Many recruitment businesses turn to an Employer of Record (EOR) for support when expanding into new markets. The U.S. is particularly attractive, thanks to a thriving economy and the potential for higher placement fees. 

From an economic perspective, the US continues to lead globally, with the recruitment industry expected to grow another 3% by the end of 2024 to $207.2 billion. Compared to the UK, for example, the earning potential in the U.S. is notably higher than; while U.S. placement fees typically range from 20-30%, UK fees generally average 10-15%.  

As enticing as this opportunity may be, recruiting in a new country, especially in the U.S., comes with unique challenges. These include handling foreign payroll, navigating tax regulations, and ensuring compliance with local employment laws—each of which could cost thousands per hire if not managed properly. This is where an Employer of Record can provide invaluable support. 

What is an EOR?  

An Employer of Record (EOR) is a third-party organization that serves as the legal employer for workers. EORs reduce the time and risk associated with hiring and managing workers across borders by taking on all legal employment obligations, such as payroll, taxes, benefits, and compliance with local labor laws. This makes it much easier and quicker to expand into new markets. 

Simplified compliance with local employment laws 

Each country has its own unique employment laws, covering everything from contract requirements to termination policies. An Employer of Record (EOR) leverages local expertise to ensure compliance with these regulations, minimizing the risk of legal issues. Expanding into the U.S., in particular, requires navigating federal, state, and local laws. 

Working with a US-based EOR will allow recruitment agencies to expand confidently.  

Cost savings and risk reduction  

Setting up a local entity in a new country can be costly, especially in the early months or even the first year of testing a market. This can be a particular challenge for smaller agencies. An EOR allows agencies to expand without upfront infrastructure costs. 

One of the biggest financial risks recruitment may encounter stems from labor costs they may be unaware of. The most common costs include overtime and paid sick leave. If a recruitment agency is unaware of these costs, they will likely not have the capability to invoice these costs to their customers, leaving the recruitment agency exposed to paying these without the ability to recoup the costs.  

Speedy access to new talent markets 

Establishing a legal entity in a new country can be time consuming and costly, requiring legal support and significant focus on funding and revenue concerns. An EOR allows you to operate and start placing talent in new countries almost immediately. 

Being able to provide talent solutions quickly in new regions has a competitive advantage that allows recruitment agencies to stand out against competitors who may still be navigating the complexities of establishing a physical presence. 

Enhanced flexibility with contract types  

An Employer of Record (EOR) can accommodate various employment types, including full-time, part-time, temporary, or contract roles. This versatility allows recruitment agencies to offer flexible staffing solutions that are tailored to each client’s needs. With the support of an EOR, agencies can scale their workforce up or down in response to client demand across different countries, all without the long-term commitment of establishing a local entity. 

An EOR also simplifies the relocation of your own employees by managing their onboarding process. For instance, if you’re testing the U.S. recruitment market remotely from the UK, an EOR can help you onboard top recruiters from your UK team when you’re ready to transition to a local setup. This enables you to maintain continuity and compliance as you expand. 

If you’re ready to start your expansion into the US market, get in touch with our team today.