What is Global Employment Outsourcing (GEO)?

Global Employment Outsourcing (GEO) is a service where a third-party vendor becomes the legal employer of workers in countries where you have no legal entity. The GEO handles employment contracts, payroll, taxes, benefits, and compliance with local labor law, while you manage the employee's day-to-day work.

If this sounds familiar, it's because GEO is essentially the same thing as Employer of Record (EOR). The terms are used interchangeably in the industry. Some vendors prefer "GEO" to emphasize the global scope of their services. Others use "EOR" to highlight the employment relationship. The core value proposition is identical: hire employees internationally without setting up local legal entities. Instead of incorporating in every country where you want to hire, you use a GEO that already has entities and employment infrastructure in place.

How the GEO model works

The process is straightforward. You identify a candidate you want to hire in another country. Instead of setting up a legal entity there (which costs $10,000-50,000 and takes 3-12 months), you engage a GEO that already operates in that country. The GEO becomes the legal employer, signing the employment contract and appearing on payslips.

You maintain operational control. You manage the employee's work, set their objectives, provide feedback, make decisions about compensation, and decide if the relationship continues. The GEO handles the administrative and legal aspects of employment: payroll processing, tax withholding, benefits administration, compliance with local labor law, and employment dispute resolution.

From the employee's perspective, they work for your company day-to-day. From a legal perspective, they're employed by the GEO. This arrangement lets you hire internationally quickly without the cost and complexity of setting up a subsidiary in each country.

GEO compared to owning an entity and using contractors

Setup time: GEO takes 1-2 weeks. Setting up your own entity takes 3-12 months. Engaging contractors is immediate.

Setup cost: GEO costs $0 upfront. Your own entity costs $10,000-50,000. Contractors cost $0.

Monthly cost: GEO costs $49-99 per employee. Your own entity costs $500-2,000 per month to maintain. Contractor management software costs $0-99 per month.

Control level: GEO gives you operational control but the GEO is the legal employer. Your own entity gives you full control. Contractors limit your control—they're independent.

Compliance responsibility: GEO handles compliance. Your own entity means you handle compliance. Contractors handle their own compliance.

Best use case: GEO works for 1-10 employees. Your own entity works for 10+ employees. Contractors work for project-based or flexible work.

When GEO services actually make sense

GEO services are valuable in specific scenarios. You want to hire 1-10 employees in a country where you have no entity. You're testing a new market and don't want to commit the cost and time of entity setup. You need to hire quickly and can't wait 3-12 months for incorporation. You want to avoid the complexity of managing international employment law in multiple jurisdictions.

Classic GEO scenario: a U.S. software company wants to hire a senior engineer in Germany. They don't have a German entity and aren't ready to spend $30,000 and wait 6 months to set one up. They use a GEO to employ the engineer legally in Germany, enabling them to hire within 2 weeks instead of 6 months.

GEOs are also useful for distributed teams. If you want employees in 5 different countries, using a GEO for each is simpler than setting up 5 separate legal entities. The GEO provides a single point of contact for employment administration across multiple jurisdictions.

Understanding the economics

GEO pricing typically includes a monthly platform fee ($49-99 per employee) plus the local employment costs (salary, taxes, and mandatory benefits). For a $60,000 per year employee, expect total costs of approximately $70,000-80,000 annually, including GEO fees and local employment expenses.

The economics strongly favor GEOs for small teams and strongly disfavor them for larger teams. Entity setup costs $10,000-50,000 upfront but only $500-2,000 per month to maintain. For 1-2 employees, a GEO is cheaper. For 20+ employees in one country, setting up your own entity becomes significantly more cost-effective.

The break-even point is typically around 10-15 employees in a single country. Below that threshold, GEOs save money compared to entity setup. Above it, owning your own entity becomes cheaper. Many growing companies start with a GEO, then transition to their own entity as headcount grows and the economics shift.

Real limitations and tradeoffs

GEOs provide speed and simplicity, but come with meaningful tradeoffs. You have less control because the GEO is the legal employer. Employment decisions must comply with local law as interpreted by the GEO, and you can't always customize benefits or employment terms as freely as you could with your own entity.

Employees may feel less connected to your company because they're legally employed by a third party. Their employment contract is with the GEO, not you. Their payslips come from the GEO. This distance can affect company culture and employee loyalty, especially for senior hires who might expect direct employment.

