When expanding a workforce or hiring across borders, companies often compare two very different options: an Employer of Record and a staffing agency. While both support hiring, they solve fundamentally different problems.
Understanding the difference between an employer of record and a staffing agency is critical for compliance, cost control, and long-term workforce planning especially when hiring internationally.
This guide explains the employer of record vs staffing agency in clear, practical terms so you can choose the right model for your hiring goals.
The simplest way to understand employer of record vs staffing agency is this:
- An Employer of Record is an employment solution.
- A staffing agency is a recruitment solution.
What an Employer of Record Does
An Employer of Record (EOR) becomes the legal employer of a worker on behalf of your company. This allows businesses to hire employees in countries where they do not have a legal entity.
In an EOR arrangement, the provider handles employment contracts, payroll processing, statutory taxes, benefits administration, and compliance with local labor laws. Your company continues to manage the employee’s day-to-day work, performance, and reporting, but the legal employment responsibility sits with the EOR.
This model is commonly used for international hiring, market entry, and long-term remote employment.
What a Staffing Agency Does
A staffing agency focuses primarily on sourcing and placing talent.
Staffing agencies recruit, screen, and present candidates for temporary, contract, or permanent roles. In most cases, once the candidate is hired, the staffing agency’s role ends. Legal employment responsibility typically transfers to your company unless the agency directly employs the worker for a temporary assignment.
Staffing agencies are especially valuable when speed of hiring, access to niche talent, or short-term workforce flexibility is the main objective.
Employer of Record vs Staffing Agency: Key Differences
| Area | Employer of Record (EOR) | Staffing Agency |
| Primary role | Employment and compliance | Recruitment and placement |
| Legal employer | EOR is the legal employer | Usually the hiring company |
| Local entity required | No | Yes (in most cases) |
| Compliance ownership | Managed through the EOR | Largely remains with the company |
| Recruitment | Not typically included | Core service |
| Employment duration | Long-term, ongoing roles | Short-term, temp, or permanent placements |
| Geographic scope | Global hiring without entities | Typically local or regional |
| Post-hire involvement | Ongoing (payroll, compliance, HR admin) | Often ends after placement |
This table highlights why eor vs staffing agency is not a like-for-like comparison.
Control and Management of Workers
With an Employer of Record, your company manages the employee’s daily work, goals, and performance just as it would with a direct hire. The difference is that the EOR handles the legal employment layer in the background.
With a staffing agency, the level of control depends on the arrangement. For permanent hires, control shifts entirely to your company after placement. For temporary or agency-employed workers, control may be shared, which can introduce co-employment considerations in some jurisdictions.
Compliance and Risk Considerations (Why This Matters)
Compliance is one of the most important and most misunderstood aspects of employer of record vs staffing agency.
An EOR is specifically designed to manage employment compliance, particularly across borders. This includes local labor laws, payroll regulations, statutory benefits, and termination rules.
Staffing agencies, by contrast, are not compliance outsourcing partners. While they must follow fair recruitment practices, your company typically remains responsible for employment law compliance once the worker is hired.
For companies hiring internationally or in unfamiliar jurisdictions, this difference can materially affect risk exposure.
Cost Structure: How the Models Differ
Cost comparisons between EORs and staffing agencies depend heavily on context, but the pricing logic is different.
EORs usually charge a recurring monthly fee per employee, covering employment administration, compliance, and payroll services. This creates predictable ongoing costs, particularly for long-term roles.
Staffing agencies often charge a one-time placement fee, commonly calculated as a percentage of the employee’s annual salary. For temporary staffing, agencies may apply markups to hourly or daily rates. These costs can appear lower upfront but may add up for long-term or repeat hiring.
The right choice depends less on headline cost and more on duration, compliance complexity, and internal HR capacity.
Which Is Faster?
Staffing agencies typically offer the fastest route to identifying candidates, especially for urgent or hard-to-fill roles. Their existing talent pools and recruitment expertise can significantly reduce time-to-hire.
An Employer of Record may not accelerate candidate sourcing, but it can dramatically reduce time-to-employment in new countries by removing the need to set up a legal entity. For global expansion, this often outweighs recruitment speed alone.
When an Employer of Record Is the Better Fit
An Employer of Record is usually the right choice when:
- you need to hire employees in countries where you don’t have a legal entity
- the roles are long-term and core to the business
- employment compliance and risk reduction are priorities
- you want a scalable, repeatable global hiring model
Hiring internationally without a local entity, book a FREE Consultation
When a Staffing Agency Makes More Sense
A staffing agency is usually the better choice when:
- you need help finding candidates quickly
- roles are short-term, seasonal, or project-based
- you want to outsource recruitment but retain employment responsibility
- hiring is local and entity setup is not a constraint
Need candidates for short-term projects locally, Find Talent Today
Can Companies Use Both? Yes and Many Do
In practice, many organizations use both models together. A staffing agency may be used to source candidates, while an Employer of Record is used to employ them compliantly in countries where no entity exists.
What matters is understanding that staffing employer of record is not a single solution it’s a combination of two distinct services with different purposes.
Final Thoughts: Employer of Record vs Staffing Agency Is About Intent
The decision between the employer of record vs staffing agency depends on what problem you’re trying to solve.
If the challenge is how to employ someone compliantly, especially across borders, an EOR is the appropriate model. If the challenge is how to find talent quickly, a staffing agency may be the better tool.
Understanding the difference helps avoid unnecessary risk, duplicated costs, and restructuring later.
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