Employer of Record (EOR) vs. Staffing Agency: Which One is Right for Your Business?
Key takeaways
- If you're running a mid-market or scaling company with headcount above 50 and need to get compliant fast, an EOR is your best bet.
- Staffing agencies can get you people quickly, but their compliance approach tends to be patchy at best.
- When you focus on what HR, Finance, and Legal actually need, you'll naturally cut down on overhead and liability.
- With coverage in 180 countries, you can expand globally without the usual delays and headaches.
- When leadership is under the gun, 24-hour onboarding takes the pressure off and gets things moving fast.
For mid-market companies looking to expand globally, Teamed takes the complexity and risk out of international hiring with solutions built specifically for your needs.
When expanding globally or managing remote teams, two options often come up: using an Employer of Record (EOR) or hiring through a staffing agency. Both models can help you grow your team, but they work in completely different ways and deliver different kinds of value. So which one should you choose?
Let's break down the key differences between EORs and staffing agencies, and when it makes sense to use each one for your expansion.
What is an employer of record (EOR)?
An Employer of Record (EOR) is a third-party organisation that officially employs your talent. After first mention, we use ‘EOR’ to keep it concise. The same goes for Staffing Agency references, ensuring clarity and consistency.
An EOR cuts through the hassle of setting up entities, prevents compliance mistakes, and eliminates wasted overhead. In highly regulated industries, an EOR takes the uncertainty off your plate, especially when boards and auditors are watching your every move.
For HR teams, this means payroll runs without errors. For HR teams, this means payroll runs without errors. For Finance, it ensures accurate tax compliance. For Legal, it reduces regulatory risk.
- Payroll: EORs are responsible for payroll calculation, processing, deducting taxes, and administering benefits.
- Compliance and legal: Ensure workers' employment arrangements adhere to local labour laws and mitigate the risk of legal issues for client companies.
- Tax management: Withhold and remittance of taxes on behalf of the employees, including income tax, social security contributions, and unemployment taxes.
- Benefits and insurance: Ensure that employees receive the necessary coverage for benefits, including health insurance, retirement plans, and other perks.
- Global workforce management becomes simple when someone else handles local employment requirements, from onboarding to compliance to payroll.
Want the specifics for your expansion? Check out our global hiring guides for all the regulatory details, or just talk directly with our compliance specialists.
Pros and cons of an EOR
What is a staffing agency?
A Staffing Agency primarily focuses on temporary or contract hires. Staffing Agencies source and recruit workers for a company, often handling short-term or specialised job placements. While they do take care of payroll for the workers they place, Staffing Agencies usually don’t cover compliance, benefits, or long-term employee management in the same way an EOR does.
Staffing agencies operate on a placement model: you define the role, they source candidates from their network, and facilitate the match. Once hired, the employment relationship is directly between you and the worker. If you need more than just temporary workers, staffing agencies probably won't cut it.
Staffing agencies basically connect companies with job seekers. They work with employers to source potential candidates by utilising their networks, databases, job boards, and other resources. They also conduct screenings of candidates to assess their qualifications, skills, and suitability for the job and shortlist candidates.
Staffing agencies establish relationships with job seekers. They collect resumes and relevant documents through online portals, email, or in-person meetings. When suitable job opportunities arise, staffing agencies match qualified candidates to available positions. If a job offer is extended, the staffing agency assists with the negotiation process, ensuring the interests of both parties are considered.
Pros and cons of a staffing agency
Key differences between EOR and staffing agencies
Both EORs and staffing agencies connect employers with workers, but that's where the similarities end.
Compliance and risk management
The biggest difference between an EOR and a staffing agency? How they handle compliance. EORs are responsible for ensuring that all legal and regulatory requirements are met in the country where the employee is based, reducing risk for your company.
Staffing agencies may handle some legal aspects, but they usually don’t cover the full spectrum of compliance requirements, particularly when it comes to international hiring.
EOR: An EOR acts as the legal employer of a group of workers, assuming the associated legal and administrative responsibilities. They handle payroll, taxes, compliance, benefits, and other employer-related obligations. The workers are assigned to and work at a client's worksite, but the EOR remains the formal employer on record.
Staffing Agency: A staffing agency focuses on sourcing and matching job seekers with employers' job openings. They connect employers with potential candidates, who are then directly employed by the employer once hired. The staffing agency's role typically ends after the placement process is complete.
