Despite explosive growth in the EOR industry, it does have its fair share of challenges, not the least of which is the lack of awareness among buyers.
DALLAS (PRWEB) February 21, 2023
Everest Group research suggests that 71% of organizations want to improve their geographical footprint; however, global expansion can be a complex and lengthy process, with organizations needing to navigate new legal systems, regulations, taxes, cultures, languages and more. Enterprises are discovering that Employer of Record (EOR) arrangements can ease the burden of international expansion; accordingly, the EOR market swelled 170% in 2020 and 120% in 2022 and is expected to continue to grow at a compound annual growth rate of 40-50% through 2025 according to Everest Group.
An Employer of Record is a third-party organization that becomes the full legal employer of a company’s workforce and assumes all employee-related responsibilities in a particular country. With an EOR, enterprises can onboard and manage talent without needing to establish a new legal entity in a particular region or risk violating local laws. EOR offerings can span the entire employee administration value chain and include services such as onboarding, benefits provision and administration, time and expense management, and payroll. An EOR partnership is a better alternative to traditional outsourcing in that it offers higher accessibility and control over the employees, better transparency in employee practices, lowered complexity in end-to-end HR management, and shorter onboarding timelines.
“Two of the top benefits enterprises receive from EOR adoption is that they no longer have to deal with the complexity of setting up international entities nor worry about staying in compliance with local laws and regulations,” said Priyanka Mitra, vice president at Everest Group. “In addition to mitigating these risks, EOR partnerships deliver administrative cost and time savings, business continuity, and global mobility—all of which are now highly valued by enterprises striving to excel in a post-pandemic, next-normal business environment."
Despite explosive growth in the EOR industry, it does have its fair share of challenges, not the least of which is the lack of awareness among buyers,” continued Mitra. “Large enterprise buyers are still gaining confidence in the model. Even those who are adopting the model often see it as a short-term solution, preferring to set up their own entities if they plan to remain in the territory for a long time. Other challenges include the recessionary headwinds that may slow down adoption and the ever-evolving regulations around remote work and dispersed workforces that add complexity to the space.”
Despite these challenges, EOR firms are investing significantly to enhance their technological capabilities to provide elevated stakeholder experiences and to bring efficiencies to various processes. For example, service providers interviewed by Everest Group have made investments in chatbots, advanced analytics, dynamic dashboards and benchmarking, and employee self-service and manager self-service tools. In addition, EOR firms are expanding payroll capabilities and services capabilities, such as recruitment, multi-language support, knowledge centers, and benefits offerings.
These findings and more are detailed in Everest Group’s recently published report, “Employer of Record (EOR) – State of the Market 2023.” This report offers an introduction to Employer of Record and an EOR market overview, including buyer adoption trends, the provider landscape, key investment themes and the outlook for 2022-2023.
- Adoption by buyer size: EOR solutions are largely adopted by small and midsized buyers, as they are primarily focused on expanding their employee size and tapping potential markets across regions.
- Adoption by geography: North America remains a major adopter and has the highest contribution to the overall revenue of EOR providers, followed by Europe and Asia Pacific regions.
- Adoption by industry: The services industry has the highest market share followed by the financial and healthcare industries.
Solution Provider Landscape
Based on Everest Group’s comprehensive evaluation framework, the PEAK Matrix®, 15 leading EOR providers evaluated are segmented into three categories:
- Leaders: Atlas, Deel, Globalization Partners, Safeguard Global, and Velocity Global
- Major Contenders: BIPO, Mauve Group, Mercans, Neeyamo, Omnipresent, Oyster, Papaya Global, and Remote
- Aspirants: Links International and Skuad
***Download a complimentary abstract of “Employer of Record (EOR) – State of the Market 2023.”***
About Everest Group
Everest Group is a leading research firm helping business leaders make confident decisions. We guide clients through today’s market challenges and strengthen their strategies by applying contextualized problem-solving to their unique situations. This drives maximized operational and financial performance and transformative experiences. Our deep expertise and tenacious research focused on technology, business processes, and engineering through the lenses of talent, sustainability, and sourcing delivers precise and action-oriented guidance. Find further details and in-depth content at http://www.everestgrp.com.