Difference Between an EOR, GEO, PEO, and AOR

The world of human resources is a dynamic industry with multiple jargon and acronyms through which professionals must sort every day. Each term has a vastly different definition and is accompanied by a list of benefits, drawbacks, and optimal requirements for usage and partnership. 

For example, there are many choices of talent outsourcing services.  Founders, CEOs, and HR professionals today have the option of choosing between EOR, GEO, PEO, and AOR services but first need to identify the type of service their organization needs. 

When identifying which outsourcing option best suits the unique needs and requirements of a company, the terminology can often get confusing.  We’ve got you covered with the ultimate guide to identifying various talent outsourcing options, how they differ from one another, and when to use each service. 

From an EOR and PEO to GEO and AOR, these outsourcing options are more than just services that help you hire talent globally. Choosing the right one can also help you build your business and plan for the future.

Defining the Terms 

Before we review the differences between the four types of talent outsourcing services and how they can assist businesses in hiring employees, it's crucial to understand what each acronym stands for.

What Does EOR Stand For? 

An EOR, also referred to as an Employer of Record, acts as the legal employer of a new hire, taking care of administrative tasks such as payroll and taxes - all while the client company retains day-to-day supervisory control.

Administrative tasks include but are not limited to, compliance with local employment laws, payroll processing, tax filing, benefits administration, visa processing and even managing employment contracts. 

By partnering with an EOR, businesses can avoid having to establish a foreign entity and alleviate the complexities and risks associated with hiring global employees. An EOR is a great solution for businesses that are rapidly growing and wish to quickly and compliantly explore new markets for sourcing international talent. 

What Does PEO Stand For? 

A PEO, or Professional Employment Organization, is a service provider that acts as a co-employer, provides your business with HR services, and ensures your company stays compliant with employment laws and regulations.

HR-related tasks such as managing payroll, employee benefits, HR administration, employee training and other complex HR functions are all handled by PEO services. 

This allows businesses of all sizes, including small and medium-sized businesses, to focus on core business operations while outsourcing complex legal and HR functions to a professional employer organization. 

While partnering with a PEO, businesses can retain control over day-to-day business operations and relieve their HR departments from administrative and compliance-related tasks.

Depending on where you plan on hiring and outsourcing your administrative and HR-related tasks, you can choose between partnering with an international PEO or a domestic PEO. 

Domestic Professional Employment Organization 

A domestic PEO provides your company with a business-to-business (B2B) service that allows you to outsource administrative and human resource-related tasks such as safety training, payroll, and benefits. Since it is a domestic service, you can only outsource to companies located in the same country your business operates in. 

For some businesses, this is an ideal resource since it allows managers and HR professionals to outsource tedious tasks while ensuring local employment laws are followed. It works especially well when the business does not have a robust HR department that would usually complete these tasks. The sense of familiarity allows for a more cost-effective and controlled way of outsourcing monotonous tasks. 

International Professional Employment Organization

Similar to the Domestic Professional Employment Organization, an international PEO provides the same services, except on a global scale. Companies can engage talent without having geographical limitations. Similar to a domestic PEO, an international PEO is a solution for businesses looking for a co-employment solution to help streamline global HR processes and reduce the immense administrative burdens associated with operating a business. An international PEO might sound similar to an Employer of Record but is different in several ways:

• All services, rights and responsibilities of the international PEO and client company are addressed in a co-employment service agreement.
• International PEOs will take responsibility for all of your global employees while an EOR is the legal employer of just your contingent global employees, with you maintaining responsibility for your permanent global staff. An EOR mitigates the risk of co-employment by maintaining this important distinction.
• EOR services may provide workers on a more temporary project-specific basis than PEOs which provide workers on a long-term basis.    

What Does GEO Stand For? 

A GEO or a  Global Employment Outsourcing company, can be used to hire and manage international employees in a country where the business is not yet registered. 

With the expertise and resources of a GEO, businesses can operate internationally despite not knowing the complexities of international employment or registering to expand their team at a global level. 

GEO providers can assist businesses with global employment solutions. From recruitment, onboarding, and payroll to benefits management and compliance, a GEO is a great way for businesses to expand globally. 

Global employers can overcome the administrative burdens and complications associated with international employment since GEOs handle all the paperwork and compliance requirements of your business. 

Sounds Familiar?

The definition of the term GEO sounds very similar to that of an EOR and international PEO, however, that is not the case. While all three outsourcing services provide similar services on the surface, a GEO differs because of its flexibility. It extends services beyond that provided by an EOR and international PEO and offers your company services you only need, rather than the whole package. A GEO can also assist you when it comes to global expansion - setting up an entity or administrative tasks related to mergers and acquisitions. 

When engaging new global employees, these nuances are what differentiate the three employee outsourcing options from one another. 

What Does AOR Stand For? 

An AOR is the term given to an Agent of Record. Generally, an Agent of Record refers to a long-term partnership between a business and an agency. This is the reason why AOR is sometimes referred to as Agency of Record. 

