While the Employer of Record (EOR) industry is still in its early stages, it’s clear that it’s here to stay. As modern organizations look for ways to become more resilient to an ever-shifting business and labor landscape, EOR service providers are growing in popularity due to the flexibility and agility they provide.
In the past ten years, the EOR market has exploded and, according to recent Everest Group research, is expected to hit net revenues of as much as $3 billion by the end of next year.
The market, driven by growing demand for international talent and a widening talent gap, is not just growing in size but also in scope. As the demand for EOR solutions has grown, the industry and its major players are evolving to offer a more comprehensive suite of services to clients.
For forward thinking HR leaders, EOR services are likely to be part of the toolset for any future global expansion, so it is important to understand the different trends that are driving the evolution of this important service.
Strategic Trends
Once considered as a tactical way to complete international hires, EOR services are now perfectly positioned as a significant value add as organisations adapt to a world of borderless talent.
Over the next 3-5 years, we can expect that the more mature EOR providers will double down on the quality and depth of the overall employee experience they provide on behalf of employers.
Employers will be focused on attracting, retaining, and growing the very best talent and smart EOR providers will grow their services around outstanding benefits, great on-boarding, in-depth country insights and employee learning and growth.
New Services within Employer of Record
As EOR services evolve to be richer and wider, HR leaders should be aware of interesting ancillary services options that providers are adding to their core offerings.
Immigration Support: EOR providers are increasingly offering assistance with visa and work permit sponsorships, simplifying the global talent acquisition process for their clients.
Specialized Services: Many EOR providers have begun to offer specialized services, like IP and invention rights protection and equity incentive planning to cater to the unique needs of their client companies.Enhanced Employee Benefits: EOR providers are now going beyond standard healthcare coverage, offering a full range of enterprise-level medical and health benefits, stock options, and even one-time benefits like moving bonuses. This trend demonstrates a focus on attracting and retaining top global talent.
Learning Support: Some EORs are starting to include Learning and Development resources as part of their service. Atlas is leading the way with Atlas Learning — a new partnership between Atlas and Coursera for Business — with over 9,000 courses available to employees worldwide in seven of the world’s most widely spoken languages.
Adoption Trends of EOR Services
Geographically speaking, the North American market remains the most advanced in terms of the adoption of EOR services.
From the Atlas Global Employer of Record Report 2024
Interestingly, according to internal Atlas data, the APAC & Oceania market has matured rapidly to surpass Europe as the second largest market in terms of EOR adoption. This is fuelled in no small part by the strong economic growth experienced in the region in 2023, especially in countries like China, in contrast to wider global trends.
In less mature markets like Africa, the Middle East, and LATAM, adoption of EOR services remains low in proportion to global uptake.
There are specific areas of growth to note in these regions, however, including both Brazil and the United Arab Emirates (UAE) as regions of rapid growth. Our multi-year figures show that growth in Africa, the Middle East, and Latin America — while more recent — is at a higher rate (50% y/y) than other regions.
In terms of the size of companies that are utilising EOR services, small to mid-sized buyers make up the global majority at roughly 87%.
It is worth noting that the move from using EOR for tactical to more strategic outcomes is matched by a trend for more adoption by mid-sized and larger companies. It is also most likely that the continuing global talent shortage is driving more and more organisations, of all sizes, towards a borderless talent strategy.
Borderless Talent – a growing trend
From the Atlas Global Employer of Record Report 2024
Working with EOR providers definitely turns the borderless talent potential into a reality. Looking at Atlas internal figures (from 2023) we can see the very wide spread of countries where employees are being hired. This spread is growing year by year and Atlas is ready with direct entities in more than 160 countries already.
Some organizations are targeting particular markets and geographies while some are seeking the very best talent, regardless of location.
Many organisations will factor in the cost of employees when choosing different markets for expansion or hiring. Atlas have responded to this need with their new Global Salary Calculator which details salary levels per country per role.
Choosing The Right EOR provider: A Checklist
As the EOR market becomes crowded with new entrants, it's important for HR Leaders to be aware of the key risk areas before engaging an EOR Provider.
Below is a list of some of the vital things to consider before committing to a new partner in this area:
Compliance Challenges: Does the EOR partner fully understand all the complexities of local compliance in every geography in which it offers services?
Data security and Confidentiality: Sensitive data will be shared, so employers should evaluate the data protection measures employed by the EOR provider and choose a trusted partner
Employee Relations and Communications: Is there a risk of communication gaps and misalignment between the employer, employees and the EOR provider?
Financial Transparency and Risk Management: Does the employer fully understand the full range of costs, fees, tax obligations and payment schedules?
Scalability and Flexibility: Choosing an EOR provider that lacks scalability or the ability to adapt to evolving business needs can hinder the company's expansion plans
Overall, it’s clear that the EOR industry is growing to become a mainstream part of global HR operations. This growth is not just seen in market size, adoption rates and geographical reach, but also in the depth and breadth of services provided.
Fundamentally, EOR is moving from a tactical option for HR towards a strategic choice to implement borderless talent and diversity strategies for organizations of all sizes and in all geographies.