With a record 81% of businesses actively engaging in global recruitment, one thing is clear: Companies are open and willing to look beyond borders to hire talent. Although companies are embracing a global growth mindset, building a global team isn’t as straightforward as hiring someone in your base country.
Luckily, there are several different solutions available to help you develop a solid hiring strategy that transcends geographical limitations. The two most common solutions to expand your global workforce are staffing agencies and an Employer of Record (EOR). An Employer of Record (EOR) serves as a legal employer and manages the entire employee life cycle as well as many other HR and compliance needs, while a staffing agency connects employers with qualified candidates to fill open roles.
So how does each model work differently to help you navigate varying local regulations, hiring practices, and recruitment channels? Let’s explore the difference between an EOR service vs. staffing agency, and the key benefits of partnering with a global EOR like G-P.
What is an Employer of Record (EOR)?
An Employer of Record, also known as an EOR, allows companies to hire globally without having to set up a legal entity. As the legal employer, an EOR manages many aspects of employment and HR tasks, including:
- Onboarding and offboarding
- Payroll
- Tax withholding and filing
- Benefits administration
- Employment contract generation
- Compliance with local laws
When exploring different global recruitment and hiring solutions, chances are you’ve also come across PEO services. What is a PEO, and how does it differ from an EOR and a staffing agency? A Professional Employer Organization (PEO) co-employs individuals with another company that already has its own registered entity in the particular jurisdiction. An EOR, however, acts as a direct legal employer and supports companies that do not have a legal entity in the country. A staffing agency, on the other hand, connects employers with qualified candidates to help fulfill talent acquisition needs.
How do staffing agencies work?
A staffing agency, also known as a temporary agency or employment agency, is an intermediary between companies seeking to hire employees and prospective job seekers. What are the benefits of a staffing agency? Ideal for sourcing temporary or full-time workers, a staffing agency streamlines hiring by matching qualified candidates with employers registered with the agency. Its functions include:
- Writing job descriptions
- Interviewing candidates
- Exchanging resumes and application documents
- Facilitating contact between the employer and employee
- Gathering feedback from job placements
In 2022, staffing and recruiting industry sales in the United States alone skyrocketed to USD 186 billion. Much like an EOR, a staffing agency can save employers money, offer flexibility, minimize time to hire, and help find the best available talent in a local market.
If global, permanent employment is your goal, a staffing agency may not be the right choice. While staffing agencies can support both short- and long-term employment, the majority of staffing agencies are in the temporary and contract sector of the industry. Companies also have less control over the hiring process, and it’s possible to encounter staffing agencies with subpar recruitment processes.
What are the differences between an Employer of Record and a staffing agency?
Although related, an Employer of Record (EOR) and a staffing agency differ in terms of their role and responsibilities. An EOR acts as the legal employer for a client company and manages everything from hiring and onboarding to global payroll and offboarding, while a staffing agency’s main focus is talent sourcing and acquisition for temporary, temp-to-hire, and long-term employees.
| Employer of Record | Staffing Agency | |
|---|---|---|
| Role | Manages the entire employee life cycle and provides ongoing HR support. | Connects employers with potential candidates, but services typically end post-hire. |
| Legal responsibility and compliance | Acts as the legal employer and ensures compliance with local labor and tax laws. | The client company remains legally responsible for employee HR needs and compliance. |
| Legal entity requirement | No local entity required. | Legal entity required. |
| Cost | Variable cost depending on scope of services and geographic location. | Percentage of the employee’s salary or standard fee per hire. |
| Hiring | Enables data-driven decisions with market insights and employer burden calculations. | Advises on talent availability and recruitment channels in specific markets. |
| Control | Handles compliance needs, but companies manage daily operations. | Companies must manage both compliance and daily operations. |
| Payroll and benefits | Manages payroll processing, benefits, and other key HR responsibilities. | Doesn’t handle payroll or benefits for the talent they source. |
| Employment scope | Offers flexibility to hire contractors and/or long-term employees. | Generally used to fill contract positions but can support both worker types. |
An EOR prioritizes compliance with relevant payroll and tax laws, and can handle administrative tasks like background checks, onboarding, timesheet management, and benefits enrollment. A staffing agency, on the other hand, usually doesn’t assume employment-related liabilities.
Is a staffing agency more expensive than an EOR solution?
The cost of both EOR and staffing agency solutions varies depending on a range of variables, including number of employees or open roles, types of services, and location. Some EORs have a fixed fee per employee, while a staffing agency will charge a fee per hire or a percentage of the employee’s salary.
Some companies choose a single provider to fulfill both staffing and EOR needs. Other businesses prefer to source candidates in-house, and then rely on an EOR for onboarding, payroll, and HR management. For added convenience, opt for a provider that covers all of your workforce needs like G-P.
Our Global Growth Platform™ pairs the industry’s most compliant Employer of Record (EOR) solutions with best-in-class payroll and HCM solutions, making it easier than ever to seamlessly hire and manage teams from a single dashboard.
What are the benefits of using an EOR?
Unlike a staffing agency that does not act as a legal employer, an EOR solution like G-P handles legal and administrative responsibilities associated with employment. This time-saving element is especially beneficial for both small and medium-sized businesses looking to expand into a new market for the first time.
In addition to streamlining HR functions, an EOR is also responsible for ensuring compliance with local employment laws that vary from country to country. Other key benefits of partnering with an EOR include:
- No local entity requirements. Setting up an entity or subsidiary in another country can be time-consuming. That’s why G-P created the global Employer of Record (EOR) model, enabling a fast and easy solution for global growth — without setting up new entities.
- Legal responsibility: When working with a staffing agency, companies must manage legal responsibilities such as payroll, taxes, and compliance. An EOR, on the other hand, stays up to date on local and international employment laws for you.
- HR administration. Unlike a staffing agency, an EOR solution manages payroll, benefits, and other HR responsibilities — so you don’t have to.
- Ongoing support. While the relationship between a worker and a staffing agency ends after the initial interviews and employee hire date, an EOR offers long-term support as the legal employer.
- Always-on compliance. EORs take on complex compliance challenges, empowering companies to grow with peace of mind.
Build your teams, your way, in 180+ countries with G-P.
When it comes to global hiring, both EORs and staffing agencies are essential players in the talent acquisition game. Luckily, you don’t have to choose between one or the other. Opt for a provider like G-P that offers EOR solutions and helps you recruit the best talent globally.
We make it easier than ever to hire independent contractors and full-time employees in 180+ countries. Easily expand into global markets with the #1 Global Growth Platform™ to:
- Unlock new opportunities: Leverage our rigorously vetted specialists to find and hire the best people in the world for the job.
- Grow your everywhere workforce. Get automatically matched with top recommended recruiting agencies. Then, hire and pay employees or independent contractors for both short- and long-term projects quickly and compliantly with G-P Meridian Contractor™.
- Enjoy holistic support. Every candidate is supported by HR experts in their region of choice 24/7, 365 days a year.
Ready to build global teams? Go where opportunity takes you and start hiring the best talent in the world today. Contact us or request a proposal.
