The startups do not disappoint because they lack good ideas. Most of them, as we know, flounder, because they lacked money.
One of the aspects that may contribute to this is excessive expenditure on full -time employment. According to this, many founders turn to the employer or EOR, assuming that adding fully developed employees is a default path to building a team. It is not. Even worse, in many cases this is a fatal mistake.
As I wrote earlier, to scale effectively, startups must solve three critical challenges.
The first is performance – performing a specific task.
The second is speed. Problems ought to be quickly solved, which suggests finding the right person without delays.
Third, there is a problem of cost optimization. Especially at an early stage, employment expenditure must remain low.
Eor fails on all three fronts. So why do the founders still use it? Here is a justification, in addition to a higher, more real alternative.
Hidden costs of EOR services
EOR employment is slow. The process that features a long chain of checks, implementation and development and finalization of contracts may take months. In the case of startups, especially now, when market changes powered by AI in weeks could also be fatal. Why wait months when you’ll be able to on board the contractor in two days?
In addition to the speed, EOR limits control. Since a company employing may lack a legal entity in the country, it has nothing to say about mental property rights, scope of labor and even employment conditions. This creates a risk, especially in countries with provisions on worker -friendly work.
For example, in Brazil and Spain, the courts are mostly with employees. If the startup must allow someone to depart, the legal battle will probably be long and expensive, not only in terms of remuneration, but also EOR fees. The average EOR costs $ 599 per thirty days.
Alternatives
Fortunately, working with EOR is not the only selection of startups. By working with the contractor management service or recorder of records (COR), you’ll be able to solve these problems.
Unlike EOR, these solutions offer speed, cost savings and flexibility. Contractors can immediately start working, without bureaucracy related to traditional employment. The cost difference is stunning – contractors management services range from 39 to 70 USD per thirty days, which is a fraction of EOR fees.
When do Eors make sense?
In the case of startups employing an international arena, COR is a higher option, unless the candidate insists on full -time employment and advantages, in this case EOR is needed. In addition, EOR will be useful if you select to rent an ultra-ladder specialist from the company for a very very long time, because the relationship reflects the relationship between the full-time worker.
In other scenarios, for example, if the company works in difficult to pay regions or if the project is involved in establishing a full presence in a recent country, each EOR and COR can provide effective solutions.
Final thoughts
Full -time employment is not mandatory. When startups are aware of this, they begin looking for higher alternatives. In the case of seeds from seeds and series A, management of contractors and COR provide flexibility, speed and cost savings that they need cleverly without burning money for unnecessary general costs.
Especially in today’s rapidly changing market, it increases the possibilities of success and can change life and death.