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what is an employer of record

What Is an Employer of Record and How Does It Work?

As businesses expand globally, they often face complex challenges in navigating different employment laws, regulations, and tax systems across multiple countries. Enter the employer of record (EOR) – a solution that simplifies international hiring and enables companies to tap into global talent pools while effectively addressing the intricacies of workforce management. But what is an employer of record, and how does it work? Well, let’s break this down further.

What is an Employer of Record?

An employer of record is a third-party organization that acts as the legal employer for a company’s international workforce. The EOR takes on the responsibility of onboarding, payrolling, and managing compliance with local labor laws and regulations, allowing the client company to focus on its core business operations.

The Demand for Global Talent

According to a report by Valuates, the global Employer of Record (EOR) Platform market was valued at US $4.45 billion in 2022 and is projected to reach US $6.6 billion by 2029, exhibiting a compound annual growth rate (CAGR) of 6.8% during the forecast period of 2023-2029.

Considering the economic impact of the COVID-19 pandemic, the Aggregator Model accounted for 67.55% of the global EOR market in 2021 and is expected to be worth US $4.62 billion by 2028, growing at a revised CAGR of 7.31% in the post-pandemic period (2022-2028). EOR customers include small and medium-sized enterprises (SMEs) and large enterprises. SMEs accounted for 69.75% of the market share in terms of revenue in 2021.

The ease of international market expansion, low human resource costs, elimination of local incorporation requirements, immigration compliance assistance, guaranteed local compliance adherence, and the absence of additional payroll tax obligations are all expected to contribute to the growth of the Employer of Record market.

How Does an Employer of Record Work?

An EOR establishes legal entities globally to employ workers on behalf of client companies. The EOR handles all local compliance, payroll, taxes, and HR administration. Client companies maintain operational control while the EOR serves as the legal employer. This co-employment model enables companies to rapidly hire international talent without setting up local entities themselves.

Under this arrangement, the employer of record takes on several key responsibilities. The employer of record performs the following functions:

  • Simplifying Compliance: An EOR ensures compliance with local employment laws, tax regulations, and statutory requirements in each country where the client company has employees. This includes handling payroll, insurance, benefits, and termination processes.
  • Co-employment Model: The EOR becomes the legal employer of the client’s international workforce, while the client company maintains operational control over the employees. This co-employment model allows businesses to expand their global reach without setting up local entities.
  • Streamlined Onboarding: The EOR handles the recruitment, onboarding, and offboarding of international employees, providing a seamless experience for both the client company and the employees.
  • Mitigating Risk: By taking on the legal responsibilities of employment, an EOR helps businesses mitigate risks associated with non-compliance, misclassification of employees, and other legal issues that can arise when hiring globally. 

This comprehensive approach, addressing regulatory compliance and operational efficiency, highlights the significant advantages of partnering with an Employer of Record. 

The Benefits of Partnering with an Employer of Record

Partnering with an experienced EOR offers several advantages for businesses seeking global expansion:

  • Faster Market Entry: EORs facilitate rapid entry into new markets, enabling companies to hire and onboard international talent without the need to establish legal entities in each country.
  • Cost Savings: Outsourcing employment responsibilities to an EOR can be more cost-effective than setting up local entities or navigating complex regulations.
  • Scalability: With an EOR, businesses can scale their global workforce up or down as needed, providing flexibility to adapt to changing market conditions, a key aspect of business process outsourcing strategies.
  • Expertise and Local Knowledge: EORs bring extensive expertise in global employment regulations and local labor market knowledge, helping companies navigate the complexities of international hiring.

As the demand for global talent continues to rise, the role of employer of record benefits becomes increasingly crucial. By understanding what an EOR is and how it works, businesses can leverage this solution to expand their global reach, access top talent, and stay competitive in the international marketplace.

Tap into Global Talent Pools with an Employer of Record Solution

Now that you have grasped the concept of ‘what is an employer of record,’ recognizing its significance is crucial. Expanding into new international markets presents a unique set of complexities that require the guidance of an experienced team. As your global employer of record (EOR) partner, Procloz ensures the highest level of support for you and your distributed workforce. Our global capabilities across multiple countries, unparalleled expertise, and dedicated service enable you to quickly and compliantly hire top talent.

We offer a comprehensive suite of global workforce solutions that address risk mitigation, local labor requirements, and compliance, allowing you to focus on growing your business.

Eager to build your dream team? Procloz is ready to assist. Contact us today.

employer of record

Unlocking Global Growth: 6 Tips On Harnessing Technology And Innovation For International Business Expansion

Technology and innovation are critical drivers of successful international business expansion, with digital advancements projected to generate an additional $2 trillion in new trade opportunities by 2025, according to a McKinsey report. These technological improvements have revolutionized business operations, allowing companies to streamline processes, enhance global connectivity, ensure compliance, and foster innovation. Notably, the World Economic Forum found that 85% of companies adopting advanced technologies experience a 30% reduction in operational costs due to increased efficiency.

