Businesses are no longer limited to their home markets for increased revenue and profits. However, market expansion isn’t easy. Setting up a legal entity in a foreign country from scratch is an expensive and time-consuming proposition. From hiring employees and constructing or leasing office spaces to familiarizing yourself with local employment laws and obtaining employment insurance, setting up shop in another country is one heck of a commitment.
But thanks to employment outsourcing organizations and the popularization of remote work, businesses can more easily navigate these tasks without losing their hair.
But with various types of employment outsourcing organizations to choose from, it gets confusing to figure out which one best suits your startup or business.
In this blog, we’ll explore the difference between a Global Employment Organization (GEO) and an Employer of Record (EOR) and which service aligns best with your business goals.
Considering a GEO or an EOR
Before we dive into a comparative analysis between a GEO and an EOR, let’s first take a look at what each of these employment outsourcing services means and what services they offer scaling businesses.
What is a GEO?
A Global Employment Organization helps growing businesses scale, hire international employees and explore new markets. GEOs simplify the process of global expansion by assisting in HR and administrative tasks, and providing expert guidance on how to navigate through the country's employment and labor laws.
GEOs facilitate international assignments and relocations and manage the complexities of visas, work permits, and other expatriate management services. With a GEO by your side, you can expand your company without the administrative burdens associated with employing a global workforce.
You might have heard of a PEO, but did you know a global PEO (Professional Employer Organization) is sometimes referred to as a GEO? We recommend taking a close look at the services offered to make sure they align with what your company needs.
What is an EOR?
An EOR or an Employer of Record is an organization that acts as the legal employer on behalf of a company. As an employment intermediary, the EOR takes care of administrative tasks such as payroll, taxes, employment contracts, employee benefits, overtime pay, etc.
The EOR also assists client businesses with their employment compliance needs, from employment regulations to administering employee benefits, aiding with visa processing and managing employment contracts. The benefit of partnering up with an EOR is that they’ll handle various HR-related functions while still ensuring you as the client retain day-to-day supervisory control of your new hires.
If you're a rapidly growing business and want to quickly yet compliantly set foot into new foreign markets, then partnering with an EOR is one of the best solutions. So, are they the same?
If you’re new to the concept of outsourcing global employment, it’s easy to get confused between a GEO and an EOR. However, they are not the same. Let’s take a look at the key services each outsourcing platform offers in order to get a better understanding of what’s best for your business.
Employer of Record Services
An Employer of Record takes on the full legal responsibility of hiring and managing employees internationally while ensuring compliance with local employment laws. Here are some of the services an EORs can offer your scaling business:
Hiring
An EOR provides you with the means to hire International employees without your company having to set up a legal entity. Once you’ve found that 10x engineer, an EOR will handle onboarding, benefits administration, payroll so they can immediately start contributing to the team.
Remember, an EOR isn’t going to help you find that 10x engineer (you’ll still have to do that on your own), but they will help with everything else to get them onboarded and paid compliantly.
Some EORs will even use automation strategies, like AI, that help streamline the onboarding and offboarding of your global hires.
With the paperwork out of the way and guaranteed compliance with local and foreign employment laws, you can focus on finding international employees that fit your job requirements and mesh with your company culture.
Non-Compliance
Operating a business in foreign lands means being exposed to unfamiliar employment laws, work cultures, norms and cultural habits. And complying with these laws isn’t optional. Failing to comply with local employment regulations results in hefty fines, penalties and even reputational damage.
With an EOR by your side, you can mitigate the risks associated with non-compliance. They understand and monitor ever-changing local employment laws, cultural norms, and habits, ensuring you have a finger on the pulse of what’s happening in that region.
Candidate Sourcing
While EORs won’t source candidates for your company, they can develop and offer your new hires a benefits package they cannot refuse. By offering the right supplemental benefits packages based on their needs, you can compete with the Goliath in your industry and secure top talent.
EORs typically offer localized benefits packages for employees across the world. These include benefits such as health insurance, retirement plans, and other employee perks.
Global Employment Outsourcing Services
Global Employment Organizations provide businesses with the legal and administrative services they need to globally expand and hire international talent.
