Article
9 min read
Employer of Record for Global Expansion and Market Testing
Employer of record
Author
Jemima Owen-Jones
Published
September 04, 2023
Last Update
October 30, 2024
Table of Contents
The role of a global employer of record (EOR) in international hiring
Leveraging a global EOR for market testing
Harnessing global talent for successful market tests
Successful strategies for global staffing with EOR
Our clients' stories: How Revolut, Project44, and others expanded globally with success
Unlock new markets fast with Deel
Key takeaways
- Local compliance, legal and tax complexities, and cultural differences can slow down your international expansion process, potentially costing you great candidates for important positions.
- Using employer of record services can increase speed to market and help companies establish their local presence faster than competitors while remaining compliant.
- Deel has helped thousands of clients expand their businesses to new markets through EOR by taking care of payroll management, local compliance, and expert knowledge of the target market.
Global expansion is essential to follow demand and outdo competitors. As 77% of employers are currently struggling to fill roles, gaining access to an international talent pool also increases the chances you’ll find the best candidates to help you grow your business.
However, testing new markets may not always pay off, and taking this step alone brings legal and financial risks to your company. Navigating complex employment laws, regulatory constraints, and cultural differences can also burden your HR team.
An employer of record (EOR) like Deel supports international expansion while eliminating the risk. Let us show you how.
The role of a global employer of record (EOR) in international hiring
An EOR is a service provider that assumes responsibility for your international hires. While you contract and oversee these workers, the EOR is the legal employer. You can also manage payroll taxes and benefits administration through them.
Using EORs bypasses the time-consuming and costly process of entity setup and enables you to hire employees (and in some cases, also independent contractors).
Ten years ago, while managing my previous company, I realized I had to internationalize my team. Hiring people outside Europe was a real pain—a nightmare because of regulations. I wanted to scale the business quickly, but the global hiring process without an EOR wasn’t scalable at all. I can now get access to top talents without asking them to relocate, and without my company necessarily being an enterprise. I’ve been able to hire in London, Bulgaria, the United States, and more. Every company and every talent now has the same chance. Everything is possible.
—Rachel Delacour,
CEO and Co-Founder, Sweep
Leveraging a global EOR for market testing
The advantages of EORs go beyond the initial hiring phase. These providers make exploring new markets more cost-effective, and lower risk as you can gauge your product or service’s viability more efficiently than you would by establishing an entity.
Let’s unpack these benefits in more detail.
Speed to market is key during expansion. Global businesses must establish themselves quickly enough to capitalize on demand or talent before conditions change. Given that international employment is more popular than ever—89% of contracts created on the Deel platform are remote—they face a lot of competition too.
EORs use their pre-existing entities to establish you in new countries within weeks. You can also test multiple markets at once. For instance, Veriff used Deel EOR to set up in the UK and Germany.
Learn how Deel has helped Fidel hire from 10 different nationalities
Deel supported Fidel through a period of hyper-growth to find talent from around the world.
“After starting using Deel, we saw a really positive change. O__ur internal teams finally had something that made their lives easier.” says Beatriz Lourenço, Talent Manager at Fidel API.
EORs also enable you to allocate your resources more effectively if you outsource HR tasks to them. They use their expertise to streamline processes like managing payroll services and comparing local benefits packages.
Meanwhile, your human resources department doesn’t have to absorb the extra work—Deel customer, Change estimates our EOR reduced their monthly workload by 300 hours.
Managing ongoing compliance risks, which involve legal and regulatory compliance, financial (payroll) compliance, employment laws, and data protection and privacy, is also easier through an EOR. Legal frameworks vary by country, so working with local experts is absolutely necessary to reduce non-compliance risks and prevent potential financial and reputational damage to your company.
For example, relying on Deel's in-house expertise allows you to:
- Localize contracts and collect all the required paperwork for hires
- Store, manage, and review documents in one place
- Keep up to date with changing labor laws and regulations with regular contract reviews
- Manage payments for government fees and social contributions
- Stay compliant with data protection and privacy laws
Plus, having the EOR act as the sole legal employer eliminates the risk of you being seen as a permanent establishment abroad and receiving extra fees.
Cost-effectiveness of market testing with EOR
In most countries, you need minimum capital requirements for the subsidiary to start operating. For small businesses and startups, that’s often way over the budget and simply doesn’t pay off. This is especially true if you only want to hire a few people, or from different countries.
There are also many other expenses you need to count in: different permits and licenses, opening bank accounts, legal fees, registration fees, employment agreements, employee benefits setup, and more.
How using an EOR for expansion can cut even more of your costs
Other than eliminating the upfront costs of setting up an entity, an EOR can save you significant amounts of money when unlocking a new market through:
- Reduced risk of non-compliance fines and penalties
- Flexible hiring of FTEs and independent contractors for short-term and long-term assignments
Read more about the financial advantages of using EOR services instead of setting up entities overseas.
Harnessing global talent for successful market tests
An EOR’s best feature is its easy access to global teams to lead your market testing and international expansion.
That’s because you need the best local employees to confirm the viability of the market and confirm further investments are worthwhile. These teams are also responsible for identifying potential obstacles and refining your strategy.
