Employer of Record vs Staffing Agency: Which Hiring Solution Is Right for Your Business?

You need to hire a project coordinator in Colombia. Do you call a staffing agency or an Employer of Record? Most business owners get these two mixed up, and choosing the wrong one costs thousands in wasted recruitment fees, compliance penalties, or hiring delays that stall growth.

Here’s the confusion: both services help you hire people. But they do completely different jobs. A staffing agency finds candidates. An Employer of Record employs them legally. One handles recruitment. The other handles payroll, compliance, benefits, and everything that comes after you say “you’re hired.”

Understanding this distinction matters because the hiring model you choose determines your costs, compliance risk, speed to hire, and long-term team stability. This guide breaks down exactly what each service does, when to use which, and how Viva Global’s hybrid approach gives you the best of both worlds without the limitations.

What Is an Employer of Record (EOR)?

An Employer of Record is a third-party organization that becomes the legal employer of your workers in countries where you don’t have a legal business entity.

Think of it this way: you want to hire a bookkeeper in Mexico, but you’re a U.S. company with no Mexican subsidiary. Setting up a legal entity in Mexico costs $15,000 to $50,000 upfront, takes 3 to 6 months, and requires ongoing corporate maintenance, local accounting, and annual compliance filings. That’s prohibitively expensive for hiring one or two people.

An EOR solves this. Viva Global becomes the legal employer of your Mexican bookkeeper for employment law purposes. We handle everything on the employer side of the relationship: employment contracts compliant with Mexican labor law, monthly payroll processing, income tax withholding and remittance, mandatory benefits administration, and ongoing HR compliance.

You manage the bookkeeper’s day-to-day work, assign tasks, review deliverables, and integrate them into your team. We carry the employment liability and administrative burden.

What an EOR handles for your international hires:

Employment contracts that comply with local labor law
Monthly payroll processing in local currency
Income tax withholding and remittance to local authorities
Social security and mandatory benefit contributions
Statutory benefits (paid time off, sick leave, maternity/paternity leave)
HR administration and employee record management
Termination procedures if the relationship ends
Ongoing compliance as local regulations change

One of the most common misconceptions is that EORs and staffing agencies do the same thing. In reality, they serve very different purposes. The EOR model exists specifically to enable international hiring without the complexity and expense of establishing foreign legal entities.

What Is a Staffing Agency?

A staffing agency specializes in finding and placing candidates into open positions. They’re recruiters focused on the front end of hiring: sourcing talent, screening resumes, conducting initial interviews, and presenting qualified candidates for your final selection.

Staffing agencies play a pivotal role in the job market, assisting companies in filling temporary, part-time, or full-time positions and helping job seekers find employment opportunities that match their skills and career goals.

When you engage a staffing agency, they handle the recruitment process so you don’t have to. This includes advertising your open position, tapping into their candidate network, screening applications, conducting preliminary interviews, and negotiating offers on your behalf.

What a staffing agency does:

Creates and posts job descriptions across multiple platforms
Sources candidates from their talent database and networks
Screens resumes and applications to identify qualified prospects
Conducts initial phone or video interviews
Performs background checks and reference verification
Presents shortlisted candidates for your final interviews
Negotiates salary and offer terms
Sometimes provides temporary workers for short-term projects

What a staffing agency does NOT do:

Once you hire the candidate, the staffing agency’s job is done. They don’t become the legal employer. They don’t process ongoing payroll. They don’t handle benefits administration or compliance. Those responsibilities fall on you as the hiring company, unless you partner with an EOR to manage the employment side.

Staffing agencies shine when you lack internal recruiting capacity, need to fill positions quickly, or want access to specialized talent pools. But they’re not an employment solution. They’re a recruitment solution.

The Key Differences: EOR vs Staffing Agency

Let’s clarify exactly where these two models diverge.

Legal Employer Status

Employer of Record: The EOR is the legal employer on paper. They appear on tax forms, employment contracts, and government filings. Your worker is legally employed by the EOR, even though they perform work exclusively for your company.

