Employment Models Compared
EOR, PEO, ASO, BPO, payroll, staffing, and contractors — what each does, what it costs, and when to use it.
Seven employment models. Each solves a different problem. The right choice depends on whether you have a local entity, how many people you're hiring, and how much control vs. convenience you want.
| Model | Best For | Cost Range | Entity Required | Compliance | Your Control | |
|---|---|---|---|---|---|---|
| Employer of Record (EOR) | Hiring in countries without a local entity | $400–$699/employee/month | No | High — EOR owns liability | Low — EOR is the legal employer | Guide → |
| Professional Employer Organization (PEO) | US-based companies wanting outsourced HR | $40–$160/employee/month | Yes | Medium — shared liability | Medium — co-employment | Guide → |
| Administrative Services Org (ASO) | Companies with entities wanting HR admin support | $30–$100/employee/month | Yes | Low — you own liability | High — you are the employer | Guide → |
| Payroll Provider | Processing payroll for your own entities | $20–$80/employee/month | Yes | Payroll tax compliance only | High — you are the employer | Guide → |
| Business Process Outsourcing (BPO) | Outsourcing entire functions (support, ops) | $1,500–$3,000/seat/month | No | BPO handles their employees | Low — BPO manages the team | Guide → |
| Staffing Agency | Finding and placing candidates | 15%–25% placement fee | Depends | Varies by engagement type | You manage after placement | Guide → |
| Independent Contractor | Project-based, truly independent work | Hourly/project rate (no employer costs) | No | Misclassification risk if ongoing | Low — contractor controls how | Guide → |
How to Pick the Right Model
Start with two questions:
- Do you have a legal entity in the country where you're hiring?
If no — your options are EOR, BPO, or independent contractor. Everything else requires an entity. - Do you want to manage the workers directly?
If yes — EOR (no entity) or payroll/ASO/PEO (with entity). If no — BPO handles the function and the people.
For most international hiring scenarios — you've found someone in another country and want them on your team — EOR is the answer. See our provider reviews to compare options.
Detailed Comparison Guides
Each guide goes deep on one comparison — costs, legal structure, and when each model wins.
EOR vs PEO →
Co-employment vs sole third-party employment — when each legal structure makes sense.
EOR vs Payroll Provider →
Processing payments vs employing people. The overlap is smaller than you think.
EOR vs ASO →
Outsourced HR admin vs outsourced employment — different levels of support and control.
EOR vs BPO →
Outsourcing the work vs outsourcing the employment. Two different problems, two different tools.
EOR vs Staffing Agency →
Finding people vs employing them. When you need recruitment, compliance, or both.
EOR vs Contractors →
When independent contractor engagement is legitimate and when you need formal employment.
EOR vs Local Entity →
The headcount threshold, cost breakdowns, and when to set up your own entity.
Contractor vs Employee →
The classification framework that determines which engagement model is legally required.
Frequently Asked Questions
Which employment model is best for hiring internationally?
For most companies without a local entity, EOR is the best model. It handles legal employment, compliance, payroll, and benefits without requiring entity setup. For companies that already have entities abroad, a payroll provider or PEO may be more cost-effective.
What is the difference between EOR and PEO?
A PEO co-employs your workers — both you and the PEO share the employer role. An EOR is the sole legal employer. PEO requires you to have a local entity; EOR does not. PEO is primarily a US model; EOR works in 80–160+ countries.
Can I use multiple employment models at the same time?
Yes, and most international companies do. A typical setup: local entity with payroll in your home country, EOR for countries where you have small teams, and contractors for genuinely independent project work. The models aren't mutually exclusive.
What's the cheapest way to hire someone abroad?
Contractors are cheapest upfront but carry misclassification risk for ongoing, full-time arrangements. EOR costs $400–$699/month per employee but includes compliance, benefits, and legal employment. Setting up an entity is cheapest per-employee at scale (15–20+) but has high fixed costs. See our pricing comparison for current rates.