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 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 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, while others use "EOR" to highlight the employment relationship.

The core value proposition is the same: hire employees internationally without setting up local 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 GEO works

The GEO model is straightforward. You identify a candidate you want to hire in a foreign country. Instead of setting up a legal entity there, 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 objectives, provide feedback, and make decisions about compensation and termination. The GEO handles the administrative and legal aspects of employment: payroll processing, tax withholding, benefits administration, and compliance with local labor law.

The employee works for you in practice but is employed by the GEO in law. This arrangement lets you hire internationally without the cost and complexity of entity setup, which typically requires $10,000-50,000 and 3-12 months.

GEO vs EOR vs direct hiring

When GEO makes 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 to 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.

Classic GEO use case: 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 incorporate. 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 is simpler than setting up 5 entities. The GEO provides a single point of contact for employment administration across multiple jurisdictions.

Costs and economics

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

The economics favor GEOs for small teams (1-10 employees) and disfavor them for larger teams (20+ employees). Entity setup costs $10,000-50,000 upfront but only $500-2,000/month to maintain. For 1-2 employees, a GEO is cheaper. For 20+ employees, your own entity is cheaper.

The break-even point is typically 10-15 employees in a single country. Below that threshold, GEOs save money. Above it, entity setup becomes cost-effective. Many companies start with a GEO, then transition to their own entity as headcount grows.

Limitations and trade-offs

GEOs provide speed and simplicity but come with trade-offs. You have less control because the GEO is the legal employer. Employment decisions must comply with local law as interpreted by the GEO. You can't 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 contract is with the GEO, not you. Their payslips come from the GEO. This can affect company culture and employee loyalty, especially for senior hires.

GEOs also create vendor dependency. If you want to switch GEOs or transition to your own entity, you must terminate and re-hire employees. This creates disruption and potential legal risk, especially in countries with strong employment protections.

GEO vs contractor management

Before committing to a GEO, consider 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, or flexible capacity. You avoid employment overhead, maintain direct relationships, and pay only for work delivered. The trade-off is less control and commitment—contractors work independently and may work for multiple clients.

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, or you value flexibility over integration, 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. Review pricing structure—some charge flat fees, others percentage-based. Assess support quality—you'll need responsive help for employment 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?

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? Can employees access it easily?

Common questions

Can I use a GEO for contractors? No. GEO services are for employees, not contractors. If you're working with independent contractors, you don't need a GEO—manage them directly using contractor management software.

How long does GEO setup take? Typically 1-2 weeks from signing the agreement to the employee starting work. This includes contract generation, background checks, and onboarding.

Can I switch GEO providers? Yes, but it requires terminating employees with the old GEO and re-hiring them with the new GEO. This creates legal and operational risk, so choose carefully upfront.

Do employees know they're employed by a GEO? Yes. The GEO appears on employment contracts and payslips. Employees understand they're legally employed by the GEO but work for your company operationally.

The bottom line

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

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 carefully. Don't default to a GEO because it's popular. Understand what you're trying to achieve, consider the alternatives, and choose the simplest solution that meets your requirements.