Expanding globally offers tremendous growth opportunities for Vietnamese SMEs, but it also comes with significant cost and compliance challenges. Traditionally, entering a foreign market meant setting up a local subsidiary or hiring through contractors, both of which can be expensive and risky. Fortunately, employer of record services provide a smarter route. This article explains what employer of record services are and how they help reduce costs and risks in international expansion. We compare the traditional approaches versus using an EOR, outline practical benefits (from cost savings to faster market entry), and share real scenarios. In a normative, advisory tone, we’ll also discuss how InCorp Vietnam can support Vietnamese businesses in going global through its employer of record services.
See InCorp Vietnam’s Employer of Record Services in Vietnam here!
What Are Employer of Record Services?
Employer of Record (EOR) services are third-party providers that legally employ staff for your company. In essence, an EOR becomes the official employer for your overseas team—managing payroll, taxes, benefits, and compliance with local labor laws—while you oversee daily operations. This lets your company hire internationally without establishing a local entity.
As a global HR partner, the EOR prepares compliant contracts, handles payroll, and ensures correct tax and social insurance payments in the host country. By outsourcing these tasks through employer of record services, SMEs can focus on growth instead of navigating complex foreign regulations.
The EOR also assumes employment liabilities, manages work permits, and guarantees legal employee benefits. You retain operational control while they manage the backend employment process—making employer of record services a streamlined, compliant, and affordable way for SMEs to expand globally.
Traditional Expansion vs. Using Employer of Record Services
Before EOR options existed, SMEs typically had two expansion strategies: set up their own foreign subsidiary or hire independent contractors abroad. Both approaches have serious drawbacks in terms of cost, speed, and risk. Below is a comparison of these traditional methods versus using employer of record services:
Before employer of record (EOR) services emerged, SMEs had two main ways to expand abroad: set up a local entity or hire independent contractors. Both were costly, slow, and risky.
1. Setting Up a Foreign Entity:
Creating a subsidiary or branch is expensive and time-consuming. It involves legal registration, accounting, and capital requirements—often costing tens of thousands of dollars and taking up to a year. Ongoing expenses for offices, directors, and compliance add more burden, while any mistake exposes you to full legal and tax liability. For SMEs, this is a heavy financial and regulatory commitment.
2. Hiring Independent Contractors:
This seems cheaper and faster but carries serious compliance risks. Misclassifying full-time staff as contractors can result in unpaid taxes, back benefits, and penalties. You may also accidentally trigger permanent establishment status for tax purposes. Contractors are less loyal and harder to control, making this approach unstable for building long-term teams or protecting IP.
3. Using Employer of Record Services:
In contrast, employer of record services offer a low-cost, low-risk path to global expansion. The EOR already has local entities and employs your staff legally under its umbrella, handling all payroll, tax, and labor compliance. You skip incorporation fees and bureaucracy—onboarding can happen within days instead of months. The EOR assumes legal responsibility for employment, reducing exposure to fines or disputes. In short, employer of record services let SMEs access global markets and talent quickly, compliantly, and affordably, without the overhead of traditional expansion.
Practical Benefits of Employer of Record Services for SMEs
Employer of record services deliver several concrete advantages that help reduce costs and risks while accelerating your expansion. Here are key benefits, explained in practical terms for Vietnamese SME decision-makers:
Significant Cost Savings
Employer of record services drastically reduce expansion costs. By avoiding foreign entity setup, you eliminate registration, licensing, and office expenses. Instead of investing $50,000+ in incorporation, an SME pays a flat monthly fee per employee—turning unpredictable capital outlays into predictable operating costs. Studies show hiring through an EOR can cost less than half of running your own entity once compliance and admin are factored in. In short, employer of record services let you expand globally without heavy upfront investment—paying only for talent and service.
Ensured Legal Compliance (Reduced Risk)
EOR providers specialize in local labor compliance, protecting you from legal penalties and misclassification risks. They manage employment contracts, tax withholdings, and benefits according to each country’s regulations. Acting as your on-ground compliance partner, they monitor legal changes and ensure your company always stays compliant. The EOR also assumes employment liability, significantly reducing legal exposure for SMEs expanding abroad. With employer of record services, you grow confidently in new markets without breaching unfamiliar laws.
Faster Speed to Market
Using employer of record services allows expansion within days, not months. While establishing a subsidiary can take up to a year, EOR providers have ready entities and infrastructure to onboard employees immediately. This speed means your team can execute projects and generate revenue faster, giving you a crucial edge over competitors. Whether placing a sales rep in Australia or an engineer in Korea, EOR solutions enable instant market presence and a quicker return on investment.
