wages in certain regions can also increase fees. In the Asia Pacific region, service prices start at $299 per employee per month, and in Europe, at $499 per employee per month. |
| Number of services | More comprehensive packages with additional HR functions and benefits generally cost more. For instance, basic packages might include payroll and compliance management, while more extensive options could encompass additional HR functions and employee support. In addition to the basic EOR services, which may cost $200 per employee/month at some agencies, you can opt for essential add-ons like health insurance for an extra $55 or other services at customized rates. |
| Position complexity | Senior or lead positions often incur higher costs due to increased compliance management and payroll complexities. These roles typically require more detailed oversight and specialized handling, which can drive up the overall expense for EOR services. EOR providers often offer custom pricing that may start at $650 per employee per month, with costs rising based on the complexity and specific requirements of the developer role. |
| Number of employees | The total number of employees influences pricing, with larger teams potentially qualifying for volume discounts. This means that as the workforce expands, businesses may benefit from reduced rates per employee, making EOR services more cost-effective. For teams of 100 to 500 employees, some EOR providers may charge up to $300 annually per developer, while for teams with over 1,000 specialists, it could be as low as $180. |
| Additional services | Requests for services beyond the standard EOR offerings—such as hiring remote talent, training, or other specialized services—typically incur additional costs. |
How to Find and Choose a Trusted EOR Vendor
Finding the perfect partner is no easy task, so here’s a short list of key criteria that will help you easily hire an EOR provider.
1. Check if they have a legal entity in your go-to foreign country.
A reliable international EOR provider should have a legal entity in the country of your choice. This spares you the need to navigate the complex process on your own, which is often required when working with PEO providers, for example. Therefore, to ensure full global compliance, always confirm that your partner has an official presence in your expansion location.
2. Make sure their EOR solution includes all the needed services.
Ensure that all the necessary EOR services are included in the provider’s plan, so you won’t have to pay separately for some of them or look for them in other vendors. Ideally, a comprehensive EOR service package includes payroll, tax management, accounting, benefits management, onboarding/offboarding, and legal compliance. Still, if any of these services are not included, this is an important factor to consider when choosing this provider.
3. Clarify your part of responsibilities upfront.
Always find out about the division of responsibilities between the provider and your company so that you clearly understand which tasks fall on the provider and which remain with you. Preferably, you should be able to be in charge of all the decision-making regarding the hiring, promoting, and firing of your engineers, as well as product development, while your provider takes care only of their operational management.
4. Verify that your provider offers clear invoices with no hidden costs, buyout fees, or additional charges.
A trusted international EOR provider should offer detailed and transparent pricing. Ensure you receive regular invoices that outline what you’re paying for. Compare the provider’s pricing with the market’s average to understand if it’s higher or lower and inquire about the value you receive for different price levels.
5. Ensure that your partner has a dedicated team of professional accountants.
A dedicated in-house team of accountants at an Employer of Record company provides thorough, multi-level oversight of payroll, tax calculations, and report submissions. This approach helps minimize calculation errors and ensures accurate finance management.
6. Check if the EOR provider has an in-house legal team.
If the provider has an in-house team of legal advisers, you will get consultations on local laws and regulations for tech businesses and apply them to your company. This will ensure that your business operations remain compliant in the specific destination, whether for remote or in-house staff.
7. Look for a provider that offers 24/7 support and communication.
The ideal EOR partner should provide you with ongoing support and communication. This means appointing a dedicated account manager to you who is always ready to answer your queries and quickly resolve any issues. Such support ensures 24/7 availability and prompt response to any situations that may arise.
8. Check the trustworthiness of the provider.
Sometimes, reviews become the final step in making a decision. The same applies when choosing an employer of record provider and hiring the perfect one. It’s crucial to check the testimonials and ratings of the potential vendor, and in some cases, ask for references from other clients. This way, you can gain insights into their experiences, assess the level of service, and ensure the provider’s ability to effectively address various challenges, helping you feel confident in your choice.
Common Questions about Employer of Record
1. Which types of businesses benefit the most from EOR services?
EOR services are ideal for companies expanding globally, especially when they lack internal resources, like lawyers or accountants, to establish labor relations with developers in other countries. EOR is also an excellent fit for start-ups and SMBs that need an efficient hiring solution without establishing legal entities in each country.