Staffing Agency: The agency is NOT the legal employer for permanent placements. They find candidates, but once hired, you become the employer (or you use an EOR to assume that role). For temporary placements, some staffing agencies do act as the employer during the assignment, but this is limited to short-term contracts.

Scope of Responsibilities

Employer of Record: Comprehensive employment management throughout the worker’s entire tenure. Onboarding, payroll, benefits, compliance, HR support, and offboarding. The EOR is involved from day one until the employment relationship ends.

Staffing Agency: Recruitment only. Their involvement begins when you have an open position and ends when a candidate accepts your offer. Ongoing employment management is not their responsibility.

Timeline and Duration

Employer of Record: Designed for long-term employment relationships. The EOR model works best when you’re building a stable, dedicated team that you plan to retain for months or years.

Staffing Agency: Can support both temporary and permanent placements. However, for permanent hires, the agency’s role is transactional and concludes at the point of hire.

Compliance and Risk Management

Employer of Record: The EOR assumes legal liability for employment compliance. EORs are responsible for ensuring that all legal and regulatory requirements are met in the country where the employee is based, reducing risk for your company. Misclassification, payroll tax errors, benefits violations, these risks transfer to the EOR.

Staffing Agency: Limited compliance involvement. They may verify that candidates meet job requirements and have work authorization, but they don’t manage ongoing compliance obligations. That burden stays with you.

Geographic Capabilities

Employer of Record: Purpose-built for international hiring. EORs maintain legal entities or partnerships in dozens of countries, enabling you to hire globally without setting up your own foreign subsidiaries.

Staffing Agency: Most staffing agencies operate domestically or regionally. While some have international reach, their focus is finding candidates, not managing cross-border employment compliance.

Numbers You Should Know

Average EOR cost: $500 to $900 per employee per month
Average staffing agency fee: 20% to 30% of first-year salary (one-time)
Time to hire via EOR: 14 to 21 days (if you already have a candidate)
Time to hire via staffing agency: 30 to 60 days (includes full recruitment)
EOR market growth: Expected to reach $6.6 billion by 2028
Staffing agency market: $650 billion globally in 2025

Cost Comparison: EOR vs Staffing Agency

Let’s talk numbers. Which model actually costs less?

The answer depends on your hiring scenario, but here’s how the economics typically play out.

Employer of Record Costs

EOR services operate on a subscription model. You pay a monthly fee per employee, which covers all employment-related services.

Typical EOR pricing structure:

Fixed monthly fee: $299 to $800 per employee per month
Percentage of salary model: 10% to 25% of gross monthly salary (less common)
Setup fees: $0 to $2,000 per country (one-time)
Offboarding fees: $0 to $500 per employee (if applicable)

For example, if you hire a $30,000 annual salary project coordinator through Viva Global’s EOR service at $599 per month, your total annual cost for EOR services is $7,188. Add that to the $30,000 salary, and your all-in cost is $37,188 annually.

Compare that to hiring domestically: a similar role in the U.S. costs $60,000 to $75,000 in salary alone, plus benefits, payroll taxes, and overhead. The LATAM hire via EOR saves you $22,000 to $37,000 per year, even after paying EOR fees.

Staffing Agency Costs

Staffing agencies charge placement fees, typically structured as a percentage of the hired candidate’s first-year salary.

Typical staffing agency pricing:

Permanent placement fee: 20% to 30% of first-year salary (one-time)
Temporary staffing markup: 40% to 75% on top of hourly wages
Contract-to-hire fee: 10% to 20% if temp worker converts to permanent

Let’s run the same example. You hire a $30,000 annual salary project coordinator through a staffing agency charging 25%. Your recruitment fee is $7,500 (one-time). After that, you’re responsible for all ongoing employment costs: payroll, benefits, compliance.

If you’re hiring domestically, you pay the $7,500 fee and move on. But if you’re hiring internationally and still need compliance support, you’ll need an EOR anyway. So the staffing agency fee becomes an additional cost on top of EOR services.