In the HR industry, however, an Agent of Record assumes responsibility for engaging and managing a business’s independent contractors. From correctly classifying your talent to drafting compliant SOWs and contracts, and managing and paying your contractors, an AOR is responsible for the entire process of engaging your independent contractors. 

An AOR or Agent of Record is the ideal solution for those looking to offload the compliant hiring, engagement and payment of their independent contractors so that they can focus on core business activities. 

Services Provided 

One of the major differences between the four talent outsourcing options is the services they offer. While services may slightly differ from provider to provider, the following services are generally offered to all those looking to partner up with an EOR, PEO, GEO, or AOR. 

EOR Services 

An Employer of Record typically provides services that assist businesses with compliance regulations in a foreign market and managing international staff. In fact, they take on full legal responsibility when the business wants to hire employees internationally. 

Employment Related Tasks

The EOR doesn’t simply hire employees but rather handles a variety of employment-related tasks such as employment contracts, taxes, payroll, benefits, employee onboarding, and even assisting with immigration and work permits. 

Mitigating Risks

Operating a business in a foreign market with unfamiliar employment laws and regulations can be quite risky and complicated. Failure to comply with local employment laws can result in hefty fines, penalties, and even reputational damage. Businesses can simplify the expansion process and reduce risk by tapping into the deep knowledge and expertise in global hiring compliance that EORs typically possess.  

HR Support

Some EORs also provide HR support. This may include helping your business with global HR policies and procedures and providing services to attract and retain top international talent. 

As a part of employee benefits packages, EORs can also offer worker compensation benefits and even unemployment insurance if necessary, making this an ideal solution for employers, HR professionals, and employees. By providing access to a comprehensive benefits package that meets the requirements of local labor laws, the EOR ensures compliance at all levels of the hiring process.

An EOR plays a crucial role in helping businesses navigate the complexities of exploring foreign business markets while allowing the business to invest more time and resources in core day-to-day operations.    

PEO Services

Companies can alleviate the administrative burdens associated with HR-related tasks and focus on core business functions by partnering with a trusted PEO. 

Administrative Services

A PEO provides various payroll administration services, including employee payroll, calculating and filing payroll taxes, and much more. While providing payroll services, a PEO will also ensure accuracy and compliance with local labor laws. 

Employee Benefits 

Another service PEOs provide is their extensively detailed employee benefits. By establishing, maintaining, and monitoring employee benefits, they can streamline the benefits administration process. From annual paid vacations, sick leaves, maternity or parental leaves, and worker compensations to benefit programs such as health insurance and retirement plans, a PEO provider assists with almost all employment liabilities. 

When businesses take advantage of the several benefits PEOs offer, they are likely to grow 7 to 9% faster and are even 50% less likely to go out of business. 

PEOs also assist with risk management and compliance. So, if you ever need guidance on HR policies or procedures, a PEO service can come to the rescue. 

GEO Services

When you don’t have the staff, expertise, or a registered company in a foreign country, a GEO can be a valuable resource. As experts in managing legal and administrative services, they can handle the various parts of employing foreign workers and workplace expansion. 

Global Payroll Management

One of the main services a GEO provides is global payroll management. This means your GEO will ensure employees are paid accurately, on time, and per the local tax and labor laws of the country of employment. A GEO will navigate and assist with all aspects of internal payroll, including calculating and withholding taxes, managing social security contributions, and navigating the unique requirements of the foreign country the business or employee will be operating. 

If you plan on opening up your own legal entity in a new market or want to expand your  business gloablly, a GEO can provide your business with the means to do so. 

Streamlined HR Service

Partnering with a GEO is an ideal option for those looking for cost-effective and streamlined HR services and employee management. Whether you are avoiding the hassle of managing multiple suppliers, recruiting HR specialists, or simply need to meet legal standards, a GEO can be a great help. Since there is a high cost of opening up your own legal entity in another country, using a GEO will ease the financial burden by providing you with the means to conduct operations without registering your company.

A GEO can also offer global HR support in the form of recruitment and onboarding for international employees, performance management, and employee relations. They are also familiar with local customs and work culture, allowing GEOs to effectively manage conflicts and suggest realistic solutions. 

Enhance Communication

Apart from the cost-effectiveness and HR services, GEOs can improve productivity and communication since there is only one point of contact for all inquiries. Now you don’t need to engage with multiple stakeholders or go through a long channel of communication to find your answers. 

Compliance 

Similar to other outsourcing services, a GEO will also handle your business's global compliance and legal matters, including contracts, work permits, and visas. With constantly evolving employment and labor laws, a GEO will ensure your business's legal requirements are met to standard. 

AOR Services

An Agent of Record or an AOR can help your business compliantly engage with independent contractors on a global scale. An easy way to understand what an AOR can provide, is to look at the services that EOR provides - but apply them to contractors, not employees. 

Since many countries view employees and contractors as different forms of employment, the laws about the hiring of these two forms of employment also vary. 