As a client of a GEO, here’s what you can expect:
Navigating Employment Regulations
Whether you hire Canadian employees or other foreign nationals to work for your business, it's crucial to pay them accurately, on time, and in accordance with local tax and labor laws. In fact, there’s no quicker way to lose talent than to regularly mess with their paycheck.
For Canadian employees, various forms of taxes need to be filed by the employer and the employee. CPP and EI are something that employers file, while income taxes are taxes that employees file. Canadian laws encourage employers to be aware of such employment regulations and to abide by them.
However, since these employment regulations are constantly changing and evolving, businesses partner with employment platforms such as GEOs to help navigate laws and administrative payroll requirements.
Human Resources
Setting up a legal entity in another country leaves business owners asking questions like ‘Do we have the resources to properly manage HR tasks here?’ and ‘Will we need help to remain compliant?’.
Setting up an entity is beyond complex. It requires managing multiple suppliers, recruiting HR professionals, understanding and navigating labor laws, conducting market research, onboarding and offering employee benefits, etc. The long list of HR-related tasks is perhaps the reason why businesses opt for partnering up with GEOs.
Similar to an EOR, a GEO can support your business with the onboarding process. Their expertise and familiarity with work culture, employment laws and corporate norms allow them to effectively manage and compliantly onboard your remote team members.
Supporting Compliance
Like an EOR, a GEO offers compliance support to ensure that your business is adhering to local labor laws and regulations. This involves providing expert advice on employment contracts, employee benefits, and HR policies.
Failure to comply results in fines, reputational damage and penalties which a scaling business can ill-afford.
Involvement and Responsibility
While a GEO and EOR offer similar services, one of the major differences between the two is the level of involvement and responsibility. A GEO takes a consultative approach and works alongside their client company to ensure compliance with local labor laws, taxation requirements, and other employment regulations.
Since a GEO acquires knowledge and experience in various employment-related issues such as hiring and paying foreign employees, they provide their client company with the support and guidance needed to stay compliant. It’s still up to the client company if they want to accept and abide by the advice given by their GEO.
This comprehensive support allows startups and companies to focus on their core business objectives while relying on the expertise of the GEO service provider. However, while this alleviates the burden of understanding and adhering to complex international regulations, the client company or startup is still held accountable for any instances of non-compliance to local employment laws.
How Do I Choose the Right Service?
Choosing the right service is a crucial decision that will greatly impact your day-to-day operations and overall business. While both EORs and GEOs are expert outsourcing services, businesses need to choose the right one to fulfill their employment requirements.
In order to choose the best service for your business or startup, the first step is to identify the areas in which your company requires outsourcing assistance. The second step is to then differentiate between the various services each platform offers. Understanding these differences will help you make an informed decision.
EOR
Managing your global workforce is not a simple task, and that's why if your business requires a platform that will handle all aspects of employment, (while freeing you of any liability) then an EOR is the option for you. With an EOR, let the professionals take responsibility for global hiring. And since the EOR acts as the legal employer, you’re able to run your business hassle-free while the EOR compliantly handles all administrative paperwork.
GEO
On the other hand, a GEO is an ideal option for businesses looking for a more flexible option when expanding globallyYou can still oversee and maintain direct control over various employment tasks and decide the best direction for your company. Hiring through a GEO provides you with the services you need to ensure global compliance and streamline global expansion, but at the end of the day, they’re consultants - you make the final decisions.
Why Borderless AI?
Borderless AI is an AI-powered Employer of Record platform that simplifies global hiring. With Borderless AI, businesses and startups hire, manage and pay employees or contractors in over 170 countries around the globe.
Global Compliance
Borderless AI understands local labor and tax laws so businesses don’t have to. We’ve got your backs by ensuring your new team members are hired quickly and compliantly.
No Upfront Costs
Borderless AI prioritizes your growth and ensures there are no hidden fees when you partner with us. With zero deposits and no advance payroll pre-funding required, we help businesses conserve cash and spend more efficiently.
Alberni
We created the first ever AI-powered agent for HR, Alberni. Alberni helps create contracts, ask questions, and analyze legal agreements in seconds. Whether you want to create employment contracts, manage time off and expenses or gain powerful HR insights, Alberni is your super-intelligent HR agent.
You bring us your global talent and we’ll handle the rest. Contact us today!
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.