When Each Model Costs Less

EOR is more cost-effective when:

Hiring internationally and you don’t have a local entity
Building long-term, stable teams (ongoing monthly cost is predictable)
You already have candidates identified and don’t need recruiting help
Compliance risk is high and you want liability transferred

Staffing agency is more cost-effective when:

Hiring domestically and you can manage employment in-house
Filling temporary or project-based roles
You lack recruiting capacity and need sourcing expertise
The one-time placement fee is lower than ongoing EOR fees for short assignments

For most U.S. companies hiring professional roles in Latin America, the EOR model delivers better long-term value because it combines cost savings (70% lower salaries), compliance protection, and predictable monthly expenses.

When to Use an Employer of Record

The EOR model solves specific hiring challenges. Here’s when it makes the most sense.

You’re Hiring Internationally

If the person you want to hire lives in a country where you don’t have a legal entity, an EOR is often your only practical option. Companies looking to expand their hiring options without setting up local entities often partner with an employer of record to ensure they comply with applicable legal and financial regulations.

Example: Your construction company wants to hire a full-time bookkeeper in Colombia. You’re based in Texas and have no Colombian entity. Setting one up costs tens of thousands of dollars and months of time. Viva Global’s EOR service lets you employ that bookkeeper legally in Colombia within 21 days, at a fraction of the entity setup cost.

You Need Long-Term, Dedicated Team Members

EOR services are designed for permanent or semi-permanent employment relationships. When you’re building a remote team you plan to retain for years, the ongoing support and compliance management an EOR provides makes sense.

Example: A real estate firm hires three remote team members in Latin America: a property accountant, marketing coordinator, and executive assistant. These are core team members, not temporary contractors. The EOR handles their employment indefinitely, and the predictable monthly cost scales as the team grows.

Compliance Risk Keeps You Up at Night

International employment law is complex and consequences for non-compliance are severe. Misclassifying workers, failing to withhold correct taxes, or violating local labor regulations can result in fines, back payments, and legal liability.

An EOR transfers that risk. They stay current on changing regulations, ensure contracts comply with local law, and handle all tax and benefits obligations correctly. If something goes wrong, it’s their liability, not yours.

You Already Have Candidates

If you’ve identified who you want to hire (through your own network, referrals, or even a staffing agency), an EOR lets you employ them quickly without needing recruiting help. This is common when companies already have talented contractors they want to convert to full-time employees or when internal teams source candidates directly.

When to Use a Staffing Agency

Staffing agencies fill a different need. Here’s when they’re the right call.

You Don’t Know Who to Hire

If you have an open position but no candidates, a staffing agency handles the sourcing and screening legwork. It’s estimated that in an average week during 2023, more than 3 million people were connected to employers through staffing agencies. They tap into talent networks you don’t have access to and present pre-vetted candidates, saving you recruiting time.

Example: A professional services firm needs a senior accountant but their internal HR team is stretched thin. They engage a staffing agency to post the role, screen applicants, and present the top three finalists. The firm conducts final interviews and makes the hire.

You Need Temporary or Project-Based Workers

For short-term needs (seasonal demand, project surges, temporary backfill), staffing agencies excel. They can place temporary workers quickly, and the short-term nature of the assignment means ongoing EOR costs wouldn’t make economic sense.

Example: A marketing agency lands a three-month campaign requiring two additional graphic designers. A staffing agency places temp workers for the project duration. When the campaign ends, the assignment concludes with no long-term employment obligations.

You Have Internal HR Capacity

If you already have systems and expertise to manage payroll, benefits, and compliance in-house, a staffing agency helps you find people without taking over employment management. You maintain control over the full employee relationship after hire.

Hiring Domestically

When hiring within your home country where you already have established HR infrastructure, a staffing agency’s one-time placement fee might be more economical than ongoing EOR costs (which you don’t need domestically anyway).

The Viva Global Advantage: Getting Both Services from One Partner

Here’s where Viva Global’s model breaks the traditional either-or choice.

