In the ever-changing landscape of global business, enterprises are increasingly turning to Employer of Record (EOR) services as a strategic tool for conquering international markets. A recent survey by CFO Research reveals that an impressive 58% of companies are either already utilizing EOR services to bolster their global business approach or are gearing up to do so within the next three years.

Dipping Toes into New Markets: A Strategic Approach

Employer of Record services serve as a valuable resource for companies seeking a phased approach to entering new markets. Acting as a golden ticket, EORs provide a secure environment for companies to test products and services, identify potential challenges, and tailor their offerings to suit the unique dynamics of local markets—all without the need to establish a legal entity. This strategic approach enables firms to validate assumptions and make informed decisions based on data, thereby mitigating risks associated with market entry.

Imagine building a robust local team while the gears of incorporation are in motion. EORs empower companies to hit the ground running, establishing a local brand presence even as legal processes unfold. By the time the local office is fully operational, the team is already deeply immersed in activities, significantly expediting the market entry process.

Seamless Transition: Navigating Complexities with Ease

Global expansion often involves navigating a complex maze of legal, HR, and tax compliance challenges, with 51% of senior finance executives identifying these obstacles as substantial barriers, according to the CFO Survey. EORs play a crucial role in overcoming these challenges by facilitating a seamless transition of the local team from the EOR to the newly established entity. This transition is akin to smoothly shifting gears on a highway, enabling the setup of local payroll operations, ensuring business continuity, and retaining the local talent pool—keeping the business engine firing on all cylinders.

Offering a versatile range of solutions, EORs can transform freelancers into full-time employees, facilitate employee relocations, champion the remote-first trend, and ensure immigration compliance. These services contribute to enhancing operational efficiency and flexibility, helping enterprises comply with tax laws, labor laws, and international trade laws and agreements.

EOR Trump Card: Cost and Time Efficiency

The undeniable advantage of EORs lies in their ability to save companies significant time and money. EORs act as a safety net for companies looking to swiftly launch overseas operations, hire employees from countries where they lack an entity, or safeguard their intellectual property globally. By mitigating the risks associated with global expansion, EORs enable enterprises to focus on their core business objectives.

A Harvard Business Review analysis of 20,000 companies in 30 countries revealed that companies venturing abroad experienced an average Return on Assets (ROA) of -1% even five years post-move. It took a decade for these companies to achieve a modest +1%, with only 40% managing to exceed 3%. However, leveraging EOR services allows companies to expedite this journey, ensuring faster and more robust returns on their international operations.

In a business landscape where the number of large companies has doubled since the turn of the century, and global expansion plans have surged, EORs have emerged as the guiding North Star. Despite the inherent challenges of international expansion, EORs are proving instrumental in helping enterprises navigate and minimize these obstacles.