Companies leveraging cutting-edge technologies like artificial intelligence (AI) and blockchain, along with fostering a culture of innovation, hold a substantial advantage in scaling their operations across borders. For instance, the International Data Corporation (IDC) forecasts that global spending on digital transformation will surge to $3.4 trillion by 2026, reflecting the significant role of technology in modern business strategies.

This article explores how technology and innovation are empowering businesses to overcome traditional barriers and achieve remarkable growth in the global marketplace. By enhancing supply chain transparency, ensuring regulatory compliance, and boosting customer engagement, advanced technologies are reshaping the landscape of international trade and commerce, offering unprecedented opportunities for businesses worldwide. 

Let’s dive deeper.

Technology and Innovation Driving Successful International Business Expansion

Streamlining Processes

“Technology has transformed traditional business processes, making them more efficient and streamlined, with Accenture noting that AI has the potential to boost profitability by an average of 38% across various industries.”

Automating repetitive tasks and leveraging artificial intelligence (AI) can significantly enhance efficiency, productivity, and cost-effectiveness in international operations. AI-powered solutions can streamline processes, optimize supply chains, and personalize customer experiences across diverse markets. 

For example, AI-driven translation and localization services can help businesses tailor their content and messaging for different cultural contexts, fostering better engagement and brand resonance. 

Global Connectivity

Technology has eliminated geographical barriers by providing businesses with global connectivity. Communication tools, such as video conferencing and collaboration platforms, facilitate real-time communication and collaboration among teams spread across different locations. This enables effective project management, decision-making, and seamless coordination among international teams, fostering innovation and accelerating international expansion.

Knowing about the future of shared service automation will help you better understand the importance of technology and innovation.

Scalability and Flexibility

Technological advancements have provided businesses with scalability and flexibility, essential for successful international expansion. Cloud computing, for example, allows companies to scale their infrastructure, storage, and computing power as needed. This eliminates the need for physical servers and costly infrastructure investments, making it easier for businesses to expand their operations globally in a cost-effective and efficient manner.

Compliance and Regulatory Management

International expansion brings forth a multitude of compliance and regulatory challenges. Technology helps businesses navigate these complexities by providing tools for compliance management, regulatory tracking, and risk assessment. Automation and digitization ensure that businesses stay updated with changing regulations and streamline their compliance processes across multiple jurisdictions. This reduces the risk of non-compliance and potential legal issues.

Data Security and Privacy

Data security and privacy are critical considerations in the digital age. International expansion involves handling sensitive customer and business data across different jurisdictions, each with its own data protection regulations. Innovative technologies such as encryption, secure cloud storage, and data privacy frameworks help businesses protect sensitive information, maintain data integrity, and comply with data protection laws. This fosters trust among customers, partners, and stakeholders, facilitating international business expansion.

Innovation in Talent Acquisition

Technology has transformed the way companies acquire and manage talent for international expansion. Digital recruitment platforms, applicant tracking systems, and artificial intelligence-powered tools help streamline the talent acquisition process. Companies can access a global talent pool, identify suitable candidates, and efficiently onboard and manage international teams. This enables businesses to access diverse skill sets, cultural expertise, and local market knowledge, fueling innovation and driving successful international expansion.

Know how is AI revolutionising talent acquisition and management to get a better idea of technology and innovation trends.


Technology and innovation are fundamental drivers of successful international business expansion. By embracing technological advancements, businesses can overcome challenges, tap into global markets, and achieve sustainable growth on an international scale. Supercharge your international business expansion with the power of technology and innovation. 

Moreover, Procloz is here to help you get started. As a technology-driven services company, we specialize in providing cutting-edge solutions as an Employer of Record (EOR) and Business Process Management (BPM) partner. Embrace the power of advanced technologies to streamline your operations and propel your company to new heights. Contact us now to embark on your journey towards international success!

Global payroll best practices

Global Payroll Best Practices: Enhancing Efficiency and Compliance Worldwide

Mastering global payroll management, including adherence to global payroll best practices, is critical for companies expanding their reach across borders. The consequences of inaccurate or delayed payments extend beyond demotivated employees, potentially leading to fines and reputational damage. Surprisingly, according to EY global survey, only 33% of the 1,486 interviewed payroll professionals reported achieving an average payroll accuracy of 90% or above across all operating countries, a decrease from the 52% reported before 2020.

So, why does global payroll management pose such a challenge? The answer to this question is multifaceted and includes factors such as:

  • Which countries are your offices located in?
  • How has your organization expanded?
  • Is there ready access to the relevant expertise required for global payroll management?
  • The number of payroll systems in use, and how efficiently they are integrated.
  • The surge in new legislation on a global scale.