Reduced HR and Administrative Burden
Expanding overseas often overwhelms SMEs with foreign payrolls, benefits, and compliance reporting. Employer of record services remove this strain by handling all HR administration—from payroll and insurance registration to onboarding and offboarding. Your team avoids complex foreign systems and can focus on strategy instead of paperwork. With the EOR managing backend HR tasks, Vietnamese SMEs can operate abroad efficiently without building a local HR team or increasing overhead.
Quick Scalability and Flexibility
EOR models allow you to scale up or down easily. Since you haven’t invested in physical offices or long-term leases, you can add or reduce staff anytime. This flexibility lets you test new markets, pilot short-term projects, or exit unprofitable locations quickly. Using employer of record services, SMEs can expand step-by-step, maintaining agility and minimizing risk. The EOR’s centralized systems also ensure consistent HR and compliance processes across all markets—making global growth simpler to manage.
How InCorp Vietnam Supports Global Expansion via EOR
When pursuing global expansion, choosing the right EOR partner is crucial. InCorp Vietnam – part of the InCorp Group with 30+ years of experience and 1,500 professionals across Asia-Pacific – is a leading provider of employer of record services that can support Vietnamese SMEs in expanding abroad. InCorp Vietnam specializes in market entry services and has a strong track record of helping businesses elevate their operations internationally. Here’s how InCorp Vietnam can assist your overseas growth through its EOR services:
Comprehensive EOR Solutions
InCorp Vietnam delivers end-to-end employer of record services to simplify your global HR operations. The team manages hiring, onboarding, payroll, benefits, and all statutory contributions in the host country. From KYC checks and compliant contracts to payroll setup and insurance registration, InCorp handles every detail so your hires are fully compliant from day one—saving your HR team from complex foreign administration.
Local Compliance & Risk Management
With deep regional expertise, InCorp Vietnam ensures full compliance with local labor laws—covering working hours, holidays, tax withholdings, and social contributions. As laws evolve, the team updates processes to keep you compliant. Acting as the legal employer, InCorp assumes liability for all employment obligations, reducing the risk of penalties and ensuring peace of mind in every market.
Ongoing HR Support
Partnering with InCorp Vietnam means your overseas HR tasks are seamlessly managed. Payroll processing, payslips, and tax filings are handled monthly, while dispute resolution and employee offboarding are supported when needed. You can choose a full EOR package or specific modules—like payroll or recruitment—depending on your budget and growth stage. This flexibility keeps operations lean and cost-efficient.
Fast Market Entry & Scalability
With InCorp Vietnam’s employer of record services, SMEs can hire and operate in new countries within days—no entity setup required. InCorp’s existing entities and regional network enable rapid onboarding across Southeast Asia and beyond. As your business evolves, you can easily scale up or down without the complexity of establishing or dissolving subsidiaries.
By partnering with InCorp Vietnam, SMEs gain a reliable ally in their international journey. You benefit from InCorp’s local know-how, compliance expertise, and proven track record supporting thousands of businesses across Asia. The result: lower expansion costs, minimized legal risks, and faster global growth—allowing even small Vietnamese companies to compete confidently on the world stage.
Conclusion
Global expansion no longer needs to be an overwhelming or cost-prohibitive endeavor for Vietnamese SMEs. Employer of record services have emerged as a powerful solution to simplify international growth. By using an EOR, a business can hire talent anywhere in the world quickly, affordably, and in full compliance with local laws. This approach sidesteps the high costs and risks associated with setting up foreign entities or relying on contractor arrangements. Instead, SMEs gain speed, flexibility, and expert support, leveling the playing field with larger multinationals.
As discussed, the combination of cost savings, legal compliance assurance, faster time-to-market, and reduced HR burden makes employer of record services an ideal choice for companies looking to expand globally while staying lean and agile. Real-world examples show that even small businesses can establish an international footprint and start reaping benefits almost immediately by leveraging EOR providers.
If your Vietnamese enterprise is considering overseas expansion – whether hiring one employee in a neighboring country or building a distributed team across continents – it’s worth exploring how employer of record services can fit into your strategy. Approach this step as a strategic partnership: by working with experienced EOR experts like InCorp Vietnam, you gain a trusted advisor and operational arm that will guide you through foreign employment landscapes.
The result is a smarter, lower-risk expansion where you can focus on growing your business globally, knowing that the costs are manageable and the compliance details are under control. In today’s interconnected economy, leveraging an employer of record could well be the key to unlocking international growth for your SME, turning global ambitions into a practical, profitable reality.
