How companies actually hire globally
Most companies don't start with an EOR. They start with a contractor, then realize they need something more. Here's the path 90% of companies follow.
Four stages of international hiring
Most companies move through these stages as they grow internationally. Click any stage to explore the details — costs, risks, and what triggers the move to the next one.
How other companies navigated this
These are composites based on real patterns we see. Names are fictional, but the situations and decisions are ones we encounter regularly.
Sarah
VP of Engineering, 40-person startup
Situation: Needed 3 backend engineers in Poland — fast. No entity, no local knowledge, tight budget.
What they did: Started with contractors on Upwork. Within 6 months, two became full-time via an EOR. The third stayed as a contractor for project work.
Marcus
Head of People, Series B company
Situation: Had 12 employees in Germany through an EOR. The monthly bill hit $7K and growing, with limited control over benefits.
What they did: Set up a GmbH in Berlin. Used the EOR to bridge the 8-week registration process, then transitioned all employees to the new entity.
Priya
CFO, 200-person company
Situation: Entities in 4 countries, each with a different local payroll provider. Month-end close took 2 weeks and errors were constant.
What they did: Consolidated everything onto a single global payroll platform. Still uses an EOR for 3 countries where headcount is under 5.
Tom
Founder, 10-person remote agency
Situation: Team spread across 6 countries. Everyone was a contractor. A client in the EU flagged compliance concerns during due diligence.
What they did: Moved the 4 EU-based team members to an EOR for proper employment contracts. Kept the others as contractors where the relationship was genuinely independent.
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Not sure about your answers? That's fine — most companies start with their best guess and adjust as they learn more about the target country.
Or skip ahead and talk to our teamHow many people do you need in the target country?
How long will you need people in this country?
Do you have a legal entity in the target country?
The reality: most companies use multiple models
Global hiring isn't a linear path you complete — it's a toolkit you mix. Here's what a typical mid-size company's setup looks like:
Contractors
Testing new markets in SEA
Via EOR
Countries with <10 headcount
UK entity
Established office, full team
German entity
Engineering hub, growing fast
This isn't unusual — it's the norm. The right approach is whichever combination of models serves each country and team size best.
When to move to the next stage
These are the concrete signals that it's time to graduate to the next hiring model.
- Worker has set hours, uses company tools, and reports to a manager
- Engagement extends beyond 6-12 months
- Local tax authority reclassifies the relationship
- Contractor requests benefits, PTO, or employment protections
- Your legal team flags misclassification exposure
- Headcount in one country crosses ~15 employees
- Annual EOR spend exceeds $60K-80K per country
- You need custom benefits or employment terms the EOR can't provide
- Country has EOR duration limits (Germany: 18 months, others vary)
- Strategic decision to establish permanent local presence
- Managing payroll across 3+ countries with separate providers
- Finance team spends excessive time on cross-country reconciliation
- Audit requirements demand consolidated payroll reporting
- Errors from manual processes across multiple systems
- Board or investors want unified global workforce visibility
Total cost comparison
What you'll actually spend across each model — per person, per month, including setup.
| Model | Monthly / person | Setup cost | Time to hire | Compliance | Control | Best for |
|---|---|---|---|---|---|---|
| Contractors | Contractor rate only | $0 | Days | High risk | Low | Short-term projects, testing markets |
| EOR | $179-699/person | $0-500 | 1-2 weeks | Provider managed | Medium | 1-50 employees, no local entity |
| Entity | $1K-3K overhead | $15K-50K | 2-6 months | Self-managed | Full | 10+ employees, long-term commitment |
| Global payroll | $20-50/person | $5K-20K | 1-3 months | Provider assisted | Full | Multi-entity, 50+ employees |
Country-specific factors that change the decision
Every country has quirks that shift which hiring model makes sense. Here are the ones that matter most.
Germany
Strict 18-month limit on EOR arrangements. Works councils required at 5+ employees. Entity setup takes 4-8 weeks.
Spain
Strong employee protections make contractor misclassification especially risky. Severance costs are high — factor this into your model choice.
Brazil
Complex labor laws with mandatory 13th salary and extensive benefits. Entity setup is slow (3-6 months). EOR is the standard entry point.
United Kingdom
IR35 rules make contractor classification complex. Entity setup is fast (1-2 weeks). Often the first country where companies set up their own entity.
Singapore
Employer-friendly regulations and fast entity setup (1-2 weeks). Low employer costs. Many companies set up entities here even with small teams.
India
Large talent pool makes it a common first international hire. Complex compliance (PF, ESI, gratuity). EOR is popular for teams under 20.
Frequently asked questions
In most countries, yes. However, some countries impose limits. Germany limits temporary employment (which includes EOR) to 18 months. A few other countries have similar restrictions. Always check country-specific rules with your EOR provider.
The EOR technically terminates the employment, and you re-hire the employee through your new entity. Good EOR providers help manage this transition. Employees keep their roles — it's an administrative change. However, continuity of benefits and tenure may need to be negotiated.
The breakeven point is typically 10-15 employees in a single country, though it varies. Countries with expensive entity maintenance (like Brazil) have a higher breakeven. Countries with fast, cheap setup (like the UK) have a lower one. Factor in not just direct costs but also your team's time managing compliance.
It depends on the country and the nature of the work. The key test is whether the worker is genuinely independent: setting their own hours, using their own tools, working for multiple clients, and controlling how the work is done. If a contractor looks like an employee, you risk misclassification penalties regardless of what the contract says.
Yes, and many companies do. You might have contractors for project work, EOR employees for your core team, and eventually set up an entity when headcount justifies it. The models aren't mutually exclusive — they serve different needs.
Key factors include country coverage, per-employee pricing, onboarding speed, benefits packages, and contract flexibility. Our EOR provider rankings compare the top providers across these dimensions.
An EOR is the legal employer of your workers — you don't need a local entity. A PEO co-employs workers alongside your existing entity. If you don't have an entity in the target country, you need an EOR, not a PEO. Read our full EOR guide for more details.
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