For ambitious recruitment firms, growth rarely stops at borders – especially when clients expect you to deliver talent wherever they need it. 

The opportunity may be clear. But the operational model behind that expansion is where many firms either accelerate – or stall. 

But once the opportunity is clear, the operational question follows: 

Do you build, partner, or outsource? 

Each path – setting up your own entity, working with a PEO/AEO partner, or using an Employer of Record (EOR) – comes with different levels of control, cost, speed, and risk. 

This isn’t a legal deep dive. It’s a practical guide to help recruitment leaders decide what makes sense at different stages of growth. 

Option 1: Build – Setting Up a Legal Entity 

In this scenario, you establish a legal entity in the new country and employ staff directly.  

In the U.S., expanding across multiple states often requires additional state registrations, tax setup, and compliance management – adding administrative complexity even if you operate under one entity. 

Why firms choose this route: 

• Long-term commitment to the market 
• High headcount projections 
• Strategic importance of the location 
• Desire for full operational control 

The trade-offs: 

• Significant upfront costs (legal, tax, incorporation, accounting) 
• Ongoing administrative burden 
• Slower speed to market 
• Exposure to local compliance risks 

For recruitment firms operating on tight margins and speed-to-hire expectations, the delay between opportunity and operational readiness can directly impact revenue. 

This option would be best suited for established firms with predictable revenue in the new market and a clear long-term expansion strategy. 

Option 2: Partner – PEO Models 

In this scenario, you work with a local employment partner who helps manage HR, payroll, and compliance for your placements or your own internal hires. The structure depends on the model. 

PEO (Professional Employer Organization) 

A PEO typically operates in a co-employment model. You and the PEO share employment responsibilities. However, in most countries, including in the U.S. you still need your own local entity for a PEO to function. 

Benefits: 

• HR administration support 
• Payroll management 
• Benefits access 
• Reduced internal HR burden 

Limitations: 

• You usually must already have an entity 
• Shared responsibility can blur accountability 
• Compliance risk may still sit partly with you 

This is best suited for recruitment firms that already have an entity but want to streamline some of their HR and payroll administration. 

Option 3: Outsource – Using an Employer of Record (EOR) 

When you work with an EOR, it becomes the legal employer of your workers in-country, and it can become the employer of your placements, while your business manages day-to-day activities. You don’t need to set up a local entity. So, you can work with clients in the U.S. placing candidates across multiple states without even being in the U.S. yourself. This is a great option to test the market before making a long-term commitment. 

Why recruitment firms use EOR 

• Fast market entry 
• Testing a new territory 
• Hiring a small initial team 
• Supporting client projects in new countries 
• Reducing compliance complexity 

The trade-offs 

• Less direct control over employment contracts 
• Per-employee service fees

For recruitment firms under pressure to move quickly, an EOR isn’t just an administrative shortcut – it’s a strategic lever. 

It allows you to respond to client demand immediately, place candidates across multiple states or countries without infrastructure delays, and validate market potential before committing capital. 

Used correctly, it becomes part of a phased expansion strategy rather than a temporary workaround — particularly when supported by a structured international growth partner. 

This option is most suitable for market testing, rapid deployment, project-based expansion, or early-stage international growth. 

How Recruitment Firms Should Think About It 

There isn’t one “right” answer – only the right answer for your stage and strategy. 

Ask yourself: 

• Are we testing demand, or committing long term? 
• How predictable is revenue in this market? 
• How quickly do we need to deploy talent? 
• How much risk are we comfortable carrying?
• Do we have internal HR and compliance bandwidth?

International expansion isn’t just about where you can place talent. It’s about how intelligently you structure that growth. 

The firms that scale successfully aren’t necessarily the fastest – they’re the ones that choose the right model at the right time.

If you’re ready to scale in the U.S. market, get in touch with our team today.