Expanding your business globally, whether outsourcing roles or growing your workforce, is a significant milestone—and a complex challenge. One of the most important decisions you’ll face is how to legally and efficiently hire international employees. Two popular options are Employer of Record (EOR), which is the umbrella under which 2Centric falls, and a Professional Employer Organization (PEO). While both offer valuable solutions, understanding their differences is imperative to choosing the right model for your business goals.

In this guide, we’ll compare EOR and PEO services, highlight key differences, and explain why many companies choose EOR services for global growth.

What Is a PEO?

A Professional Employer Organization (PEO) partners with businesses to co-employ workers. Under this model, the PEO shares specific legal responsibilities, such as payroll, benefits administration, and HR compliance. However, your company must already have a legal entity in the country where the employees are based.

Key Features of a PEO:

• Requires a local legal entity
• Shared employer responsibilities
• Manages payroll, taxes, and benefits
• Offers HR compliance support

What Is an EOR?

On the other hand, an EOR, such as ourselves, is a third-party organization that legally employs workers on your behalf in foreign countries. The EOR handles all compliance, tax, payroll, and labor law obligations. Crucially, you do not need a local entity to hire internationally with an EOR, making it a faster and more flexible route for global hiring.

Key Features of an EOR:

• No local entity required
• Full legal employment responsibility
• Manages payroll, benefits, and compliance
• Fast onboarding and risk mitigation

Why EORs Are Often Better for Global Expansion

While PEOs work well for domestic or established international operations, EORs offer a more scalable and streamlined solution for entering new markets. Here’s why many companies choose an EOR for global expansion:

1. Faster Market Entry

Establishing a legal entity abroad, especially for the first time or alone, can take months to try and navigate. EORs eliminate this delay, allowing you to hire talent in days instead of months.

2. Reduced Legal and Compliance Risk

Global employment laws differ significantly than local or national laws, and failing to comply can result in substantial fines, legal consequences, and more. EOR services specialize in navigating complex local labor regulations, thereby minimizing your legal risks, investigating complex local labor regulations, thereby minimizing your legal risks..

3. Cost-Effective Expansion

With an EOR, there’s no need to invest in setting up foreign subsidiaries, legal teams, or HR infrastructure. You pay for what you use, keeping overhead low.

4. Operational Simplicity

From payroll to benefits to taxes, EORs provide an end-to-end HR solution, freeing your team to focus on strategy and growth, not red tape.

Want to know more about how EORs work in Colombia? Check out the article here.

When a PEO Might Be the Better Fit

A PEO may still be a strong option if:

You already have a legal entity in the country.

You’re looking for long-term HR support in established markets.

Conclusion: Choose the Right Partner for Your Growth

If your company is looking to test new markets, hire international talent quickly, or expand without the burden of entity setup, an Employer of Record is likely the most efficient and compliant choice. PEOs offer solid support for companies with existing infrastructure, but EORs provide the speed, flexibility, and simplicity that modern businesses need to scale globally.

Thinking about taking the leap or learning more? Click here to schedule a free consultation with a 2Centric expert.