2. Who will be the employer of developers?
When engaging an EOR provider, they become the official employer of your remote employees, simplifying the hiring and onboarding process by eliminating the need for you to establish a legal entity abroad. It’s crucial to verify how each EOR provider operates and to choose one that manages everything in-house without involving third parties. This ensures better oversight and control over your employees.
It’s also essential to distinguish between EOR and PEO services. With a PEO, the responsibility is shared between the provider and the client. In contrast, in an EOR arrangement, the provider acts as the sole legal employer, assuming full responsibility for all employment-related matters. Understanding the nuances of EOR vs PEO services is essential for making an informed choice.
3. Do I, as a client, have access to contracts with hired employees?
Although the EOR provider serves as the official employer for your developers and holds their service agreements, you will be the one to decide on the cooperation terms with your developers and have access to these documents.
4. How are the responsibilities divided between you and the Employer of Record provider?
The Employer of Record vendor acts as the official employer, but you, as a client, are responsible for finding and recruiting tech talent. You also remain accountable for the entire decision-making process regarding hiring, terminating, and promoting of your developers. Not to mention that the EOR vendor will never interfere with the development of your product. In turn, the EOR provider takes care of all HR tasks and benefits administration, such as gym memberships, health/life insurance, etc., as well as other aspects of work regulated by law.
5. How is employee data security ensured?
A reliable EOR provider ensures employee data security through advanced encryption technologies, adherence to global security standards such as GDPR, and restricting data access to authorized personnel and you as the business owner. Regular security audits and the signing of non-disclosure agreements by employees provide an additional layer of information protection.
6. How does an EOR provider hire remote employees, and what employment models are usually used?
Depending on local regulations and labor market specifics, EOR providers employ various models to hire workers in foreign countries. The most common models include:
- Business-to-Business (B2B) Contract: This is the most popular and flexible model, where individuals work as independent contractors. This arrangement allows for more flexibility in terms of cooperation and lower taxes than full-time employment. Payments are typically made in USD, giving the contractor the flexibility to either retain or convert the currency into the local one.
- Full-Time Employment (FTE) Contract: This model presupposes that the employee is officially hired as part of the company’s workforce. This approach requires strict compliance with the local labor law. However, one significant drawback is the higher taxes (40%+), divided between the employer and the employee. Additionally, there are numerous other obligations, such as severance pay, insurance, and social benefits. A key feature of this model is that salaries must be paid in the local currency, which can be less advantageous for the employee due to inflation and exchange rate fluctuations.
Better than Just an EOR Service
When it comes to choosing an Employer of Record (EOR) provider, why settle for the ordinary when you can have an extraordinary approach?
At Alcor, we go beyond standard EOR services by offering a comprehensive solution designed specifically for tech companies. Our unique combination of tech recruitment and seamless EOR services not only simplifies global operations but also eliminates the need to manage multiple providers.
In addition to the full set of EOR services, we provide full-cycle IT recruitment, connecting you with top software engineers in just 2 to 6 weeks through our team of 40 skilled headhunters. We maintain high standards with an 80% client CV approval rate and a 98.6% candidate probation pass rate.
For instance, our clients like People.ai, BigCommerce, Ledger, and Sift have reaped the benefits of our integrated and global approach. A notable example is Dotmatics, a US-based company developing scientific software incorporating science, data, and decision-making. Over a year and a half of collaboration, we expanded their team to 30 tech specialists, including roles such as Engineering Director, Full Stack, React, QA Automation, DevOps, and Node.js experts. We also managed payroll and provided legal compliance services to ensure Dotmatics could operate transparently in both the US and Eastern Europe.
At Alcor, we manage all aspects of software R&D outsourcing in LATAM or Eastern Europe, eliminating the need for you to establish a legal entity abroad. We handle payroll, taxes, and benefits, ensuring 100% legal compliance so you can focus on scaling your product.
On top of that, we offer comprehensive back-office support, including office search, negotiations, leasing, employer branding, hardware procurement, stock options for your developers, and others upon your request.