A significant challenge in global payroll, in line with the global payroll best practices, is the substantial rise in financial legislation, adding complexity to the responsibilities of payroll professionals. Consequently, it comes as no surprise that numerous companies are actively seeking international payroll processing solutions, including reputable global payroll services

Various options are accessible to address this growing concern. Let’s explore.

Global Payroll Best Practices

Global payroll management involves handling payroll processes across multiple countries, each with its own set of regulations, tax laws, and labor requirements. Implementing best practices in global payroll, including workforce management, helps organizations ensure accuracy, compliance, and efficiency. Global payroll best practices encompass a holistic approach that ensures not only accuracy and compliance but also the seamless integration of payroll processes into the broader organizational framework. Here are some global payroll best practices:

Data Security and Privacy

A 2022 report by the Ponemon Institute indicates that the average global cost of a data breach is $4.35 million. In light of these significant financial risks, the payroll solution prioritizes robust data security measures to safeguard sensitive employee information during global payroll processes. We implement stringent security protocols, including advanced encryption and secure access procedures, to ensure the highest level of data protection. Furthermore, compliance with data protection regulations, such as the General Data Protection Regulation (GDPR), is crucial to maintaining employee privacy across diverse geographical locations.

For example, when it comes to global payroll, imagine securing your employee data like hiding it in a digital vault using encryption – it’s your data’s secret hideout. Access control, with fingerprint scans or digital keycards, ensures only the right folks get in. Following data privacy rules, like GDPR, is your superhero shield for employee data. Just a heads up, keeping data safe is a constant gig. Teach your team about cybersecurity, and together, you’ll be like superheroes defending against data breaches!

Cultural Sensitivity and Communication

A proficient global payroll system must adapt to diverse cultural nuances, ensuring clear and effective communication worldwide. Recognizing the importance of cross-cultural communication, it should adeptly adjust styles to prevent misunderstandings, fostering a positive work environment. Transparency and employee satisfaction are bolstered through the provision of clear, easily accessible information on payroll, benefits, and deductions.

Continuous Training and Skill Development

Is the payroll solution provider committed to providing continuous training for your payroll team? Recognizing the dynamic nature of global payroll, ongoing training for payroll professionals is imperative. It ensures the team remains well-informed about the latest regulatory changes, technology updates, and best practices, enhancing their adaptability to evolving challenges in the global payroll landscape.

Alright, imagine your payroll team as a highly specialized workforce. Ongoing training, kind of like their daily workout, keeps them sharp. It’s like having a newsfeed for the latest rules, tech tricks, and top practices. That way, they are always ready to tackle any challenge the global payroll world throws at them. 

Audit and Compliance Reviews

Does the global payroll solution include built-in mechanisms for regular audits and payroll compliance reviews? Conducting regular audits of global payroll processes helps identify potential issues and ensures ongoing compliance. Regular reviews also provide opportunities to optimize processes, implement improvements, and address any discrepancies promptly.

Centralization and Standardization

Centralizing payroll functions can streamline processes and ensure consistency across the organization. By standardizing payroll procedures, businesses can minimize errors, reduce administrative costs, and improve overall efficiency. This approach allows for better control and visibility into payroll activities on a global scale.

Compliance with Local Regulations

One of the critical aspects of global payroll management is staying compliant with local tax laws and labor regulations. Understanding and adhering to the specific requirements of each country in which a company operates is essential for payroll security. This involves regularly updating payroll systems to reflect changes in tax codes, labor laws, and other statutory requirements.

Utilization of Technology

Leveraging advanced payroll technology is pivotal to achieving efficiency in a global payroll system. Cloud-based payroll solutions enable real-time data access and collaboration across different locations. Automation of routine tasks, such as data entry and calculations, not only reduces the risk of errors but also frees up valuable time for payroll professionals to focus on more strategic aspects of their roles.

Strategic Partnerships with Local Experts

Collaborating with local experts, such as tax consultants and legal advisors, can offer valuable insights into the intricacies of each region’s payroll requirements, complementing HR support. Establishing strong partnerships with local professionals helps organizations navigate complex regulations and ensures that payroll practices align with local norms.

For instance, think of your global payroll game as a team effort. When you team up with local experts – the tax wizards and legal pros – it’s like having your league of superheroes. They bring valuable insights into the nitty-gritty of each region’s payroll scene, working hand in hand with HR support. It’s like having allies who help you navigate the regulatory maze, making sure your payroll practices match the local vibe seamlessly.

What’s the Takeaway?

In a nutshell, diving into the intricacies of global payroll isn’t just a challenge; it’s a ticket to global growth. Prioritize these best practices to ensure precise and efficient payroll management. A strategic investment in global payroll strategies sets the stage for seamless international success, emphasizing ongoing refinement for accurate and timely payments across borders.

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