The three EOR operating models: How to find the right fit for your company

The most effective method that a company can use to find new employees is by requesting the services of an EOR. Nonetheless, there are certain rules that an EOR must follow in order to hire employees compliantly in any country. Therefore, it is vital to learn about the different EOR operating models before choosing the services of any of them.

In this article, you will learn all the details you should know about the existing EOR operating models. And with the information that you will find here, you can discover the ways how EORs provides their services globally. Besides, it will be easier for you to know which EOR operating model should your company choose. Let’s observe:

  1. What is an Employer of Record (EOR) and why do companies need it?
  2. What are the benefits of requesting the services of an EOR?
  3. How many types of operating models can an EOR have?
  4. What are the advantages and disadvantages of the EOR operating models?
  5. Myths you should know about the indirect EOR operating model
  6. How can you choose an Employer of Record that fits your company’s needs?
  7. How can Connect Resources help you get the services of a professional EOR?

1. What is an Employer of Record (EOR) and why do companies need it?

EOR is an acronym that stands for “Employer of Record”, which is a third party that supplies staff for companies. Besides, an EOR can also help companies to expand globally due to the many useful services that they offer. Therefore, many organizations opt for hiring the services of a professional EOR in order to achieve their global expansion goals.

But if your main business need is to find employees effortlessly, then an EOR can help you fulfill it quickly. Finding and hiring employees can be a tedious task for companies, which is why they hire a third party instead. And in most cases, this third party can be an EOR or a staffing agency, and both provide similar services.

Nonetheless, an EOR will provide more advantages since it can offer a larger range of services and benefits. Therefore, if you are interested in getting EOR services, you can get the best ones with the Connect Resources team. With our specialists, your business requirements will be fulfilled successfully in a matter of time.

1.1. How does an Employer of Record work?

If you want to know why an EOR can be useful, you should first know about their working methods. Right after companies hire these services, EORs can become the legal employers of the employees who work for those companies.

Nonetheless, companies will still remain operational control over those employees provided by EORs. Keep in mind that an EOR only takes care of HR tasks, so business owners will still have control of their operations.

The exact tasks of EORs are related to the following aspects:

2. What are the benefits of requesting the services of an EOR?

Any Employer of Record that offers high-quality services will be able to provide their clients with many advantages. And the more advantages you can get from an EOR, the more efficient will become your business. For example, some of the main benefits of requesting EOR services for making your company improve are the following ones:

  • Your company will be able to enter your target market effortlessly and in no time.
  • In case you desire to expand your business and make it grow internationally, a qualified EOR can provide you with an international workforce.
  • Another great benefit of working with an EOR is that your company will always stay in compliance with local laws and regulations. Besides, your business will also meet all data protection requirements.
  • Furthermore, if you need assistance with your company’s HR operations, an EOR can help you with them. Besides, you will also get assistance with other tasks, including international payroll and administration.
  • No business owner needs to worry about immigration, liabilities, and taxes when working with a professional EOR.

3. How many types of operating models can an EOR have?

Now that you know about the role of an Employer of Record and its benefits, let’s learn about EOR operating models. Firstly, you should know that there are three main types of operating models related to EORs. And those are the direct, indirect, and hybrid models, and we will explain each of them below.

But before that, you must be aware that learning about these EOR operating models will allow you to choose an EOR. Therefore, learning about the differences, advantages, and disadvantages of each of them is vital in order to avoid mistakes. Now then, let’s find out more useful information about these operating models of most EORs.

3.1. The direct EOR operating model

Most EORs that operate through a direct model have the necessary local experience that they need to provide their services. Therefore, they should also provide their clients with timely and cost-effective HR services in order to cover all requirements successfully. And there are several characteristics that you should take into account before hiring an EOR that operates this way.

For instance, you should know that in this case, the EOR will have no partner or customer to manage. Besides, an Employer of Record that works with this type of EOR operating model has other outstanding features. One of them is that it can create its own policies, contracts, and practices, with no partner to align with.

Although it seems to be an advantageous model, it is recommendable to know about the other EOR operating models too. This way, you will be able to compare them all and choose the one that best fits your business needs.

3.2. The indirect EOR operating model

The second option is the indirect model, which is a bit different from the first one we already talked about. Nonetheless, that does not mean that this alternative is not useful; in fact, it can help you in certain cases. But first, you need to know what the indirect EOR operating model is about before determining your final decision.