Most companies face this scenario: they need recruiting help AND international employment support. Traditionally, that means working with two separate vendors. A staffing agency to find candidates. Then an EOR to employ them. Two contracts, two points of contact, two billing relationships.

Viva Global eliminates that complexity by offering both services under one roof.

Full-Service Recruitment + EOR Employment

When you partner with Viva Global, we handle the complete hiring lifecycle:

Step 1: Candidate Sourcing (Staffing Agency Function)
We tap into our network of pre-vetted Latin American professionals to source qualified candidates for your open roles. Project coordinators, bookkeepers, marketing specialists, customer success managers, whatever you need. We post roles, screen applicants, conduct initial interviews, and assess English proficiency and technical skills.

Step 2: Client Interviews and Selection
We present 3 to 5 finalists who match your requirements. You conduct final video interviews, assess cultural fit, and select your preferred candidate. We facilitate the entire process but you make the hiring decision.

Step 3: EOR Employment (Employer of Record Function)
Once you select a candidate, Viva Global becomes their legal employer in their home country. We process all employment paperwork, set up payroll, enroll them in mandatory benefits, and ensure full compliance with local labor law. You onboard them into your team and manage their daily work.

Step 4: Ongoing Employment Management
We handle monthly payroll, benefits administration, tax remittance, and HR compliance for as long as the employee works for you. One predictable monthly invoice covers everything.

This integrated approach means:

No vendor juggling: One partner handles recruitment and employment
Faster hiring: We control the entire process end-to-end (14 to 21 days typical)
Seamless transition: Candidate selection flows directly into employment setup
Cost efficiency: No separate recruitment fees on top of EOR costs
Single point of accountability: Any questions or issues, you have one contact

Or Bring Your Own Candidates

Already have someone in mind? Maybe a contractor you want to convert to full-time, or a referral from your network, or a candidate you found through LinkedIn. No problem.

Viva Global’s EOR service works independently too. You bring us the candidate, and we handle all the employment formalities. We don’t charge recruiting fees if you’re sourcing candidates yourself. You get pure EOR services: compliant employment without the staffing agency markup.

This flexibility lets you choose the level of support you need. Full-service recruitment plus employment? We’ve got you. Just employment management for candidates you source? We handle that too.

Real Scenarios: Which Model Wins?

Let’s walk through three common hiring situations and determine the optimal approach.

Scenario 1: Construction Company Needs a Bookkeeper in Colombia

The Need: A Texas-based construction firm runs $8M in annual revenue and desperately needs dedicated bookkeeping support. They want someone handling job costing, accounts payable/receivable, and monthly financial reports. They’ve identified that hiring from Colombia offers 70% cost savings compared to domestic bookkeepers.

The Challenge: They have no Colombian entity, no recruiting contacts in Colombia, and limited time to manage a lengthy hiring process. They need someone skilled, English-fluent, and familiar with U.S. accounting software.

The Solution: Viva Global’s full-service recruitment plus EOR.

We source pre-vetted bookkeeper candidates from our Colombia talent network, present finalists with U.S. GAAP experience and QuickBooks proficiency, and facilitate interviews. Once the company selects their bookkeeper, we employ them through our Colombian EOR, handling all payroll, taxes, and compliance. Total time from engagement to start date: 18 days.

Annual Cost: $26,000 bookkeeper salary + $7,188 EOR fees = $33,188 total. Compare that to $60,000+ for a U.S. bookkeeper. Savings: $27,000+ annually.

Scenario 2: Law Firm Needs Temporary Paralegals for Big Case

The Need: A mid-size law firm is handling a major litigation case requiring document review over the next four months. They need three temporary paralegals immediately, with specialized e-discovery experience.

The Challenge: Temporary need, domestic hiring, specialized skill requirements.

The Solution: Traditional staffing agency.

A legal staffing agency places three contract paralegals within one week. The agency handles payroll for the temp workers during the four-month assignment. When the case concludes, the firm has no ongoing obligations. Clean, straightforward, and perfectly suited for temporary domestic hiring.

