Employer of Record (EOR) services are an ever increasingly popular way of enabling access to a talented workforce. It enables an out-of-country company to expand their operations in a faster, more efficient and cost-effective manner. It also decreases operational risks for them. South Africa has been and continues to be an EOR preferred destination for foreign companies. While the advantages of accessing EOR services for foreign businesses are apparent, are there any local benefits? This article unpacks what the impact of EOR on local communities is. It explores the effects of an EOR operation on the local economy and the professionals employed by an EOR service.
Why do Companies Use an EOR Service
A company’s success is impacted by the talent of their workforce. EOR services enable companies to access high quality talent at a reasonable, and reduced rate. A reliable EOR partner heads up the in-country recruitment process starting at recruiting the best candidates, vetting their qualifications and backgrounds, assisting in the interview processes and onboarding. This better ensures that the correct local person is employed for a foreign company. Once employed, the EOR service provider managers functional areas such as Human Resource Management and Payrolls as well as continuous local tax and legal compliances. As such, the two primary main reasons why companies use EOR services is to decrease costs and reduce their risk.
How do EOR Services Impact Local Communities?
EOR services have been shown to have a positive ripple effect on local economies. The result has been that there are an ever-increasing number of EOR service opportunities for foreign companies throughout Africa.
8 Ways EOR Services Impact Local Communities
1. Increased Local Employment:
Research by LinkedIn Corp reports that EOR services stimulate local employment which can decrease a communities unemployment rate.
2. Greater Local Revenue and Economic Growth:
All EOR employees are based in-country and therefore are required to pay taxes in South Africa. Additionally, the majority of earnings tend to remain in-country. The result is that local revenue and economic growth is boosted.
3. Increases Consumer Spending:
EOR jobs tend to pay more than locally based jobs. This means that professionals employed through EOR partnerships have more disposable income. This benefits and stimulates their local economy.
4. Boosts Foreign Direct Investment (FDI):
EOR services boost FDI by providing a mechanism for foreign companies to easily invest in the South African economy. For example, there is no need to establish a local entity to employ and pay South Africans or access local services.
5. Promotes Fair Labour Practices:
EOR service providers ensure South African labour laws are applied. Their knowledge of the often-dynamic labour system requirements, means that labour laws are continuously complied with and associated labour-related risks are marginalised.
6. Slows Down and Reverses Brain Drain:
A long-standing issue in South Africa is that of qualified and experienced professionals leaving to work overseas. EOR services provide locally based professionals access to opportunities in South Africa that they would otherwise have sought overseas.
7. Upskilling and Knowledge Transfer:
Working for a foreign based company exposes local professionals to new technology and techniques. Companies provide in-house training which transfers skills and international industry knowledge to South African employers who would otherwise not have had these opportunities. This results in innovation within the local economy and business environment.
8. Improved Career Development Opportunities:
Professionals employed through an EOR service have a higher exposure rate to the global economy. This can lead to an acceleration of their skills development and their industry knowledge. Consequently, they are better positioned to be considered for career advancement opportunities while still able to contribute towards their local community.
What develops an economy is when every able-bodied person works. Moeletsi Mbeki, Economist
Why South Africa is the Best EOR Service Base
South Africa has been rated, and continues to be rated, as one of the world’s most favoured EOR service delivery point.
South Africa remains the far-and-away first choice for enterprise contact centre leaders in the USA and Australia, and a close second in the UK and Canada. Ryan Strategic Advisory, 2025 Industry Commentary
Surveys show that there are a number of good reasons why South Africa is an EOR service destination of choice. This is especially true when partnering with an experienced EOR partner, like The Key Recruitment Group who has over 50 years of experience.
5 Reasons to use Key Recruitment’s EOR Services
- Cost reduction in relation to expanding into a new and overseas market.
- An average decrease of 30 – 60% on operational overhead costs.
- Access to high quality talent and sophisticated skills network.
- Optimal geographical location for providing services to USA, Australia, Europe, UK, Middle East, Africa and the Americas.
- Low-staff turnover and high-levels of employer loyalty.
The Key Recruitment Group has a long-standing successful history of employing local talent for foreign companies. We know that in partnering with us through our EOR services, your company can accelerate your expansion while decreasing associated risks. Contact Us today to discuss the ways in which we can augment your EOR business strategy.