In this case, the EOR leverages certain elements of its local partner, including in-country knowledge, nuanced experience, and many others. Furthermore, the EOR can also leverage local adjacent business service contracts, which include lawyers, accountants, co-working spaces, and many more. Nonetheless, any EOR that works this way must make sure its partner remains invisible since it is an indirect operating model.

To summarize, it may have many benefits and a few disadvantages, which is why it is important to analyze. But before making your final choice, there is a third option you should consider.

3.3. The hybrid EOR operating model

The last option of the EOR operating models is the hybrid model, which is a combination of the previous ones. Therefore, it has all the advantages and disadvantages of the other models that we previously explained. However, it is also important to analyze its whole structure and consult with a specialist in case you have any questions.

To summarize, an EOR that works by using a hybrid operating model can incorporate entities in certain countries. In the meantime, it can also leverage local partners in some other nations as well. In case you require an EOR that works with any of these EOR operating models, you can contact Connect Resources and request our services.

4. What are the advantages and disadvantages of the EOR operating models?

As we mentioned before, all EOR operating models have both advantages and disadvantages, depending on your company’s needs and requirements. Therefore, it is essential to take a look at them all:

4.1. Advantages

  • The direct model does not require the EOR to have a partner, so it can make its own contracts, policies, and practices freely. Besides, EORs that work with this operating model tend to have a lot of local expertise to provide the best services.
  • Although the indirect does count on a local partner, the EOR can leverage their in-country knowledge, and many other elements. And unlike the direct model, the EOR is not limited to offering its services in countries where it is incorporated. In other words, the EOR’s local partners allow it covers many more countries, which is a great advantage for clients.

4.2. Disadvantages

  • Regarding the direct model, its main disadvantage is that the EOR can only operate in the countries it is incorporated in. And remember that an EOR cannot be incorporated in all existing countries at the same time. This model is only useful for those who need EOR services in a handful of locations.
  • As for the disadvantage of the indirect model, not all EORs tend to integrate their local partners into the operations. In other words, the clients could be handed off to local partners by surprise, which can lead to a negative experience. Therefore, it is important to understand how the EORs interact with their partners before hiring them.

5. Myths you should know about the indirect EOR operating model

The most common myth related to the indirect model is that it does not protect intellectual property. However, the truth is different when it comes to some EORs that operate under the direct and indirect EOR operating models. The EOR will always protect and transfer the employee IP to the customers contractually.

On the other hand, there is another myth, which is that EORs using local partners do not understand local laws. But the truth is that they can benefit from local employment professionals’ expertise and knowledge. These professionals help to understand the customary practices and laws of their countries.

6. How can you choose an Employer of Record that fits your company’s needs?

It is essential for you to get the exact EOR services you need to meet all your company’s requirements. Therefore, there are things you must consider before choosing an EOR, like the country you are looking to expand to. By deducing this, you will be able to determine the kind of support you need from an Employer of Record.

Once you have a clear idea of what you need from an EOR, you can start evaluating your options. During this selection process, make sure to take into account some features, like the EOR operating models used. In some cases, choosing the hybrid model is the best option.

7. How can Connect Resources help you get the services of a professional EOR?

In case you desire to get more guidance on the EOR operating models, Connect Resources will be your assistance. Our specialists will provide you with the most effective methods so you can be sure which model is more convenient for you. And besides, you can opt for requesting the Employer of Record services that we provide for companies like yours.

With our EOR services, you can not only get new employees but also enter your target market in no time. Furthermore, it will be easier for you to expand your business globally and start your operations as soon as possible. On the other hand, you can get the best outsourcing solutions and HR management with the help of Connect Resources.

Would you like to contact our Connect Resources team to obtain more information about the EOR operating models and their advantagesIf you have any questions, please feel free to call us on +971 433 16 688. Or you can also e-mail us at contact@connectresources.ae. And then, you will talk to one of our representatives who will gladly answer all of your questions.

Besides, in case you are looking for the most convenient job opportunities, make sure to visit thetalentpoint.com website. Then, all you need to do there is to submit your CV or resume to search for your dream job easily. Besides, you can also feel free to send an email at contact@thetalentpoint.com, so we can receive your application and review it.

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