Moving Beyond the EOR Model in South America: Unlocking Growth Through Direct Hiring

For many international companies expanding into South America, the Employer of Record (EOR) model provides a quick and compliant way to bring talent onboard without the need to establish a local entity. It’s often the right choice in the early stage; streamlining onboarding, handling payroll, and reducing initial administrative complexity.

But as your team grows, the EOR model can become more of a limitation than a solution. Once you reach a certain headcount, the costs, compliance considerations, and lack of direct control outweigh the convenience. That’s when it’s time to consider setting up your own legal entity in South America and hiring employees directly.

When Does It Make Sense to Transition?

If your team in South America has already grown beyond ten employees, and you anticipate adding dozens more in the near future, the math begins to change. Direct hiring through your own entity offers long-term advantages, including:

• Cost Efficiency: EOR fees are often charged per employee, making them less cost-effective as headcount scales.

• Cultural Integration: Employees hired directly tend to feel a stronger connection to the company, boosting engagement and retention.

• Legal and Compliance Control: Operating through your own entity ensures full alignment with local labor, tax, and social security regulations.

• Employer Branding: You present yourself as a true employer in the market, strengthening your reputation among candidates and clients.

In South America, where employment laws are often more protective and nuanced than in other regions, owning the employer relationship directly can be a strategic differentiator.

Why You Need a Fractional HR Partner

Transitioning from an EOR model to direct employment in South America isn’t just about paperwork. It requires local knowledge, bilingual communication, and deep cross-border expertise to avoid pitfalls. That’s where a fractional HR partner like Roire HR Services comes in.

At Roire, we provide the HR and legal bridge between your headquarters and the South American workforce:

• Bilingual Expertise: We handle employee communications in both English and Spanish, ensuring clarity across borders.

• Cross-Border Experience: Our team understands both local labor laws and international compliance frameworks (SOC 2, ISO, HIPAA).

• HR and Legal Integration: From employment contracts and onboarding to payroll vendor selection and compliance audits, we cover the full spectrum.

• Scalable Support: We act as an extension of your leadership team—without the overhead of a full in-house HR/legal department.

The Bottom Line

In South America, the EOR model can be a helpful entry point. But once your team grows beyond ten employees, and especially if you plan to add dozens more, direct hiring through your own entity provides greater control, cost savings, and long-term strategic value.

Partnering with a fractional HR provider like Roire HR Services ensures a smooth, compliant, and culturally aligned transition.

If your company is ready to take the next step in South America, Roire HR can guide you every step of the way.