Employer of Record vs. Staffing Agency: What’s the Difference?

You know that moment when you find the perfect candidate-smart, experienced, and fully aligned with your company's culture-but then you realize they live in another country? It changes a lot. And two very different solutions keep coming up in your research: Employer of record (EOR) services and staffing agencies. They get lumped together constantly, but they work in fundamentally different ways.

The confusion makes sense. Both help companies access workers in countries where they have no legal presence. Both handle complex paperwork you'd rather avoid. But one lets you hire your own people while the other finds people for you to work with temporarily.

This distinction matters enormously for global expansion. Get it wrong, and you might end up paying twice what you expected or losing control of your hiring process entirely. Companies like Pebl have wrestled with this confusion because search engines and job seekers often treat these services as interchangeable. They're not.

Here's exactly what each service does, when you'd use one versus the other, and why it could make or break your international hiring strategy.

What is an EOR?

An EOR is a third-party organization that becomes the legal employer of your workers in countries where your company has no presence. Think of it as your international HR department on paper. The EOR signs the employment contracts, runs payroll, and takes on all legal responsibilities for employment compliance.

The crucial part for growing companies is that you still run the show. You find the candidates, conduct the interviews, set their salaries, and manage their day-to-day work. The EOR simply handles the backend complexity of international employment. They process payroll in local currency, withhold the right taxes, provide statutory benefits, and make sure employment contracts follow local labor laws.

Some of the latest figures show remote hiring demand rose 35% while cross-border compliance concerns jumped 29%. This heightened demand checks out, as about half (47%) of startups and SMEs are turning to EOR solutions to test new markets without setting up a local entity.

This setup solves a specific problem for companies building global teams. Instead of spending months and potentially hundreds of thousands of dollars setting up legal entities in new countries, you can hire that perfect developer in Berlin or marketing manager in São Paulo within days. The EOR already has the local infrastructure, legal expertise, and compliance systems in place.

The key distinction is that EORs do not find talent for you. They do not recruit, source candidates, or maintain pools of available workers. That's staffing. EORs simply make it legally possible to employ the specific people you want to hire, wherever they happen to live.

What is a staffing agency?

A staffing agency connects employers with job candidates for temporary hire, contract staffing, or sometimes permanent positions. These agencies maintain pools of pre-screened workers and match them to companies that need immediate help but do not want to handle the full recruitment process themselves. Think of them as talent suppliers rather than employment facilitators.  A staffing agency is different from an EOR because it recruits candidates to meet temporary workforce needs.

The core business model revolves around sourcing candidates. Staffing agencies recruit through job boards, networking events, and their own databases, then present qualified candidates to client companies based on specific needs. Most focus heavily on short-term placements, seasonal work, or project-based roles where companies need extra hands for days, weeks, or months.

Staffing agencies excel at local talent sourcing and rapid placement. They are designed to fill immediate staffing gaps, handle seasonal demand spikes, or provide specialized skills for short-term projects. But they are not built for long-term global employment infrastructure or helping you hire your own permanent international team members.

Here's a crucial difference from EORs: staffing agencies often remain the legal employer of the workers they place. The temp workers technically work for the agency, which handles their payroll, and the client company pays the agency for their services. This arrangement shields client companies from many employment responsibilities but limits their control over the workers.

The manner in which staffing agencies make money versus EORs is different, too. "The core of most staffing agency business models is the markup between what you pay the worker and what you bill the client," writes Nick Andriacchi, Chief Revenue Officer at Madison Resources. From the agency's perspective: "You pay a temp worker $20/hour and bill your client $30/hour. That $10/hour difference, before overhead, is your gross profit."

Key differences between EORs and staffing agencies

The confusion between EORs and staffing agencies makes sense until you dig into what each actually does. One handles the backend of employment after you find talent. The other finds talent but rarely handles long-term employment responsibilities.

The timing difference tells the whole story. Staffing agencies work at the front end of hiring. They source candidates, conduct initial screenings, and present options to client companies. Once a placement happens, their job is largely done.

EORs work at the back end. They step in after you've found someone you want to hire and handle everything needed for onboarding and employing that person legally.

