Employer of Record: Expand Globally with Confidence

What Is an Employer of Record — and Why Does It Matter?

Hiring in a country without a legal entity is complex and time-consuming. That’s where a global EOR helps.

An EOR is a third-party organization and global hiring solution that serves as the legal employer of a worker in a foreign country.

EOR service providers take on all formal employment responsibilities on behalf of a company, including managing contracts, ensuring compliance with local labor laws, handling tax registration, and more. In essence, an Employer of Record functions as a fully managed HR and compliance service designed specifically for businesses looking to expand internationally.

Importantly, while EOR service providers take care of the legal and operational side of employment, the day-to-day duties of the employee remain fully under your control.

The division of responsibilities is one of the main benefits of utilizing a global Employer of Record. By acting as the legal employer, EOR service providers take on the administrative burden and compliance risk that come with global expansion, meaning your team can stay focused on what matters most: growing the business, finding the right talent, and building your international presence.

At a time when businesses are increasingly borderless, the role of an Employer of Record has never been more vital to creating a secure, compliant, and future-ready foundation for your workforce.

Setting up a legal entity in a new market is a resource-intensive process that is costly and slow. For example, entity incorporation involves multiple steps such as government approvals and notarizations, which can often lead to unpredictable delivery dates.

One common bottleneck businesses face when trying to set up a legal entity is opening local corporate bank accounts. According to a 2024 global report, 62% of global jurisdictions said it takes over a month to open a bank account for a new entity, due to cumbersome Know Your Customer (KYC) checks and paperwork.

Unfortunately, even once a legal entity has been established, businesses still face many ongoing challenges, such as managing payroll, navigating local hiring processes, and HR complexities.

This is why, for many companies, using an Employer of Record service provider is the fastest and safest way to scale globally. Not only does an EOR make rapid international expansion possible, but it also mitigates the risk of employee misclassification, non-compliance fines, and payroll errors — all of which can lead to reputational damage or legal challenges.

Direct vs Indirect: The Two Types of Employer of Record Services

There are two distinct types of Employer of Record models: indirect and direct. While both options help to rapidly streamline international hiring, their approaches differ considerably.

Indirect Employer of Record

An indirect Employer of Record (EOR) does not necessarily operate its own legal entities in every country it serves. Instead, it depends on a network of third-party providers and in-country vendors to deliver HR, tax, legal, and payroll services on its behalf. While this model enables broader coverage, it can create complications around responsibility and accountability, particularly when issues arise that require urgent support from the provider.

Disadvantages of an Indirect EOR:

• Multiple layers of complexity: Requests and questions can pass through several intermediary providers, resulting in slower response times.

• Limited direct oversight: The indirect approach can dilute control, making it harder to ensure consistent compliance with local employment regulations.

• Communication issues: Working across different time zones with multiple intermediaries can result in miscommunication and potential misunderstandings, complicating employee management.

Delayed support: Employees and managers may face delays due to indirect communication channels, disrupting productivity and operations.

Overall, indirect EOR services often lead to added complexity, reduced operational transparency, and increased risks and expenses, making them less suitable for businesses aiming for efficient global expansion.

Direct Employer of Record

A direct Employer of Record (EOR), such as Atlas, has its own business entities established in the countries where its employees are hired. As a result, a direct EOR never needs to outsource its legal employer status to local third party EOR providers. This model allows the EOR to manage employment responsibilities internally, with its own in-country teams handling day-to-day support.

Advantages of a Direct EOR:

• Streamlined Communication: Direct control and fewer layers ensure prompt, accurate responses to questions and issues.

• Greater operational transparency: Internal management of entities allows businesses clear oversight of compliance and administrative processes.

• Faster onboarding: In-house teams accelerate hiring timelines by eliminating third-party delays.

• Cost-effectiveness: Removing the need for third-party subcontractors reduces overall fees and expenses, providing predictable pricing for expanding businesses.

• Enhanced compliance: With direct control over entities, a direct EOR has stronger and more reliable adherence to local labor, payroll, and tax laws.

• Superior employee experience: Dedicated, in-house support and consistent HR management across more than 160 countries result in improved employee satisfaction and smoother onboarding.

This enables companies to confidently scale their global workforce while minimizing compliance risk and administrative complexity.

