.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
Back
.svg)
.svg)
.svg)
.svg)
.svg)
.png)
The Two Main EOR Operating Models
EOR services simplify global employment by acting as the legal employer on behalf of another company, doing the heavy lifting of payroll, taxes, and compliance with local labor laws for their clients.
The two primary EOR operating models are wholly-owned (in-house) and partner-based. Understanding the nuances of each model is crucial before committing to a global expansion solution. Each carries distinct operational, financial, and compliance implications. Let’s dive in:
1. Wholly-Owned EOR Models
In a wholly-owned EOR model, the provider establishes and operates its own legal entities in the countries where it offers services. This means the provider directly employs the workers and manages all employment-related responsibilities internally.
👉 For example, an EOR provider aiming to support clients in Japan sets up its own subsidiary in Tokyo. Through this entity, the provider hires employees on behalf of its clients, handling payroll, taxes, compliance, and benefits packages directly.
2. Partner Models
Conversely, the partner model involves the EOR collaborating with local in-country providers to service regions where they don’t have a local entity themselves. They rely on the partner's expertise in local employment laws and practices to compliantly hire employees in that country.
👉 For example, an EOR provider without a physical presence in Brazil, partners with a local service provider. This local partner manages the employment aspects – such as compliance with Brazilian labor laws, payroll, and benefits – on behalf of the EOR provider's clients.
This approach allows the EOR provider to offer services in regions where establishing a legal entity might be impractical or cost-prohibitive.
Deep Dive into Wholly-Owned Models
Let’s take a closer look at the benefits and drawbacks of the wholly-owned EOR model:
Pros of Wholly-Owned EORs
Full control over processes
EORs that have a network of owned entities have complete control over employment processes in all their supported regions. This means they can standardize policies and procedures to provide a consistent experience for customers.
Better compliance and reduced risks
When using owned entities, client data stays with the EOR provider instead of changing hands between multiple third parties. This makes compliance with international standards and best practices like GDPR easier.
Faster response times and improved efficiency
If you or your employees have any issues, an EOR with owned entities will likely have faster response times and more efficient support. Instead of having to communicate with in-country providers that might be scattered across many different time zones to get answers, they can leverage in-house expertise to quickly resolve queries.
Cost-effectiveness
Once the EOR provider has taken the time to establish their own entities, they can charge a lower price for EOR fees in that region without having to account for a markup on services from external in-country providers.
Cons of Wholly-Owned EORs
Limited country coverage and scalability
To expand into new markets, the EOR provider has to establish additional entities – a costly and time-consuming process. This means the provider typically has limited country coverage compared to those using a partner model.
If your business scales to new regions and you require support from the same provider, it can also impact your ability to scale – you might have to use multiple EOR providers to meet all your needs.
Slower adaptation to market changes
In-house models lack the agility to adapt quickly to changing employment laws and market conditions. For example, sudden changes in local tax laws may require significant infrastructure adjustment.
This can delay the implementation of a solution. In comparison, EORs following a partner model can trial and replace in-country providers to find the best fit for current market conditions on short notice.
Compare the Best EOR Providers
Deep-dive into the best EOR services to help you scale globally in 2025, with easy comparisons on top features and pricing.
Read More.png)
Deep Dive into Partner Models
On the other hand, here are the benefits and drawbacks of the partner model:
Pros of Partner Models
Rapid market entry with local expertise
Partnering with local in-country providers allows the EOR provider to enter new markets swiftly, expanding their reach and offering their clients the ability to scale their teams in many markets. They can also tap into the expertise of well-established local providers that have deep knowledge of in-country employment laws.
Flexibility in diverse markets
The partner model gives the EOR provider the freedom to quickly respond to different market conditions, changing their in-country providers to suit shifting business needs or even meet the specific requirements of a client.
Cons of Partner Models
Dependency on third-party providers
Solely relying on external partners makes it challenging to provide consistent employment practices and standards across different regions.
The EOR also has to adapt to any pricing increases or contractual changes the in-country provider implements. This can have a domino effect of unexpected changes and fees for their clients.
Misalignment with internal processes
Differences in operational procedures between the company and local partners may result in inefficiencies and miscommunication that provide a poor experience for customers.
Less control over compliance nuances
An EOR provider using the partner model typically has limited oversight over the day-to-day operations of chosen in-country providers. This can increase the risk of non-compliance with local labor laws, leading to legal and financial repercussions for the EOR provider and their clients.
Why a Hybrid Model Works Best
It’s clear there are distinct advantages and drawbacks to both approaches. You’ll find EOR providers arguing for the superiority of one or the other – but why not combine the best of both worlds? That’s the approach Playroll has taken, to provide the following benefits:
1. In-depth expertise
In-country providers offer deep local expertise. Hybrid-model EORs can leverage this to ensure strong compliance, benefits, and payroll support. When the time comes to establish their own entities, they can use this experience to refine their approach and expand their internal knowledge.
2. Flexibility and tailored solutions
A hybrid approach combines the control of a robust network of wholly-owned entities, while still leveraging the local expertise of a partner network – after all, there’s no one-size-fits-all when it comes to global employment. The EOR provider can move fast and flexibly tailor their solutions to meet the unique needs of each customer, in every region.
For instance, Playroll can leverage owned entities for core HR functions in major markets while partnering for specialized local expertise in niche regions, tailoring solutions to each client’s unique needs.
3. Speed to market and scalability
By leveraging partnerships with vetted local providers, the provider can extend their reach in more countries and meet the growth goals of businesses of all sizes.
Playroll was founded by the VAT IT Group, with decades of global employment expertise – giving us comprehensive internal resources to complement the knowledge of in-country partners, and the ability to reach scale without sacrificing quality service.
4. Robust compliance and risk management
Combining internal compliance expertise with real-time local regulatory updates from trusted partners improves risk management across jurisdictions, and the ability to provide accurate updates to clients.
At Playroll, our in-house legal experts ensure an extra layer of protection when it comes to safeguarding client data, vetting employment contracts, and agreements with in-country providers.
5. Improved employee experience
We leverage internal payroll and benefits experts alongside the local knowledge of in-country providers. The result is a seamless payroll system that pays your people on time, every time, and competitive options for localized benefits. In addition, each employee gets a dedicated point of contact for questions they might have, to boost employee satisfaction and prevent churn.
Why Companies Choose Playroll as Their EOR Partner
Playroll's hybrid approach is not just a theoretical advantage; it translates to tangible benefits. We can provide comprehensive global HR solutions at scale, at no cost to quality – backed by all the capabilities we need to flexibly meet the needs of any business. With a wide network of wholly-owned entities and strategic local partnerships, Playroll’s Employer of Record solution provides the total package of compliance, efficiency, affordability and a better employee experience.
Playroll's extensive experience within the VAT IT Group has allowed us to face and resolve nearly every global employment challenge.
This means businesses expanding internationally can confidently focus on growth, while we handle the complexities of building a global workforce.
Playroll is really thinking with us. They focus on our problems and how to solve them, instead of forcing a textbook approach on us. The support team is very professional, cheerful and always on the ball. They are way faster than their competitors – we have an answer in a matter of hours instead of days.
Peter Verhaert, HR Manager, Exalate
Book a chat with our team to find out how our global employment solutions can scale your business anywhere, without the red tape.
.png)
.svg)
.svg)
.svg)
.svg)
.svg)