Expanding your business to countries like Indonesia can be challenging. Local laws, payroll rules, and compliance requirements can slow you down. That’s where an Employer of Record (EOR) becomes essential.
An EOR service handles employees’ payroll, taxes, and legal compliance, so you can focus on growing your business. Research stated that companies can boost productivity by up to 70% by using EOR.
Let’s explore below how EOR can make your global hiring faster, simpler, and more efficient.
What is an EOR?
An Employer of Record is a third-party organization that legally employs workers on behalf of another company. EOR handle local labor laws, payroll, taxes, and benefits, while you retain complete control over daily work tasks and performance management.
This setup lets you hire talent globally without establishing a legal entity in each country. It’s a fast, cost-effective way to scale your workforce while fully complying with local employment regulations.
EOR vs. PEO: What’s the difference?
While both EOR and PEO (Professional Employer Organization) services help with HR management, they work differently. A PEO co-employs your staff but requires your company’s legal presence in the country. An employer of record, on the other hand, becomes the full legal employer and can hire workers for you even if you don’t have a local entity.
This makes EOR services ideal for global companies looking to enter new markets quickly.
Read more: Why Choose HRO: A Simple Guide to HR Outsourcing
How EOR increases productivity: 6 benefits for business
Using an Employer of Record ensures compliance and boosts business productivity. As remote work continues to grow, this services are becoming essential for simplifying HR tasks and adapting to modern workforce needs. Companies have reported a 77% increase in employee productivity by leveraging Employer of Record solutions.
Below are the ways EOR service can improve your business productivity:
1. Rapid Market Entry
This setup lets you hire in new countries without establishing a local entity, cutting hiring time from months to weeks.
2. Focus on Core Business
Outsource HR, payroll, and compliance so your team can focus on product development, sales, and strategy.
3. Cost Efficiency
Avoid the high costs of setting up and maintaining a legal entity—This services cover compliance, payroll, and local HR.
4. Risk Reduction
Employer of Record ensures compliance with local labor laws, minimizing risks of misclassification, penalties, and legal issues.
5. Access to Global Talent
Hire top talent anywhere without geographic restrictions, supporting a more diverse and capable team.
6. Seamless Payroll and Benefits Management
It manages payroll, taxes, and mandatory contributions (like BPJS in Indonesia), keeping employees paid and compliant.
Read more: Top 10 Reasons to Outsource HR in Surabaya
How to choose the right EOR partner
Not all EORs are equal—choosing the right one helps ensure successful global expansion.
Know Your Hiring Goals
Before picking a provider, define your hiring plans and expansion needs. This helps you find an Employer of Record partner that fits your business.
- Align with your hiring and expansion plans
- Ensure smooth onboarding and retention
- Understands local worker classification rules
Local Expertise and Compliance Knowledge
Pick a provider familiar with local laws, taxes, and benefits (e.g., BPJS Kesehatan, BPJS Ketenagakerjaan, severance rules in Indonesia). Prefer those with in-country operations.
Employee Support and Responsiveness
Good employee support boosts satisfaction and retention. Your provider should:
- Be responsive to employee questions
- Offer straightforward onboarding and support systems
- Use tools that keep communication smooth
Ask about how they handle employee issues, what tools they use, and their response times.
Ability to Handle Complex Issues
Choose an Employer of Record experienced in managing contract changes, terminations, and disputes under local laws. Ask for case examples.
Read more: How a recruitment agency can transform hiring in the manufacturing industry
Simplify your HR with InCorp
Are you planning to expand into Indonesia? InCorp Indonesia (an Ascentium Company) offers reliable Employer of Record services to streamline your HR operations.
Here’s how we help:
- Complete HR Support: We manage everything—from contracts and onboarding to BPJS, payroll, and taxes.
- Local Expertise: Our team ensures full compliance with Indonesian labor laws, reducing your legal risk.
- Grow with Ease: Leave the admin work to us and focus on growing your business in Indonesia.
Ready to scale in Indonesia? Get in touch with us today for a smooth and compliant hiring process.
Frequently Ask Questions
What is an Employer of Record (EOR)?
An EOR is a third-party company that legally employs workers on behalf of another business, handling payroll, taxes, and compliance.
Who should use EOR services?
Companies expanding abroad or hiring remote workers without setting up a local entity benefit most from EOR services.
How does an EOR differ from a PEO
An EOR becomes the legal employer, while a PEO only co-manages HR functions with an existing local entity.
Is using an EOR legal in Indonesia?
Yes. EOR services comply with Indonesian labor laws, enabling foreign companies to hire employees legally without establishing a local company.
Get in touch with us.
What you'll get
A prompt response to your inquiry
Knowledge for doing business from local experts
Ongoing support for your business
Disclaimer
The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.
We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.
Verified by
Teddy Willy
Branch Manager – Surabaya Office at InCorp Indonesia
With 10 years of experience in business consultancy, Teddy Willy offers expertise in financial and production auditing, sales and marketing, channels and distribution, supply chain management, and human resources for every business sector in Indonesia.
