Hiring globally? At some point, someone’s probably told you to use a PEO, or maybe an EOR. They both sound like ways to offload HR and payroll in other countries, and technically, they are. But the way they work (and what they expect from you) is very different.
If you’re trying to figure out which model fits your hiring plans, whether you're scaling a team in one country or going global across five, this guide breaks it down side by side. No fluff, no buzzwords, just a clear comparison so you can make the right call for your business.
PEO vs EOR at a Glance
Understanding the Comparison
Legal employer
With a PEO, you stay on paper as the employee’s legal employer. The PEO handles a lot of the admin, but ultimate responsibility, especially legal liability, still sits with you. An EOR, on the other hand, becomes the employee’s legal employer, which means they’re on the hook for compliance, payroll, and contracts.
Requires a local entity
This is one of the biggest differences. PEOs only work if your company already has a registered legal entity in the country where you’re hiring. EORs don’t need that; they operate through their local entities, so you can start hiring without setting anything up.
Best for
PEOs tend to work best when you’ve already got a footprint in the country, maybe an office, a growing team, or long-term plans to build out operations. They give you support without taking full control.
EORs, on the other hand, are great when you need to move quickly. Maybe you’re hiring one person in a new market, or testing the waters before going all in. You don’t need infrastructure, and the whole setup is way faster.
Compliance risk
A PEO shares some of the compliance burden, but not all. If something goes wrong, like a misclassification or a mistake in local labor law, you could still be liable. EORs take on most of that risk, especially when it comes to employment law, taxes, and required benefits.
Payroll & benefits
With a PEO, you're often still in the weeds, your team might handle part of the payroll process, or manage benefits directly. EORs handle it all: salaries, deductions, government filings, even local perks. It’s a more hands-off experience for your team.
Speed to hire
Setting up an entity to use a PEO can delay hiring by months. With an EOR, you can typically onboard someone in a matter of days, because the infrastructure’s already there.
When Should You Use a PEO?
A PEO is the right choice if:
- You already have (or plan to set up) a local legal entity
- You want to share employer responsibilities (including compliance and payroll)
- You’re hiring permanent teams in one or two key locations
- You prefer a co-employment model where you maintain more legal control
It’s best suited for companies with long-term operational plans in a country and the internal capacity to manage local HR requirements.
When an EOR Makes More Sense
An EOR is often the better fit when speed and simplicity matter more than setting up shop. If you're hiring in a new market and don’t want to deal with entity registration, tax setup, or local employment law, going through an EOR lets you skip all that and start working with talent almost immediately.
It's also a strong option when you’re bringing on just one or two people in a country, not enough to justify a full entity, but still important hires. And if you're testing the waters in a new region or unsure about long-term plans, the flexibility an EOR offers can save you time, money, and future headaches.
Put simply, EORs are built for lean, fast-moving teams that want to hire without red tape.
Can You Switch from PEO to EOR (or vice versa)?
Switching between a PEO and an EOR isn’t impossible, but it’s not something you want to rush into. It’s more like changing gears in a moving car: you can do it, but you need to time it right.
Let’s say you started with a PEO because you had a local entity, but now you're scaling faster than expected and want more flexibility. Moving to an EOR could make sense, but that shift usually means ending one employment structure and starting a new one under different legal terms. In some countries, that counts as a formal termination, which might trigger notice periods or severance, even if the employee keeps doing the same job.
The reverse is true too. If you've been using an EOR to test a new market and you're ready to commit long term, setting up your entity and switching to a PEO, or hiring directly, could reduce long-term costs. But again, it’s rarely a simple “swap.” You’ll likely need to sign new contracts, re-register for taxes, and handle local compliance steps that vary country to country.
Bottom line? These transitions come with operational and legal friction. They're doable, but it's worth planning them with expert help, especially if you’re dealing with multiple hires or strict labor laws.
Which Model is Best for You?
It depends on what you’re trying to achieve, how quickly you need to move, and what kind of presence you want in each market.
If you already have a legal entity and you’re planning to build a long-term team in a specific country, a PEO might work well, it gives you support without fully handing over control. But if you're hiring in multiple countries, want to move fast, or aren’t ready to commit to setting up shop locally, an EOR gives you the freedom to do that without the legal or logistical burden.