Cost: Temporary staffing markup of 50% on hourly wages. For $35/hour paralegals, firm pays $52.50/hour all-in. Four-month cost per paralegal: approximately $34,000. No EOR needed since hiring is domestic and temporary.

Scenario 3: SaaS Startup Building a Remote Customer Success Team Across LATAM

The Need: A Series A SaaS company is scaling its customer success function. They plan to hire five customer success managers across Mexico, Colombia, and Argentina over the next six months. These are permanent, full-time roles core to their growth strategy.

The Challenge: International hiring in three countries, no legal entities in any of them, need long-term employment solution with predictable costs.

The Solution: Viva Global EOR with optional recruitment support.

For candidates the startup sources themselves (through inbound applications or referrals), Viva provides EOR-only services. For positions where they need recruiting help, Viva handles full-service sourcing and employment. The startup builds a five-person LATAM customer success team within six months, all employed compliantly through Viva’s EOR in their respective countries.

Cost: Five employees at average $35,000 salary = $175,000 in salaries. EOR fees at $599/month per employee = $35,940 annually ($2,995/month for five employees). Total annual cost: $210,940. Equivalent U.S. team would cost $350,000 to $450,000 in salaries alone. Savings: $150,000+ annually while accessing strong LATAM talent.

Common Misconceptions About EOR vs Staffing Agency

Let’s clear up confusion that trips up many hiring managers.

“An EOR Will Recruit Candidates for Me”

Not automatically. While some EORs (like Viva Global) offer recruitment services, traditional EOR providers do not. Their function is employment management, not candidate sourcing. If you engage a pure EOR, you’re expected to bring them candidates you’ve already identified.

This is why companies often use both services: staffing agency to find candidates, then EOR to employ them. Viva Global eliminates this split by offering both.

“Staffing Agencies Handle All the Compliance Stuff”

No. Staffing agencies find people. Once hired, compliance is on you (or your EOR). Staffing agencies may handle some legal aspects, but they usually don’t cover the full spectrum of compliance requirements, particularly when it comes to international hiring. Don’t assume recruiting help includes employment compliance support.

“I Can Only Use One or the Other”

False. Many companies use both simultaneously. A staffing agency sources candidates for multiple open roles. An EOR employs those candidates once selected, plus handles ongoing payroll and compliance. Or you use an EOR for international hires and a staffing agency for domestic temp workers. The models complement each other.

“EOR Services Are Only for Huge Companies”

Not true. EOR services scale beautifully for small businesses. Hiring one person internationally? An EOR makes it possible without prohibitive entity setup costs. In fact, EORs are especially valuable for small companies that lack internal HR and legal resources to manage international compliance themselves.

Viva Global works with companies of all sizes, from 5-person startups to 200-employee service businesses. The model works regardless of company size.

Making Your Decision: EOR, Staffing Agency, or Both?

Here’s your decision framework.

Choose an Employer of Record when:

Hiring internationally in countries where you lack a legal entity
Building long-term, permanent teams
Compliance risk and legal liability concern you
You need predictable monthly employment costs
You already have candidates identified

Choose a Staffing Agency when:

You need recruiting help to source candidates
Filling temporary, seasonal, or project-based roles
Hiring domestically and you have internal HR capacity
Speed of placement is critical and you’re hiring short-term

Choose Viva Global (Both Services) when:

Hiring internationally from Latin America
You want one partner handling recruitment and employment
Building a long-term remote team
You need 70% payroll cost savings with zero compliance risk
You value speed, simplicity, and single-vendor accountability

The smartest hiring strategies don’t force an either-or decision. They use the right tool for each situation. International, long-term hires? EOR. Domestic, temporary roles? Staffing agency. Building a LATAM team from scratch? Viva Global’s integrated recruitment plus EOR.

Taking the Next Step: How Viva Global Simplifies Your Hiring

You understand the difference now. Staffing agencies find people. Employers of Record employ them legally. Most companies need both services when hiring internationally.

