Employer of Record vs Staffing Agency: principal difference

The time has come for your business to start operating on a bigger scale. With the growth opportunities, a lot of logistical, legal, and compliance challenges come across inevitably. One of the most important issues is managing the hiring of new professionals selected from the global talent pool.

Among companies, two popular solutions come into play swiftly: employer of record (EOR) and staffing agencies. Both models aim to take care of the talent acquisition needs, but they serve different requirements and operate in significantly diverse ways.

In this guide, we’ll walk you through the key differences between EOR and Staffing. And we’ll show you why Staffing, when done right, as we do at Lupa Hire, is the smarter, more flexible, and future-proof way to build your team.

The Difference between Employer of Record and Staffing Agency

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When it comes to emphasizing the distinction between an employer of record and a staffing agency, one concept comes to mind: scope of responsibility.

An EOR assumes the role of the legal employer, even though the talent's output goes to a third party. It means that EOR services take on the full weight of legal employment obligations, taking care of compliance with local labor laws, employment contracts, payrolls, accurate tax withholdings, liabilities, etc.

Therefore, all legal and administrative complexities of the hire are handled by this entity, allowing the client company to focus on the output and integration of the new hire.

On the other hand, staffing agencies are focused on quick talent acquisition. Their expertise relies on managing the different stages of the recruitment process through carefully designed sourcing, screening, and vetting processes.

From identifying talent to successfully placing a suitable candidate in a job opening, their role normally concludes once the contract is signed. Consequently, in most cases, the legal and administrative employment responsibilities end up falling on the hiring company.

Nevertheless, some staffing agencies, like Lupa Hire, offer expanded services in essential administrative and legal areas, such as contract management, payroll, and compliance, providing an integral approach to the entire recruitment and hiring experience.

What Is a Staffing Agency?

Here, one word comes to the forefront: intermediation. 

A staffing agency is an intermediary company that seeks to connect hiring companies with specific needs with potential candidates. These agencies streamline the entire hiring process on behalf of the client company. Thus, they are in charge of writing job descriptions, reviewing resumes, conducting interviews, etc., until a final candidate gets placed.

Employment arrangements may differ, but normally staffing services work with three types of workers: temporary staff for short-term needs, permanent employees to fit within the company's existing structure, and contract workers.

Staffing agencies do not assume legal responsibility for the workers. They aim to connect the right company with the right employee and to streamline the entire selection process.

In the case of companies looking to access the LatAm talent pool, hiring top-tier talent in LatAm has never been easier. With Lupa Hire, it's not only easier; we make it simple, reliable, and cost-effective. From local expertise to full operational support, we ensure every step of the process is smooth and compliant. 

Benefits of Using Staffing Agencies

Staffing agencies offer hugely valuable assistance to enterprises looking to hire employees from a wide talent pool, especially in different countries, without dedicating abundant resources to such tasks, something particularly important to small and mid-sized companies.

Partnering with an agency can be the key to augmenting the workforce in a streamlined way, particularly when companies need to fulfill certain skill gaps on short notice.

Let's specify all the pros associated with this model:

• Extensive networks: These agencies have large databases with abundant information regarding potential candidates and considerable connections across different industries, making it easier to find qualified candidates for various roles, especially niche professionals.
• Time saving: Since staffing agencies are in charge of the entire recruitment process, you can save valuable time for your in-house HR team. Staffing agencies take care of job posting, initial screenings, interviews, background checks, etc.
• Reduced costs: Outsourcing these HR tasks can also help save expenses related to job posting, in-house recruiter salaries, infrastructure, and services, among others.
• Flexibility and scalability: Concerned about variability in the production demands or about some incoming economic turmoil? Fear not. These agencies allow you to increase or reduce your workforce, according to market conditions and company's needs, offering a wide range of hiring solutions such as temp-to-hire, full-time, etc.

What Are Employers of Record?

Briefly explained, is an organization that legally employs workers on behalf of another enterprise. This entails the assumption of all legal employment responsibilities of the employees, such as legal compliance with local employment laws and tax laws, employee benefits packages, drafting and managing contracts, among many more.

They are in charge of the entire administrative burden associated with the workforce, complying with the HR functions, such as payroll processing, on behalf of a third party. They also assume the legal risks of these hires.

These service providers come in handy for enterprises wishing to hire talent in new markets but being reluctant due to legal and administrative complexities. These EOR companies are a cost-effective, low-risk solution for enterprises aiming to quickly expand internationally without having to form a legal subsidiary in a foreign territory.

Why Choose an Employer of Record?

If your company is looking to take advantage of global talent pools without the hassle of opening a proper new branch or a subsidiary in foreign lands, EOR services offer an ideal way to acquire international talent and boost your growth.

Let's summarize all the benefits associated with this model:

• Compliance with local laws: EOR companies have in-depth knowledge of local labor laws and regulations, ensuring adherence to all legal requirements and minimizing risks.
• Global expansion: This model enables you to fill skill gaps and hire in basically any country, without having to endure the complexities of setting up a local entity.
• Reduced administrative burden: HR and administrative tasks are assumed by the EOR company. This allows your in-house to focus on core activities and strategic actions.
• Flexibility and scalability: You can easily scale up or down your workforce depending on project needs and market conditions, without long-term commitments.
• Provide a package of employee benefits: Since they act as an outsourced HR team, especially for international employees, they work hard to attract and retain the best international talent available, offering health insurance, retirement plans, paid leaves, and other benefits.
• Effective way to outsource HR functions: All HR operations can be delegated to EOR entities, from onboarding to offboarding, ensuring a comprehensive day-to-day workforce management.

Employer of Record or Staffing Agency, Which One to Choose?

Still weighing your options? Take a step back and ask yourself:
How much control do I want over the hiring process?
Do I want to delegate employment responsibilities—or stay in charge and move faster?

If your goal is to hire internationally without setting up a legal entity abroad, an Employer of Record services (EOR) might be the right fit. EORs handle everything from contracts to compliance, letting you tap into global talent with minimal overhead.

But if what you really need is speed, flexibility, and access to top-tier candidates, then staffing is the smarter route. Especially if you already manage HR and legal in-house, a staffing agency can help you fill roles quickly, without the long-term commitments or legal entanglements.

If that sounds like your scenario, Lupa Hire is your best ally in LatAm.

We bring you closer to exceptional talent with clarity, speed, and a human touch, making the entire process smoother, smarter, and more aligned with your growth.

Let’s build your team, the Lupa Hire way.