EOR vs PEO vs Staffing: The Difference and How to Choose

Many leaders turn to Google to understand the differences between EORs, PEOs, and staffing agencies — and with good reason. The terminology is unclear and often overlaps in practice.

This lack of clarity can have significant consequences. While the three hiring models may seem similar, they serve very different purposes. Choosing the wrong one can waste time and resources, introduce more compliance risks, and slow business growth at pivotal moments.

As a leading provider of both EOR and PEO services, Deel has helped hundreds of companies navigate these choices. Our extensive experience has shown us which models work best for different contexts.

Our guide to EORs, PEOs, and staffing agencies brings all that knowledge together. Let us give you clear explanations of how each hiring model works alongside their pros and cons, pricing structures, and the ideal scenarios for each one.

EOR vs PEO vs Staffing Agency: Hiring models comparison

Before we dive into our comparison, here’s an overview of the key differences between the three hiring models so they’re clear in your mind:

What is an EOR?

An Employer of Record (EOR) is a third-party organization that hires workers on your behalf. They register employees under owned entities in countries and take full responsibility for HR, payroll, and compliance. If any legal or tax issues arise, they are held accountable by the authorities.

While the EOR handles all HR functions, you still retain full control of the day-to-day work. You can manage your workforce as you see fit, provided you remain compliant with local labor and employment laws.

Typical pricing structure of an EOR

As an ongoing arrangement, an EOR usually charges a per-employee fee or a fixed percentage of payroll. The exact amount usually depends on the location. Some jurisdictions have a higher administrative workload than others, and providers will price their services accordingly.

Pros of an EOR

• Faster time-to-hire
• Lower setup costs abroad
• Reduced compliance risk
• Scalable — can add workers and locations easily
• Access to HR and payroll expertise

Cons of an EOR

• Limited ability to customize benefits
• Dependent on the EOR’s local infrastructure

When to use an EOR

Consider an EOR when you need to hire overseas quickly and compliantly. With the provider acting as the stand-in employer, you can skip the entity setup process and onboard workers in days.

For example, many companies use EORs for fast market entry. The speed enables you to capitalize on opportunities before competitors and act while conditions are still favourable. Plus, as you’re using the provider’s resources, you don’t lose your investment if the market doesn’t pan out.

Others find that EORs are a more cost-efficient way to source talent. Instead of setting up an entity to hire one or two employees abroad, you use the provider’s legal entity and pay a more manageable monthly fee. This service can be critical when you’re looking for rare expertise to plug a skill gap and move a project forward.

Read our article on five EOR use cases for large enterprises to get into more detail on how the hiring model can help you grow and expand.

What is a PEO?

A Professional Employer Organization (PEO) enters into a co-employment relationship with your business. The provider handles tasks like payroll processing, benefits administration, and employment contracts while you focus on day-to-day management.

Does this sound similar to the employment model of an EOR? The main difference between an EOR vs a PEO is that you remain the official employer on paper, even if you share employment responsibilities with the provider. You’re accountable for any compliance issues, such as penalties and legal action.

Another difference is that EORs usually offer international coverage, whereas PEOs are limited to specific regions. For example, Deel PEO specializes in state-by-state compliance in the US.

Typical pricing structure of a PEO

Similar to the EOR model, a PEO charges you a per-employee fee or a percentage of payroll. The total depends on your business size and industry, the number of employees, and the benefits chosen.

While fees vary, a PEO tends to have a lower monthly cost than an EOR.

Pros of a PEO

• Access to better employee benefits
• Simplified HR and payroll
• Access to local expertise
• Workforce unified under the same company name

Cons of a PEO

• Limited to regions where you already have an entity
• Less flexibility over international hiring

When to use a PEO

PEOs are the best option when you already have a local entity but lack the resources to handle HR and payroll compliantly. They can help you scale within the country. Instead of building out your HR department, you can allocate more resources to strategic initiatives and expand your operations.