Check out our blogs on contractor vs. employee status and employee misclassification to see how EORs tackle these compliance challenges.
Legal and administrative responsibilities
EOR: As the legal employer, an EOR assumes all legal and administrative responsibilities associated with employment. This includes payroll processing, tax withholding and remittance, benefits administration, compliance with labour laws and regulations, and managing employment contracts.
Every jurisdiction has mandatory benefits that can blindside unprepared companiesEvery jurisdiction has mandatory benefits that can blindside unprepared companies. Take Sweden's extended parental leave (OECD report [1]). Get it wrong and you're looking at serious reputational and financial damage. Teamed knows these regulatory details inside out from years of hands-on experience, giving HR, Finance, and Legal leaders the confidence to expand into defence or financial services.
Staffing Agency: Staffing agencies do not act as legal employers. They assist with candidate sourcing, screening, and matching, but the employer directly employs the selected candidates. The employer manages legal and administrative responsibilities, such as payroll, taxes, and compliance.
Flexibility in hiring
Best EORs offer flexibility in how you hire. Whether you’re looking for long-term employees or contractorsBest EORs offer flexibility in how you hire. Whether you’re looking for long-term employees or contractors, an EOR can handle both. This means you can scale globally without losing sleep over admin nightmares or compliance risks.
Staffing agencies, on the other hand, are better suited for short-term or specialised roles but may not be as effective for long-term, full-time hires.
Control over employees and workplace
EOR: An EOR maintains higher control over the workers' employment arrangements. They have the authority to set and enforce employment policies, handle disciplinary actions, and make decisions related to workplace rules and regulations.
Staffing Agency: Employers who directly hire workers through a staffing agency have more control over the employees' day-to-day activities, work assignments, and supervision. They are responsible for managing and overseeing the workers' performances.
Costs
EORs charge service fees, typically a subscription per employee. When you lay out all the costs in a comparison table, HR, Finance, and Legal teams can quickly see which option gives them the best value and transparency.
Staffing Agency: Staffing agencies typically charge a one-time fee, often 20–30% of the candidate’s first-year salary. Employers bear all ongoing employment costs directly.
When to choose an employer of record or staffing agency
Your choice between an EOR and a staffing agency comes down to what you need, what you can spend, and what expertise you have in-house.
Which option is right for your business?
Choosing between an EOR and a staffing agency depends on your company’s needs. If you’re looking for short-term placements or specialised skills for a project, a staffing agency might be the right fit. However, if you need to hire employees internationally and ensure full compliance with local laws, an Employer of Record is the better option.
Payroll runs smoothly, compliance risks disappear, and your team gets back to doing strategic work that actually matters.
Factors that decide what you should choose
- Employment Arrangement: Consider the nature of the employment arrangement you require. If you need a long-term employment solution with full legal and administrative support, an EOR may be more suitable. A staffing agency may be a better fit if you prefer to hire directly and have greater control over the workers. This means that a staffing agency will only help you with recruiting—everything from job posting to onboarding.
- Legal and Compliance Needs: If you want to offload legal and administrative responsibilities, including payroll, taxes, benefits, and compliance management, an EOR can provide comprehensive assistance. Partner with an EOR and they'll handle all the legal and compliance stuff while you focus on running your business.
- Workforce Flexibility: A staffing agency can provide the necessary flexibility if you require a temporary workforce that can be scaled up or down quickly. If you prefer a stable, long-term workforce, an EOR may be more appropriate. An EOR works great when you want to mix long-term employees with contractors on your team.
- Cost Considerations: Evaluate the financial implications of each option. EORs typically charge ongoing service fees, while staffing agencies charge placement fees or a percentage of the hired candidate's salary. Usually, a staffing agency would be more affordable if you hire low-salary employees. Planning to hire a bunch of people at once? Lock in a long-term EOR partnership. You'll save money in the long run.
Scenarios where an EOR is the better choice for mid-market and scaling companies
- HR: Immediate relief from local hiring complexities without missing mandatory benefits.
- Finance: Predictable, fair and transparent budgets without hidden overheads.
- Legal: Reduced liability risks when operating in heavily regulated sectors like defence or financial services.