This is where an Employer of Record plays a pivotal role. By managing employment responsibilities on your behalf, EOR service providers help businesses navigate diverse regulatory landscapes without the need for in-house legal teams in every country. They handle essential functions such as employment contracts, tax registration, payroll processing, and benefits administration in accordance with local laws.

Atlas ensures built-in compliance at every step, with legal and regulatory teams monitoring changes across 160+ jurisdictions. Our infrastructure is ISO 27001, 27017, and 27018 certified, and fully GDPR-compliant—ensuring your data and operations remain secure and audit-ready.

Why AI Tools Can't Be Trusted to Manage Compliance

Artificial intelligence is increasingly becoming a core feature of modern HR operations. As highlighted in the Global Atlas Report: Challenges, Strategies, and Solutions for Global HR Leaders, 95% of business leaders are using AI to research researching how AI can support global HR tasks, from managing payroll to benefits and compliance.

These figures reflect a growing reliance on automation to streamline compliance research and workforce decision-making. Our report clearly indicated that AI is rapidly gaining traction – over half (54%) of those surveyed use AI tools frequently, and 41% use them occasionally.

Despite this interest, compliance remains the single biggest challenge for expanding businesses, with 86% of respondents saying that keeping pace with international labor laws and regulations is the most difficult aspect of global expansion.

Compliance is shaped by nuance, cultural differences, and the specifics of local regulation. These sensitive areas all require human judgment, contextual insight, and local expertise. While automation can support efficiency, algorithms lack the interpretive capabilities needed to guide real-world compliance decisions.

It’s easy for operations to become fragmented when managing multiple international teams, time zones, and regulatory environments.  That’s where a direct Employer of Record like Atlas becomes essential.

Unlike fragmented subcontractor models, Atlas acts as the legal employer in each country, giving your business the ability to hire and manage staff while retaining full control over your people strategy. Crucially, our direct EOR structure allows for streamlined, consistent processes in payroll, onboarding, and compliance, all while providing deep, country-specific expertise at every step.

But what truly sets Atlas apart is our white-glove support model. From day one, global employees benefit from a premium, high-touch experience that prioritizes communication, care, and continuity.

For businesses aiming to avoid bloat and stay agile, partnering with an Employer of Record is a strategic way to reduce the overhead of entity setup, control fixed costs, and test new markets without long-term commitments. By integrating EORs into their workforce planning, companies can maximize operational efficiency while maintaining flexibility and speed across borders.

Choosing the Right EOR Partner for Long-Term Growth

Whether you're prioritizing pricing transparency, entity ownership, or access to local knowledge and dedicated customer support, these factors play a direct role in shaping operational efficiency, legal compliance, and employee satisfaction. The best EOR service providers align with your strategic goals and scale alongside your business. Additionally, they offer the oversight and flexibility needed to navigate even the most complex or highly regulated global markets.

As demonstrated in our work with Mamoon and numerous other partners, choosing the right EOR can make all the difference. By selecting a direct Employer of Record, such as Atlas, your enterprise can gain fundamental knowledge of local systems, ensuring that your business remains compliant, competitive, and connected to its global teams.

By directly managing our own legal entities in over 160 countries, rather than relying on third-party intermediaries, Atlas gives you full visibility, greater consistency, and tighter compliance across every market you operate in. Whether your business is hiring in one country or entering several simultaneously, you gain access to a streamlined, unified infrastructure that supports faster decision-making, clear accountability, and long-term scalability.

We also recognize that legal compliance is only one part of a successful global expansion strategy. Our direct Employer of Record services are designed to deliver a complete solution, including onboarding, payroll, benefits administration, HR support, and ongoing regulatory updates.

Atlas brings together local expertise with a service model that prioritizes care and continuity. This ensures that your international teams feel supported from day one, and that your business culture is reflected consistently across borders.

Crucially, Atlas acts as a strategic partner, not just a service provider. Our human-centric, personalized, and hands-on approach means that we take the time to fully understand your expansion plans, and work with you to shape a global hiring strategy that balances risk, cost, and opportunity.

Whether you are testing a new region, converting contractors, or building a distributed workforce, we help you navigate cross-border employment confidently and compliantly.

With Atlas as your partner, you're not just hiring internationally. You're building the foundations for long-term, global growth.