History of Employer of Record (EOR) Services

Origins of the Employer of Record Concept

The concept of Employer of Record (EOR) services dates back to the mid-20th century, evolving from staffing agencies and payroll outsourcing solutions. Initially, companies relied on third-party staffing firms to handle temporary employment, primarily in industrial and clerical sectors. These firms acted as intermediaries between employers and workers, managing payroll and administrative functions.

1970s–1980s: Growth of Contingent Workforce Solutions

With globalization and the rise of outsourcing , businesses started leveraging staffing agencies for contract and temporary employment solutions. During this period, the idea of a separate legal entity handling employment responsibilities for workers gained traction. However, these services were still primarily used for domestic hiring rather than global employment.

1990s: Expansion of International Workforce Solutions

By the 1990s, multinational corporations (MNCs) faced challenges in hiring employees in foreign markets without establishing a local entity. This led to the development of Professional Employer Organizations (PEOs) in the U.S., which provided co-employment services, assisting with HR, payroll, and compliance. Around the same time, the Employer of Record(EOR )model began emerging as a distinct service, offering companies a way to legally employ workers abroad without setting up foreign subsidiaries.

2000s: Globalization and Regulatory Compliance Drive EOR Adoption

The early 2000s saw the rise of remote work, freelancing, and international business expansion, driving the need for EOR services. Companies looking to hire global talent without dealing with complex local labor laws turned to EOR providers. The model gained popularity in industries like IT, consulting, and finance, where companies sought flexible workforce solutions.

2010s: Technology-Driven EOR Solutions

The 2010s marked a significant transformation in the EOR industry with the advent of HR tech platforms, AI-driven payroll systems, and automated compliance tracking. Several global EOR providers emerged, such as Papaya Global, Deel, Multiplier, and Lano, offering streamlined, digital-first solutions for hiring international employees. Cloud-based HR management systems made it easier to manage payroll, benefits, and local compliance remotely.

2020s: Post-Pandemic Remote Work Boom

The COVID-19 pandemic (2020–2021) accelerated the adoption of EOR services as companies shifted to remote-first hiring strategies. With businesses hiring employees across borders, EOR became a key enabler of global workforce mobility. Governments also increased scrutiny on employment classification, making EOR an attractive option for ensuring compliance.