Your AOR provider can properly classify your talent as either ‘employees’ or ‘contractors, so you avoid the risks of misclassification. Failure to correctly classify and hire contractors can lead to fines, penalties, and in many countries – jail time.

Compliance

Just like EORs, an AOR will handle compliance and legal matters for your global contractors.

Engagement and Payment

The rules involved in compliantly engaging contractors varies from country to country. The largest benefit to hiring an AOR is outsourcing the responsibility of labor law compliance and payment of contractors. HR departments and hiring managers can focus their attention on growing their core business while their AOR manages their global contractors.

EOR Vs PEO

When exploring various talent outsourcing services, each choice has its pros and cons. In reviewing EOR and PEO, it is crucial to look at their nuanced differences as they may appear to be very similar. 

Both an EOR and PEO will help you achieve your business's long-term goals of operating and conducting business in new markets, though there is one key difference between the two. 

An EOR acts as the legal employer of your new global hire. After your business signs a binding Master Services Agreement with the EOR, they oversee and manage various aspects of your new hire’s employment -  from employment contract generation to onboarding and payroll, and finally offboarding. A PEO, on the other hand, acts as a co-employer. This means that the PEO and business share the responsibilities and liabilities of employing new employees and other aspects of employment. 

Both EORs and PEOs are solid options for growing businesses, however, it’s best to carefully consider which solution works for your company’s unique needs. 

GEO Vs AOR

Before choosing the ideal service for your business’s unique needs, you should explore the differences between global employment outsourcing and an agent of record. On the surface, an AOR solely serves businesses interested in outsourcing the management of their independent contractors, however, there are some similarities and nuanced differences between the two options. Let’s examine their roles when aiding with the following three services: 

1. Compliance

Both the GEO and AOR offer compliance assistance, however, a GEO assists with making sure your business is compliant with local employment laws. This means you and your company’s HR department get the final say and will be held responsible if compliance is not met. An AOR on the other hand, consults with local experts and ensures your company abides by local hiring regulations as it pertains to independent contractors. They hold authority in making such decisions for your business. 

2. Responsibilities 

Perhaps one of the most obvious differences between the two is the services they offer. A GEO handles HR and payroll benefits for your business across multiple countries, while an AOR handles hiring, management and payment of your independent contractors across the world.

3. Scalability

A GEO helps you hire employees globally without establishing multiple legal entities in various countries around the globe. In contrast, an AOR helps you compliantly hire contractors around the world.

Choosing the Right Service

When it comes to picking the right outsourcing service for your business, you need to identify your business’s most significant needs. This is one of those scenarios where one size doesn’t fit all, making it essential to identify the areas in which your company requires outsourcing assistance.  

Here are a few points that will help you identify  the right talent outsourcing service: 

EOR 

Entering a new market efficiently while remaining compliant with all relevant regulations can be a challenge, but partnering with an EOR is an easy solution. When you are looking to tap into the professional and creative expertise of talented professionals from across the globe, an EOR platform is an ideal choice.

Not only will an EOR  ensure you remain compliant with all local and international employment laws, but they will also assist with the hiring of foreign employees, from hiring to onboarding to managing terminations. They’ll compliantly handle all the paperwork and extra administrative tasks while you manage the day-to-day activities of your new hire and focus on growing your business. 

PEO

If you want to maintain some control over your new hires, a PEO will provide you with some of the benefits of an EOR while giving you the opportunity to co-employ your new hires. This means you can share HR and administrative responsibilities. The PEO will ensure you stay compliant with local labor laws and assist with administrative tasks such as payroll, but you will still have control over important HR decisions.

GEO

Are you looking to expand into several different countries around the same time and want to ensure compliance while minimizing the risks associated with navigating international employment laws? Hiring through a GEO can provide you with the services you need to ensure global compliance and streamline global expansion.

AOR 

When interested in engaging independent contractors locally or in a foreign country with unfamiliar labor laws, it's best to seek the guidance of an AOR. They can take the responsibility of correctly classifying your talent, engaging, managing and paying global contractors while navigating the complex global hiring landscape.

Why Borderless?

Borderless is an Employer of Record platform that simplifies global hiring. With Borderless,  companies can hire, manage and pay employees and contractors in over 170 countries without the hassle of setting up a local entity.  

Borderless redefines global HR by requiring no upfront costs, prioritizing labor law compliance and offering the first-ever AI-powered agent to answer questions and create and analyze employment contracts. 

Borderless also offers an unrivaled customer and employee experience. From onboarding to offboarding, in-country Borderless employees and dedicated account managers are there to guide businesses through the global hiring process. In addition, Borderless has created an intuitive mobile app so new team members can easily access their employment data, complete administrative tasks, and directly chat with Borderless agents. 

Contact us today and find out how we can help you expand into new markets, stay compliant, and hire talent from 170+ countries around the world.

_Disclaimer

_{Borderless does not provide legal services or legal advice to customers, contractors, employees, partners, or the general public. We are not lawyers or paralegals. Please read our full disclaimer here.}