- For C-suite executives: Get the confidence to expand globally fast with 24-hour onboarding.
Scenario 1: International expansion under pressure Imagine your financial services firm has just closed Series B funding and the board is demanding rapid expansion into Europe Imagine your financial services firm has just closed Series B funding and the board is demanding rapid expansion into Europe. Your legal and HR teams are already stretched, and compliance risk is a board-level concern. That's when an EOR becomes your secret weapon. They handle hiring across 180 countries, keep payroll running smoothly, and guarantee compliance. Your C-suite stays focused on growth, not paperwork.
Looking to expand internationally and hire foreign workers? Go with an EOR. They can help simplify the process by managing local employment requirements, compliance, payroll, and tax obligations.
For instance, a financial services firm expanding into European markets would benefit from an EOR's compliance expertise—ensuring payroll runs without errors, 24-hour onboarding, and fair and transparent costs across 180 countries. This gives HR, Finance, and Legal teams the certainty they need when dealing with high-stakes regulations.
Scenario 2: Risk mitigation for regulated sectors For a mid-market defence For a mid-market defence or professional services company, entering new markets means navigating strict local laws—often with a small in-house legal team. An EOR takes the admin burden and legal liability off your shoulders, giving you certainty and control. As one CFO put it, “Our board wanted international revenue growth, but we couldn’t risk a compliance misstep. With EOR, we had peace of mind from day one.”
Want to transfer employment risks like workers' compensation or unemployment claims? An EOR takes those on, protecting your organization from legal and financial exposure.
Scenarios where a staffing agency is the better choice
Scenario 1: Direct control and supervision
If you want direct control over workers, including their daily tasks and supervision, a staffing agency might work better for you.
Scenario 2: Temporary or Project-Based Staffing
Need someone short-term? Looking for specialized skills for a project? Want to test someone out before committing? A staffing agency gives you that flexibility.
Key takeaways
- An EOR cuts compliance risks for mid-market businesses.
- Staffing agencies give you flexible workers but often can't help you globally.
- Keep your eye on what HR, Finance, and Legal actually need.
- Teamed works in 180 countries with pricing that's fair and transparent.
- C-suite leaders love our 24-hour onboarding when they're under pressure.
Find the right match
Both EORs and staffing agencies have their place. It all comes down to what you need. For companies focused on global expansion and long-term employee relationships, an EOR offers a more comprehensive, compliant solution. In contrast, staffing agencies can be a good option for short-term placements or project-based roles.
Not sure which way to go? Let's talk about your expansion timeline and what compliance looks like for you. We'll show you exactly how each option affects your budget, your risk, and how fast you can move.
Frequently Asked Questions
- What’s the core difference? An EOR is the legal employer and carries payroll, taxes, benefits, and compliance. A staffing agency sources candidates; once hired, you’re the employer and you carry the risk.
- When should I use an EOR? International hiring, regulated sectors, or when you need certainty and speed without opening entities. Ideal for mid-market and founder-led companies scaling across borders.
- When is a staffing agency the better fit? Short-term cover, project bursts, or when you want to do all employment admin yourself and keep full HR ownership in-house.
- Who owns compliance and risk? EOR: we do — local contracts, payroll, taxes, benefits, and audit-ready records. Staffing: you do — after placement, you manage employment law, payroll and liabilities.
- How do costs compare? EOR: a predictable per-employee fee that replaces entity set-up, ongoing filings, and local counsel. Staffing: a placement fee (often a % of first-year salary) plus all ongoing employment costs on you.
- Do I lose day-to-day control with an EOR? No. You direct the work, targets, and culture. The EOR handles the legal employer obligations behind the scenes.
- Can an EOR handle contractors too? With Teamed, yes. One platform for contractors, EOR employees, and your own entities — with smooth status changes and no re-onboarding.
- How fast can we start and where? Teamed offers 24-hour onboarding across 180 countries, with payroll coverage in 130 countries and 50+ currencies.
- Which teams benefit most from an EOR? HR gets error-free, on-time payroll. Finance gets clean, transparent line items. Legal reduces misclassification and regulatory exposure — especially in defence, financial services, and healthcare.
- How is Teamed different from a staffing agency? We’re not recruiters. We work alongside your TA or agencies to employ, pay, and protect your people globally — with transparent pricing, named specialists, and no hidden fees.
