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Article

6 min read

How SMBs Maintain Operational Flexibility with Employer of Record Services

Employer of record

Author

Jemima Owen-Jones

Published

May 09, 2024

Last Update

July 23, 2024

Table of Contents

How does an Employer of Record service work?

Adapting to economic changes

Testing foreign markets

Scaling up the workforce

Transitioning between different entity setups

Streamlining global talent acquisition

Enabling remote and mobile teams

Mitigating compliance and regulatory risks

Entity or EOR, you can do it all with Deel

Key takeaways
  1. SMBs can find it challenging to maintain operational flexibility as they expand due to their limited resources. Using an EOR allows them to quickly test and enter new markets at a lower cost.
  2. EORs shield smaller companies from the regulatory risks associated with expanding across international borders. They become legally responsible for all your workers and ensure compliance with all relevant labor laws.
  3. With the right EOR service, SMBs can streamline their international hiring strategy, tap into global talent pools, and access the skilled workers they need.

41% of SMBs are focused on growth and expansion. However, many are uncertain about how to restructure their company to remain agile and resilient. 

Operational flexibility is crucial in today’s competitive and constantly changing business environment. However, many SMBs lack the resources and infrastructure required to change strategies quickly. They may miss opportunities, impacting their market position and overall competitiveness. 

Employer of Record (EOR) services can enable SMBs to expand by streamlining hiring, payroll, compliance, and entity setup. Keep reading to discover how you can maintain your company’s agility and resilience as you hire abroad. 

How does an Employer of Record service work?

An EOR like Deel allows companies to hire in a foreign country without establishing an entity. While the provider becomes the legal employer, you retain control and oversight of your day to day operations.

As the employer, the EOR handles compliance with all local employment laws. They also absorb all the legal liabilities should issues like penalties or lawsuits arise. This means your business can eliminate most of the risks associated with hiring and expanding overseas.

EORs have become popular among organizations of all sizes as the business world goes remote first. However, the service presents a clear strategic advantage for SMBs. You can develop the operational flexibility of a much larger company for a relatively low, fixed monthly cost.

We explore the different ways EORs boost the agility, adaptability, and resilience of SMBs in the following sections. 

Adapting to economic changes

EORs enable companies to rapidly adjust their strategy and processes in response to global market shifts. As a result, SMBs can move quickly enough to capitalize on favorable conditions and retreat from disadvantageous ones.

Under normal circumstances, SMBs don’t have the capital to make on-the-spot investments. They often have to wait until they’ve gathered the funds to set up entities and new divisions abroad — by which point the opportunity may have passed.

An EOR like Deel provides a cost-effective solution by allowing you to outsource many of these operations. We handle all the entity setup plus processes like hiring, onboarding, and payroll. Instead of weeks or months, you can make a strategic move within days.

Suppose a neighboring country introduces tax advantages for SMBs in your industry. You could move your headquarters there under Deel’s EOR before other companies move in and take over the market.

Testing foreign markets

Small businesses can use an EOR to explore new markets instead of committing their limited resources. You can enter and withdraw from countries without worrying about losing your investment. This leaves you free to base your strategies around outcomes rather than budgetary constraints.

The cost savings for SMBs can be substantial. Establishing a legal entity can range anywhere from $60,000 to $120,000 USD depending on the country. The EOR also spares you from the hidden costs of setting up a foreign subsidiary such as managing payroll and hiring local experts.

An EOR is also faster than setting up your own legal entity. Deel customer, Nium, estimates our service saved them around 12 to 24 months of effort. You can capitalize on emerging markets before competitors even recognize the opportunity.

Deel Employer of Record
Hire employees globally with the #1 Employer of Record
Deel provides safe and secure EOR services in 100+ countries. We’ll quickly hire and onboard employees on your behalf—with payroll, tax, and compliance solutions built into the same, all-in-one platform.

Scaling up the workforce

Once you’ve entered a new market, EORs enable you to quickly build your staff there. Services like Deel let you onboard hundreds of workers at once. As a result, you can have the right numbers and local expertise from the start of your new venture. 

For example, fintech company Form3 has hired 96 new employees across 30 different countries with Deel. As an SMB, they couldn’t have managed this alone.

EORs can continue to support you through periods of high growth. You can rely on their HR and payroll experts until you’re ready to expand your in-house teams. This frees up your resources for the most critical areas of the business and makes your operations more efficient.

