Working with an employer of record is a viable solution for U.S.-based tech companies that have made the decision to hire remote employees in emerging markets around the world. A global employer of record service — like Truss — can make the difference for a hiring company by helping find and recruit talented tech professionals and by taking on the legal responsibility of compliance with local labor laws.
Tech companies that plan to hire remote tech talent in different parts of the world with an EOR may not know that there are different types of employer of record providers. This quick comparison will help outline the key differences between Direct EOR and Partner EOR to keep you informed and help you find the perfect fit for your business strategies.
Contact Truss today to learn more about our end-to-end global hiring platform!
READ MORE: How an EOR Reduces Hiring Costs for Tech Startups
Direct EOR vs. Partner EOR
There are two primary types of employer of record providers — Direct EOR and Partner EOR — that each have their own benefits to U.S.-based tech companies. A Direct EOR is an employer of record that possesses its own local legal entity in the hiring country, allowing you to work directly with parent companies. A Partner EOR is a service that uses third-party in-country agencies to handle aspects of hiring and employment.
The key benefits of these employer of record services will help determine which type of employer of record provider will deliver the best results for your tech company as you work to grow your team and expand your operations. The key areas where these employer of record partners differ include legal liability, global payroll, primary costs, data security, and communication.
Here is a closer look at how direct and partner employer of records are different:
1. Legal Liability and Contracts
A primary benefit of an employer of record is that it takes on the legal responsibilities of employing remote employees in countries around the world. Employers that are not compliant with local labor laws and do not have accurate employment contracts may be subject to fines.
- Direct EOR: Employment contracts are written and issued directly by the local entity, and when dealing directly with the entity, there is a higher degree of accountability.
- Partner EOR: With a partner EOR, employees sign contracts provided by a local third-party provider rather than the employing company, which can lead to confusion when determining who is legally responsible in a dispute.
2. Global Payroll
Global payroll with multi-currency contracts can be a challenge when you don’t have the right partner. The right employer of record provider will handle key aspects of a remote workforce — like payroll, taxes, employee benefits, and human resources responsibilities — allowing you to focus on end goals.
- Direct EOR: A direct EOR will handle all payroll, taxes, and employee benefits with a single in-house provider to ensure that employees have a consistent onboarding and management experience.
- Partner EOR: Partner EOR providers force tech companies to rely on local partners for payroll and human resources applications that can lead to disjointed support and inconsistent employment experiences.
3. Cost and Speed to Market
Many U.S.-based tech companies that hire remote tech talent in emerging markets benefit from the remote employees being able to hit the ground running and contribute to company projects from the start — but it is important to understand the costs tied to each type of employer of record.
- Direct EOR: A direct EOR has higher overhead costs with a legal entity in the country, which can translate to higher end costs for hiring companies.
- Partner EOR: In many cases — partner EOR providers have lower end costs for users due to lower overhead costs built into the hiring fees.
4. Data Security and Communications
When you deal with private employee information and intellectual property, data security is an important factor in the equation, and the type of employer of record you partner with will have an impact. In addition to data security, an employer of record will help provide clear lines of communication between hiring companies and new employees on key issues.
- Direct EOR: With every aspect of employment under a single umbrella, a direct EOR simplifies and consolidates data security, while providing seamless communication.
- Partner EOR: When working with a partner EOR that implements third-party providers, hiring companies lose an element of oversight and may battle with communication gaps.
READ MORE: Choosing the Right EOR for Your Tech Company
The Benefits of Choosing Truss as Your Global EOR
Truss is a direct employer of record provider with legal entities in multiple countries in Central Asia, Eastern Europe, and the Caucasus that will provide U.S.-based tech companies with a wealth of benefits. Armed with a quick comparison of the differences between a direct EOR and a partner EOR, you will have a better understanding of what to look for when you choose your employer of record provider.
Working with a direct EOR means eliminating the middleman for your tech company. Because Truss owns and operates legal entities around the globe, your team interacts with the people who actually manage the local payroll, compliance, and support. The direct connection speeds up response times, cuts out hidden third-party costs, and provides consistent legal support. Instead of navigating a web of regional partners, you get a single, accountable partner that protects your intellectual property and ensures remote workers are integrated from day one.
Partnering with Truss means eliminating intermediaries to gain full transparency, faster response times, and airtight local compliance in emerging markets. By cutting out the middleman, you can build and grow your international tech team with confidence.
Ready to simplify your global expansion? Contact Truss today to get started!
