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Global employer-of-record spend could be as high as $35 billion

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Rising concerns over misclassification risk drive industry growth

According to a report from SIA, the global expenditure on employer-of-record services is estimated to fall within the range of $25 billion to $35 billion. This growth is primarily being propelled by a progressively intricate legislative environment, which has raised concerns about the risk of misclassification. Additionally, there has been an upsurge in the utilization of talent platforms for the direct sourcing and management of workers, among various other factors outlined in the report.

The report acknowledged that due to insufficient data, a more precise assessment of the industry’s growth couldn’t be provided. The study examined data from 11 employer-of-record firms for its analysis, while pointing out the existence of over 100 such providers worldwide.

In line with the report’s findings, an employer of record is an entity that takes on the role of the employer for a worker who has been recruited and hired by another party for administrative purposes only. This arrangement allows the worker to carry out their tasks under the supervision and control of the hiring party. The benefit of this setup is that companies can legally involve workers in new geographical locations without the need to establish a legal entity or running afoul of local regulations.

The suite of services provided by EOR firms encompasses various functions such as onboarding, offering benefits, managing payroll, overseeing time and expenses, as well as handling other administrative tasks.

For those affiliated with SIA as corporate members, the complete 66-page “Employer of Record and IC Evaluation and Compliance Landscape Summary” report is accessible.

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