Additionally, PEOs also enable small businesses to offer more competitive benefits. They can negotiate deals at volume, helping you to compete for talent with larger companies in your region.

What is a staffing agency?

A staffing agency connects your business with temporary workers. In most cases, it employs these workers directly and manages HR, payroll, and compliance while you manage your workforce.

Unlike the other two hiring models, staffing agencies also take care of recruitment. If you share the skills and experience you’re looking for, they can draw from their candidate network to find the right fit. Many specialize in particular industries such as IT, tech, or pharmaceuticals to ensure they have the expertise to make placements.

Want to hire an agency worker to be a full-time employee? A staffing agency should allow you to convert them to a direct hire at the end of a contract with the individual’s agreement. In that case, the employment relationship transfers from the agency to your company, and you assume full legal responsibility for them.

Typical pricing structure of a staffing agency

Agency pricing tends to vary more than EOR and PEO services. Because agencies usually charge a percentage of the worker’s annual salary, the total fees depend on:

• Job title
• Department
• Seniority
• Industry
• Location
• Length of contract

For example, our Global Salary Insights tool says the average salary for an accountant in the UK is between £30,000 and £70,000 a year. If you’re looking for someone with experience to join your team, you can pay toward the higher end of that range and more agency fees as a result.

Pros of a staffing agency

• Fast access to talent
• Lower recruiting workload
• More scalable workforce
• No long-term commitment required

Cons of a staffing agency

• Only a short-term solution
• Potentially high ongoing costs
• Cultural disconnect from temporary workers

When to use a staffing agency

Think about using a staffing agency to fill short-term or project-based roles. For example, many businesses use them to find maternity cover because the position is usually only open for six to twelve months.

Also, consider a staffing agency as a stopgap measure. If you need to fill an essential role urgently, the service can find someone to step in while you find the permanent hire.

How to choose the best hiring model for your business

The hiring model you choose depends on your specific business needs and goals. Here are the main factors to consider when deciding between an EOR, PEO, or staffing agency:

• Legal presence: Do you have an entity established in the region where you want to hire workers? If not, then you either need to incorporate or use an EOR provider

• Duration: How long are you planning to hire workers? A staffing agency is best for short-term assignments, only lasting a few months to a year, whereas an EOR is better for long-term projects

• Administrative capacity: How much can your current team handle? If you lack the HR and payroll infrastructure for hiring overseas, an EOR can ensure compliance

• Budget: Can you absorb unexpected costs? Staffing agency fees can fluctuate, whereas EOR and PEO services tend to be more predictable month-to-month

• Geographic scope: Where are you planning to hire? EORs and staffing agencies are best for international expansion, while PEOs are better for domestic growth

• Time-to-hire: Do you need talent immediately? Staffing agencies are most likely to source the workers you urgently need for projects, and EORs can set them up quickly

• Long-term goals: What are you hiring workers to do? Whether you’re testing a new market or replacing someone taking a leave of absence, considering the use case can often tell you which solution makes the most sense

• Scalability: Does the service enable you to add workers and locations as needed? The ideal hiring solution should support growth by letting you scale its services

Cover every hiring scenario with Deel

Choosing the right hiring model is about balancing cost, speed, and control. Once you’ve decided on your priorities, your next step is to find the right partner to support growth.

That’s where Deel comes in. Our platform supports both EOR and PEO services and consolidates them through one unified platform. We make it simple to hire, pay, and manage workers wherever you have a presence in a way that makes the most sense for you.

• Hire workers in 150+ countries through our EOR network
• Manage state-by-state compliance with our US PEO
• Run payroll in multiple currencies
• Access local expertise in every region
• Offer affordable yet competitive employee benefits
• Use our white glove entity setup service to switch when you’re ready

Know how you want to handle global hiring? Book a call with the Deel team to see how we can support your next move through our consolidated EOR and PEO services.