Key Findings & Highlights:

Economic instability will likely prevail through 2025. Geopolitical and regional conflicts, inflationary and recessionary concerns, and the competitive labor market continue to be major influences, generating business uncertainty and requiring organizations and vendors to secure the required workers and specialized skills from countries where they may not have an established presence. These factors drive the demand for EOR services as organizations gain a broader understanding of the benefits of this model.

Geographical targeting is global amongst vendors, with most targeting firms headquartered in their home region. North American-headquartered firms remain the predominant target and adopter of Global EOR services, representing ~51.9% of the market in 2023. Regional targeting and growth within LATAM and APAC continued as organizations sought to secure competitively priced and skilled labor pools, including multi-lingual talent. North America and APAC continue providing solid pipelines for new client and worker growth as firms expand their targeting of critical countries, including the United States, Hong Kong, and the Philippines.

Multi-national firms of all sizes will remain the primary target for EOR services, with the largest concentration of adopters, ~85%, operating in the small to mid-market segment (<15k employees). SMB adoption is attributable to smaller start-up organizations within emerging sectors and a lack of in-house expertise dedicated to global expansion strategies, i.e., HR, legal, and accounting resources. As buyers’ understanding of Global EOR services and their respective benefits increases, global EOR vendors are more frequently engaging and securing contracts with enterprise organizations.

Primary drivers for organizations to engage with a global EOR vendor include:

• Reducing or eliminating the costs, effort, and risks in navigating the complex process of establishing legal entities and operations in foreign countries
• Maintaining direct access to knowledgeable HR, legal, and payroll experts to support workforce cost modeling and international expansion strategies.

Buyers indicate that international HR and payroll reliability and compliance remain the most critical desired outcomes of global EOR outsourcing; HR and payroll compliance are rated highest for potential vendor impact.

Vendors focus on enabling long-term client and channel partnerships, driving ARR, expanding geographical and industry expertise, and broadening capabilities. Vendor service offerings and technologies continue to evolve, with open-source API-enabled technology platforms and tiered product and pricing models aligned with client buying maturity and organizational requirements. Enhanced technology investment and third-party partnerships across the Global EOR services market will increase as providers shift focus and strategies to keep pace with broader HR technology advances. The impact of advanced technologies and GenAI are yielding third-party technology partnerships to speed the time-to-market of tech stack and staff capabilities across functions, including GenAI, fintech, learning, workflow management, and time/expense management.

Vendor organizations are evolving to include dedicated client success organizations, reflecting growing global EOR market maturity, strategic client engagement, and recent C-suite appointments, leveraging data and client relationships to deliver adaptable and easily scalable solutions in alignment with current and anticipated future needs. As working environments continue shifting, EOR vendors must assess and modify policies and procedures, providing the appropriate level of enablement for workers, such as flexible work schedules, four-day work weeks, etc. Supporting a remote workforce requires a well-defined culture, allowing workers to remain connected and informed. Vendors are focusing on employee engagement, career development, and success planning for the future of work.

The rapid introduction and evolution of advanced technology, i.e., GenAI, is driving vendors to innovate and rapidly balance ethical risks against industry regulations associated with the responsible use and application of technology. While technology is a crucial differentiator between vendors, with AI/GenAI, predictive/prescriptive analytics, and extreme personalization as top technology roadmap investments, vendors agree there is a delicate balance between the application of technology and human interaction.