Viva Global delivers both under one partnership, eliminating vendor complexity and accelerating your hiring timeline.

Here’s how it works:

For full-service hiring (recruitment + EOR):

Book a consultation to discuss your open roles, requirements, and timeline
We source candidates from our pre-vetted LATAM talent network
You interview finalists (typically 3 to 5 candidates per role)
We handle employment as your EOR once you make your selection
You manage daily work while we handle payroll, compliance, and HR

For EOR-only services (you bring candidates):

You identify who you want to hire (contractor conversion, referral, direct sourcing)
We process employment paperwork and set up compliant contracts
We manage all payroll, benefits, taxes, and ongoing compliance
You focus on integrating your new team member

Either way, you get the same outcome: skilled LATAM professionals working on your team at 70% lower payroll costs, with zero compliance risk, and support from a partner who understands both recruitment and international employment.

FAQ: People Also Ask

Q: Can I use a staffing agency and an EOR together?

Yes, and many companies do exactly this. The staffing agency recruits and presents candidates. Once you select someone, the EOR becomes their legal employer and handles all ongoing employment obligations. This combination gives you recruiting expertise plus compliance protection. However, you’ll pay both the staffing agency’s placement fee and the EOR’s monthly service fee, so budget accordingly.

Q: What’s cheaper: hiring through an EOR or using a staffing agency?

It depends on the hiring scenario. For international, long-term hires, an EOR typically costs less because you avoid entity setup expenses ($15,000 to $50,000) and benefit from predictable monthly fees ($299 to $800 per employee). Staffing agencies charge 20% to 30% of first-year salary as a one-time fee, which can be substantial for senior roles. For domestic temporary roles, staffing agencies often make more economic sense since you don’t need international compliance support.

Q: Does Viva Global charge both staffing fees and EOR fees?

No. When you use Viva Global’s full-service recruitment plus EOR, our monthly EOR fee includes the cost of finding and placing your candidate. You don’t pay a separate 20% to 30% recruiting fee on top of EOR costs. This integrated pricing makes Viva more cost-effective than using a traditional staffing agency plus a separate EOR. If you bring your own candidates, you pay only EOR fees with no recruiting charges.

Q: How long does it take to hire someone through an EOR vs a staffing agency?

Staffing agencies typically need 30 to 60 days to complete a full recruitment cycle (posting, sourcing, screening, interviews, offer negotiation). Once a candidate accepts, you still need to set up employment, which adds time if you’re hiring internationally. EORs can process employment paperwork in 7 to 14 days if you already have a candidate. Viva Global’s full-service model (recruitment plus EOR) typically completes hiring in 14 to 21 days total because we control the entire process end-to-end.

Q: What if the person I hire through an EOR doesn’t work out?

When you hire through Viva Global’s EOR, you maintain full management control over the employee’s work. If performance issues arise, you work with us to address them through coaching, performance plans, or ultimately termination if necessary. Viva handles the legal termination process in compliance with local labor law, including any required notice periods or severance payments. You have the flexibility to end the employment relationship, just as you would with a domestic employee, but without navigating foreign legal systems yourself.

Ready to hire skilled LATAM professionals without the complexity?

Book a free consultation with Viva Global to discuss your hiring needs. Whether you need full recruitment support or EOR services for candidates you’ve already identified, we make international hiring simple, compliant, and cost-effective.

Book a Call with Hunter

About the Author

The author is Co-Founder and VP of Sales at Viva Global, a leading remote staffing agency and employer of record specializing in connecting US companies with the top 1% of Latin American talent under the motto “Talent Without Borders.” With extensive experience across Fortune 500 companies, top-rated tech firms, and early-stage startups in sales and customer success roles, the author has witnessed firsthand how recruitment processes evolve as companies scale. This diverse background has shaped a unique perspective on talent acquisition that now drives Viva Global’s approach to placing remote employees across various industries, helping businesses overcome hiring challenges and build thriving distributed workforces.

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