This explains why nearly half of startups now use EOR services for international expansion while staffing agencies remain focused on filling immediate local needs. If you want to hire your perfect candidate in Prague and manage them as your own employee, you need an EOR. If you need three temporary developers next week and do not care who they are as long as they can code, you need a staffing agency.

The solutions solve completely different problems, which is why companies like Pebl have worked so hard to clarify that they are not in the business of finding talent for you.

When to use an EOR

EORs shine in specific scenarios where global compliance meets the need for speed. Here's when this model makes the most sense for your business:

• Testing new markets without major commitment. You can hire one or two employees in a new country to explore opportunities without the massive upfront investment and hidden costs of entity setup. If the market doesn't work out, you can exit quickly without the headache of dissolving a foreign subsidiary.
• Hiring full-time international employees quickly. When you find that perfect candidate in Singapore or São Paulo, an EOR lets you employ them within days instead of months. No waiting for incorporation paperwork or navigating foreign business registration requirements.
• Avoiding employee misclassification risks. Many companies start by hiring international contractors, but this creates serious misclassification exposure since contractor laws vary dramatically between countries. An EOR lets you hire proper employees from day one with full legal protection.
• Scaling globally without legal entity setup. Setting up subsidiaries in multiple countries can cost hundreds of thousands of dollars and take 6-18 months per location. EORs let you build teams across 10 or more countries while maintaining one simple contract relationship.
• Ensuring bulletproof compliance in complex jurisdictions. Countries like Germany, France, and Brazil have intricate labor laws that change frequently. EORs maintain local expertise to keep you compliant with employment regulations, tax requirements, and mandatory benefits without dedicating internal resources to legal research.
• Managing multi-currency payroll and benefits. Running global payroll in local currencies while providing statutory benefits like health insurance, retirement contributions, and meal vouchers becomes automatic. Your international employees get proper localized compensation packages without your finance team learning Brazilian tax law.

The common thread: EORs excel when you know who you want to hire but need someone else to handle the complex backend of international employment legally and compliantly.

When to use a staffing agency

Staffing agencies excel when you need bodies in seats quickly and do not want to handle the recruitment process yourself. They work best for specific, shorter-term scenarios where finding talent matters more than long-term employment infrastructure.

• Covering immediate local staffing gaps. When your customer service team gets slammed during Black Friday or your warehouse needs extra hands for holiday shipping, staffing agencies can deliver pre-screened workers within days. They maintain pools of available talent specifically for these surge situations.
• Filling seasonal or project-based work. Summer camps need counselors, tax firms need preparers during filing season, and retail stores need holiday help. Staffing agencies specialize in matching temporary workers to predictable cyclical needs without the overhead of permanent hiring.
• Accessing specialized skills for short-term projects. Need a data analyst for a three-month market research project or a graphic designer for a product launch? Staffing agencies often maintain networks of skilled freelancers and contractors who can jump in immediately.
• Outsourcing recruitment when you lack internal resources. Small companies without dedicated HR teams can lean on staffing agencies to handle candidate sourcing, initial screening, and background checks. The agency does the legwork of posting jobs, reviewing resumes, and conducting first-round interviews.
• Testing candidates before permanent hiring. Some staffing agencies offer temp-to-perm arrangements where workers start as temporary employees but can transition to full-time if both sides are happy. This creates a built-in trial period for roles where cultural fit matters.

The critical limitation is that staffing agencies are not built for global employment support or long-term workforce management. They typically operate within single jurisdictions and focus on placement rather than ongoing employment infrastructure. If you want to hire someone permanently in another country, a staffing agency cannot provide the compliance, payroll, and legal employer services you need.

Far more than a staffing agency

To clear it up once and for all: Pebl is not a staffing agency, which means we don't find talent for you. But we do a whole lot of other things that will make your life easier.

Our global Employer of Record (EOR) service and workforce management platform make it possible to legally employ the specific people you want to hire across more than 185 countries without setting up legal entities. To put it simply: You stay in control of your hiring strategy. We just handle the heavy lifting-the legal, the logistical, the bureaucratic-and make it feel simple. Get in touch to learn more.

Disclaimer: This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided "as is," and no representations are made that the content is error-free.

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