Deel enabled us to hire 100 people that we probably wouldn't have been able to [...] otherwise. Plus, it helped us reduce the number of workers leaving us. A lot of contractors were leaving when we couldn’t support them in being employees.

Leanne Schofield,

Head of People, Form3

Transitioning between different entity setups

As well as enabling you to enter new markets, EORs can facilitate seamless transitions between different business structures. You can manage mergers and acquisitions, dissolutions, or even set up your own entity with their support. 

EORs don’t just allow SMBs to set up entities quickly. Providers like Deel have the in-house expertise and resources to handle complex legal and operational changes compliantly. We can also minimize the disruption to your business by handling hiring, onboarding, and relocations.

Take esports company EEG for example: After a recent acquisition, they had to absorb teams across 20 different countries. Deel helped them manage the process in hours instead of days by setting up local entities, handling the paperwork, and centralizing payroll.

SMBs don’t have to transition out of EORs as they expand. Contrary to popular myths, very few services have limits and you can keep using them as long as it makes sense for your organization.

Streamlining global talent acquisition

Small companies can access a wider candidate pool and more diverse skill sets with the help of an EOR. You can hire in more countries through your provider’s entities and onboard new employees in days. That means you’re less likely to be impacted by the global talent shortage and find yourself lacking key skills.

Accessing foreign talent can be make or break for SMBs in many industries. For example, healthcare company Prenetics often requires very specialized talent they can only find in certain countries. Deel’s EOR allows them to hire skilled workers wherever they find them.

Even without specific skills in mind, EORs can help you source the best workers SMBs often don’t have the in-house expertise to navigate international labor and employment laws successfully. Deel’s EOR spans over 150 countries, allowing you to offer positions globally and choose the ideal candidate from a broader selection.

While there’s certainly a talent shortage in most places, as soon as you start to think globally… the problem disappears and you can find some truly amazing talent. And I think that’s been the key message to Lyre’s success: There are enough people, [and] they might be in all the places you are probably not looking.

Carl Hartman,

Co-founder, Lyre

Enabling remote and mobile teams

Small companies can use EORs to hire and manage dispersed teams instead of establishing their own entities. That means you can offer work-from-anywhere policies to all your staff without significantly increasing your costs.

By supporting remote work, SMBs can attract and retain more skilled workers. Then you’ll be more likely to have the talent you need to launch strategies quickly and adapt to market changes. As you end up spending less on recruitment, you can redirect those funds into your core operations.

You can also manage a mobile workforce more effectively with an EOR. If you spot an opportunity in a foreign market, you could relocate teams there within days. That way you’ll always have the right talent on the ground to ensure the success of overseas projects.

Top providers like Deel combine EOR and visa services to support international employment from end to end. For example, we helped IT company Quantium relocate talent to the Netherlands on a highly skilled migrant visa in just three weeks.

Mitigating compliance and regulatory risks

EOR providers help you maintain compliance across diverse regulatory environments. You can protect your SMB from unforeseen liabilities which can drain your resources and disrupt your progress.

SMBs are particularly vulnerable to the risks due to their limited resources. As the EORs provide expertise and handle compliance tasks, you will likely identify and resolve potential issues. The provider also takes on liability in case there’s an oversight.

Undistracted by compliance issues, your team is freer to focus on core strategy. The result is that you can identify and seize opportunities more easily.

[Two contractors] were such great members of the team that we really wanted to keep them. But because these were new countries for us, we were overwhelmed by the local compliance required to hire them full-time.“I'm in charge of compliance, but there's no way anyone can be an expert on every country in the world. Deel handled all of it, including answering our team member’s questions directly through their platform.

Harry Rillstone,

Director of legal and compliance, Crimson Education

Entity or EOR, you can do it all with Deel

As an all-in-one platform, Deel enables you to hire, pay, and manage your entire global workforce in one platform. With legal entities across 110 countries and counting, our EOR model simplifies international expansion by providing you with:

  • Local payroll management, benefits administration, taxes, and compliance

  • Competitive benefits packages tailored to each country

  • Support from local HR and legal experts

  • IP protection

  • 20+ integrations for HR, Finance, and more

For clients transitioning from the EOR model to owned entities, Deel offers continued support through Entity Setup services and Global Payroll. Clients can customize their use of Deel services by using the EOR model for some locations, Global Payroll for others, and engaging independent contractors as needed.

To discuss your options with an expert, book a 30-minute demo with our team today.

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