GEOs also create vendor dependency. If you want to switch GEO providers or transition to your own entity, you must terminate employees with the old provider and re-hire them. This creates operational disruption and legal risk, especially in countries with strong employment protections. Switching is not a simple process.

GEO vs contractor management

Before committing to a GEO, honestly evaluate whether you need employees at all. For many roles, independent contractors provide similar value with less complexity and lower cost. Contractors don't require GEOs—you engage them directly and pay via Wise, PayPal, or Payoneer.

The contractor model works well for project-based work, specialized skills, flexible capacity, or international work. You avoid employment overhead, maintain direct relationships, and pay only for work delivered. The tradeoff is less control and commitment—contractors work independently and may work for multiple clients simultaneously.

Many businesses default to GEOs when contractors would serve them better. If the work is project-based, the role doesn't require full-time commitment, you value flexibility over integration, or you want to minimize employment overhead, contractors are often the simpler choice.

Choosing a GEO provider

If you decide a GEO is right for you, evaluate providers carefully. Check country coverage—not all GEOs operate in all countries. Some operate in 80 countries, others in 150+. Review pricing structure—some charge flat per-employee fees, others charge percentage-based fees. Assess support quality and responsiveness—you'll need help answering employment law questions.

Ask about transition paths. If you want to move to your own entity later, how does the GEO handle employee transfers? What's the process and timeline? What are the costs and risks? Getting this information upfront helps you understand the long-term relationship.

Consider platform usability. You'll use the GEO's platform to manage payroll, benefits, and documentation. Is it intuitive? Does it integrate with your existing systems (accounting software, project management, etc.)? Can employees access it easily to see their payroll and benefits? A poor platform creates ongoing friction.

Frequently asked questions

Can I use a GEO for contractors?

No. GEO services are designed for employees, not contractors. If you're working with independent contractors, you don't need a GEO—manage them directly using contractor management software or direct payment via Wise, PayPal, or Payoneer.

How long does GEO setup actually take?

Typically 1-2 weeks from signing the agreement to the employee starting work. This includes contract generation compliant with local law, background checks, benefits enrollment, and employee onboarding into the GEO's systems.

Can I switch GEO providers if I'm unhappy?

Yes, but it's disruptive and carries legal risk. You need to terminate employees with the old GEO and re-hire them with the new GEO. This is administratively complex and in countries with strong employment protections, can create legal exposure. Choose your GEO carefully because switching isn't simple.

Do employees know they're employed by a GEO?

Yes. The GEO appears on employment contracts and payslips. Employees clearly understand they're legally employed by the GEO but work for your company operationally. It's transparent.

What if I want to transition from GEO to my own entity?

It's possible but disruptive. You would need to establish your own entity in the country, then transition employees from the GEO to your entity. This requires new contracts, benefits transitions, payroll setup, and employee communication. It typically takes 4-8 weeks and involves legal and administrative complexity.

What happens if the GEO goes out of business?

It's rare, but possible. Your employees would likely be transferred to another GEO or you'd need to establish your own entity quickly. This is why choosing a financially stable, established GEO matters. Check their financial stability and longevity before committing.

Making the decision

Ask yourself these questions:

How many employees do you want to hire in this country? (1-10 suggests GEO, 10+ suggests own entity.)

How long-term is this hiring? (Permanent suggests own entity eventually, temporary suggests GEO.)

Can these roles be filled by contractors instead? (Yes suggests contractors, no suggests GEO or entity.)

What's your timeline for hiring? (Need people in 2 weeks suggests GEO, can wait 6 months suggests own entity.)

What's your budget for setup costs? (Limited budget suggests GEO, adequate budget suggests own entity.)

How important is direct employment relationship? (Very important suggests entity eventually, less important suggests GEO.)

Based on your answers, the appropriate approach will likely be clear.

The bottom line

GEO services enable international hiring without setting up legal entities. They're valuable for small teams (1-10 employees), market testing, and distributed hiring across multiple countries. They provide speed, simplicity, and compliance support without incorporation costs.

But GEOs aren't always necessary. For larger teams (20+ employees in one country), your own entity is more cost-effective. For project-based work or flexible capacity, contractors are simpler and cheaper. For domestic hiring, PEOs may be a better fit.

Evaluate your needs honestly. Don't default to a GEO because it's popular or easy. Understand what you're trying to accomplish, consider the real alternatives, and choose the simplest solution that meets your requirements. Sometimes that's a GEO. Sometimes it's contractors. Sometimes it's your own entity.