Local employees also have many advantages over relocated ones. Using their experience and knowledge of the culture, they should be able to:
- Know how to create the best possible impression of your company
- Tell you which marketing strategies will work best
- Build quick relationships with customers and partners
- Reduce misunderstandings due to cultural differences and mistranslations
- Find the most reliable sources of data
In fact, local employees can be make-or-break for global expansion. For example, retail giant Walmart failed to enter the German market and lost $1 billion (USD) in the process. A local hire could have told them not to brand themselves as low-cost when German consumers prefer high-end goods.
EORs not only recruit staff quickly but also allow you to scale and adjust. If you expand via mergers and acquisitions, they can help you minimize risks and integrate inherited talent.
💡See also: Integrating Inherited Talent: 7 Key Steps for Enterprise M&A
Discover how Deel helped Moralis double their workforce
**With Deel, Moralis hired over 95 employees across 36 countries but still saved 150 in admin hours.
I really felt an instant connection with Deel. I realized things were moving fast, and the team was flexible and keen to fix things according to our needs. Within only two weeks, Deel had onboarded us, had the call with the contractors, and made the first payments for 70+ people,” says the Head of People & Culture at Moralis, Lizette Kuld.
Note
If you withdraw from a market, EORs also let you keep the global talent you hired using sponsored VISAs. You can offer to have employees work remotely from their home country or relocate to your other legal entities.
Successful strategies for global staffing with EOR
While EORs offer a lot of assistance, you’ll still be involved in plenty of decisions. Here are some best practices to help you make the most of the relationship with your provider and guarantee further success.
- Get the best deal: EOR offerings vary but you can cut down on research by creating a Request for Proposal (RFD) and letting providers make you offers
- Explore the different use cases of EORs: There’s no need to stop at global hiring and expansion when EORs like Deel also assist with payroll and HR tech consolidation
- Attract and keep top candidates: Use your provider as a retention and hiring strategy by advertising your newfound location flexibility
- Clarify your target market: Gather industry insights, advice, and support from your EOR customer success manager to deliver your product and services to the target market the right way
- Collaborate with the EOR on onboarding: There’s some overlap between setting up new employees and welcoming them to your business. Discuss the onboarding sequence, timeline, and activities with your EOR to make sure you’re aligned
- Focus on employee experience: Working in different places and time zones can create distance between teams. Help them stay connected with your EOR’s collaborative tools like Deel’s Slack plugins
The most critical aspect of global workforce management strategies is choosing the right EOR solution. Top providers let you enter multinational markets, offer comprehensive features, and have competitive pricing. As the Oursky team has noticed, your EOR’s reputation also has an impact on your success.
When I hire overseas, I find that people know and trust Deel. Upon learning that their contract will be signed through Deel, they feel reassured because they know that the platform can be trusted, and it gives them peace of mind too. The way we’re using the latest technology even when it comes to hiring also says a lot about who we are as an employer. This is really important, especially when it comes to remote hires. The tools you use can be a reflection of your office and culture.
—Ben Cheng,
Founder and Project Manager, Oursky
Customer support is also key. Teamflow’s previous provider didn’t have 24/7 support which meant a $100,000 problem took a week to solve.
“We chose Deel mostly because of its extreme commitment to their mission and prioritization of customer success
—Chris Baugh,
Head of Business Operations, Teamflow
💡 See also: The Benefits of a Dedicated CSM: How Deel Sets You Up for Success
Our clients' stories: How Revolut, Project44, and others expanded globally with success
If you’re curious about the impact an EOR could have on your global expansion plans, here are some real-world success stories.
Popular banking app Revolut wanted to build the world’s first global financial service so international employment was essential to their mission.
HR manager, Luke Besling credited Deel EOR with giving the fintech company its competitive edge: “Thanks to Deel, we get to hire local talent in any country where we want to expand long before we set up the entity there. Effectively, this gives us a head start.”
Like Revolut, Project44 requires robust global support to manage operations across over 25 countries. Deel has saved them around $500K per year compared with other hiring solutions.
While it’s easy to focus on financial success, let’s not forget the effect EORs have on company culture. French company, Slite found they could help employees achieve their dreams of relocating and helping others.
Personally, one of the biggest positives is that [Deel] allows us as a company to help local communities. Before, you had to move to a big city or even a new country to work in tech. Now you can stay where you want and get paid fairly. In turn, that money goes back to the community.
—Christophe Pasquier,
CEO, Slite
Unlock new markets fast with Deel
With access to global EORs, your company can plan its next global move with confidence. Explore international markets with minimal legal and financial risk, source the best local candidates, and establish your presence in virtually no time.
Deel eliminates borders as the world’s largest EOR provider. We have local entities in over 100 countries so you can use our proven system to adapt to any market changes and go where the demand takes you.
Global Expansion
📖 Ready to take the next step toward expansion? Book a 30-minute demo to ask our experts all your questions about how we work.
🤔 Considering a PEO instead of an EOR? Deel’s got you covered with our upcoming payroll, benefits, and HR management for US teams.
About the author
Jemima is a nomadic writer, journalist, and digital marketer with a decade of experience crafting compelling B2B content for a global audience. She is a strong advocate for equal opportunities and is dedicated to shaping the future of work. At Deel, she specializes in thought-leadership content covering global mobility, cross-border compliance, and workplace culture topics.
