TL;DR
- EOR: Best for companies that want to hire employees in a country where they do not have a legal entity. The EOR becomes the legal employer and manages payroll, benefits, taxes, and compliance.
- PEO: Best for companies that already have a local legal entity and want support with payroll, benefits, HR administration, and compliance.
- ASO: Best for companies with an existing entity that only want administrative HR and payroll support without co-employment.
- For India: Companies without an Indian entity generally need an EOR because the traditional US-style PEO co-employment structure is not formally recognized in India.
- Cost: Asanify EOR starts from $99 per employee per month, while PEO pricing commonly ranges from $100 to $200 per employee per month or 2% to 12% of payroll, excluding entity setup and maintenance costs.
- Simple rule: No local entity = EOR. Existing entity + HR support = PEO. Existing entity + admin support only = ASO.
Key takeaways
- An Employer of Record (EOR) becomes the legal employer for your team in a country where you have no entity. A Professional Employer Organization (PEO) co-employs staff under an entity your business already owns, so PEO vs EOR comes down to one question: do you own a legal entity where you want to hire?
- EOR needs no local entity. PEO requires one, and setting one up typically costs $10,000 to $50,000 or more before a PEO can even start.
- Asanify’s Global EOR starts from $99 per employee per month with onboarding in as little as 24 hours. PEO fees usually run 2% to 12% of payroll, or $100 to $200 per employee per month, on top of the entity cost.
- In India specifically, the traditional co-employment PEO model isn’t formally recognized under Indian labor law, so most companies searching for “PEO services in India” actually need an EOR. More on that below.
- Choose EOR if you don’t own a legal entity in the hiring country. Choose PEO if you do and only need HR and payroll support.
What Is an EOR (Employer of Record)?
An Employer of Record is a third-party organization that becomes the legal employer for your workforce in a given country, while your business continues to direct the employee’s day-to-day work. Instead of registering a subsidiary, filing with local authorities, and managing ongoing compliance, you use the EOR’s existing legal infrastructure to hire quickly and compliantly.
An EOR typically manages:
- Employment contracts and offer letters
- Payroll processing and salary payments
- Tax withholding and statutory filings
- Benefits administration
- Social security and pension contributions
- Visa and work permit support
- Employee onboarding and offboarding
- Local labor law compliance
Asanify’s Global EOR covers 100+ countries, starts from $99 per employee per month, and can onboard a new hire in as little as 24 hours.
What Is a PEO (Professional Employer Organization)?
A PEO enters a co-employment relationship with your business: the client company remains the legal employer, while the PEO handles administrative HR work such as payroll, benefits administration, and compliance support. A PEO does not provide legal employer infrastructure, so it generally requires you to already hold a registered legal entity in the country where employees are based.
Typical PEO services include:
- Payroll administration and tax filing support
- Benefits management
- Employee onboarding support
- Compliance guidance and workers’ compensation administration
- HR policy assistance
PEO fees are usually structured one of two ways: a percentage of total payroll (commonly 2% to 12%), or a flat per-employee-per-month fee (commonly $100 to $200).
What Is an ASO (Administrative Services Only)?
An ASO is a third model that’s easy to confuse with a PEO but works differently: an ASO provider handles back-office HR and payroll administration, but never becomes a co-employer or the legal employer. The client company carries full, sole legal responsibility for its employees at all times.
ASO fits companies that already have a registered local entity and want to outsource administrative work such as payroll processing, benefits enrollment, and statutory filings, without sharing employment liability the way a PEO’s co-employment model does. If you own an entity and want administrative support only, without shared liability, an ASO is worth evaluating alongside a PEO.
PEO vs EOR: Core Differences
| Factor | EOR (Employer of Record) | PEO (Professional Employer Organization) |
|---|---|---|
| Legal employer | The EOR acts as the legal employer on record | The client company remains the legal employer |
| Local entity required | No, the EOR uses its own in-country entity | Yes, before a PEO relationship can start |
| Employment liability | The EOR manages payroll compliance and statutory obligations | Shared under a co-employment arrangement |
| Country coverage | Hire across multiple countries without setting up entities | Limited to countries where you already have an entity |
| Speed to hire | Often within days, sometimes within 24 hours | Slower, since an entity must exist first |
| Typical cost | Asanify EOR starts from $99 per employee per month | 2% to 12% of payroll, or $100 to $200 per employee per month |
| Best suited for | Companies hiring globally without a local entity | Companies with an existing entity that need HR support |
EOR vs PEO vs ASO: Side-by-Side Comparison
| Feature | PEO | EOR | ASO |
|---|---|---|---|
| Requires a local legal entity | Yes | No | Yes |
| Who is the legal employer | Client (co-employer with PEO) | The EOR | Client only |
| Employment liability | Shared | Held by the EOR | Held by the client |
| Payroll and tax filing | Yes | Yes | Yes |
| Benefits administration | Yes | Yes | Yes, administration only |
| Best suited for | Companies with an entity wanting bundled HR support | Companies hiring where they have no entity | Companies with an entity wanting admin support without shared liability |
EOR vs PEO Cost Comparison
| Cost factor | EOR (Asanify) | PEO |
|---|---|---|
| Base cost | From $99 per employee per month | $100 to $200 per employee per month, or 2% to 12% of payroll |
| Entity setup required | No | Yes |
| Entity setup cost | None | $10,000 to $50,000 or more |
| Entity maintenance | None | $5,000 to $20,000 or more annually |
| Time to hire | As little as 24 hours | Weeks to months, since an entity must exist first |
For businesses hiring a small team in a new country, EOR is often the more cost-effective route since it avoids paying for entity setup and a PEO at the same time.
PEO vs EOR for India Hiring
India is the market this question comes up in most, so it deserves its own answer: in India, a PEO can only legally operate if your company already holds a registered Indian entity, because Indian labor law does not formally recognize the US-style co-employment model a PEO relies on. An EOR sidesteps that requirement entirely by acting as the legal employer itself, through its own Indian entity.
India’s regulatory bodies, the Employees’ Provident Fund Organisation (EPFO), the Employees’ State Insurance Corporation (ESIC), and the Income Tax Department, expect one legal employer per employee. That’s a structural difference from the US, where employer liability can be split between a client and a PEO under co-employment. It’s also why most providers marketing “PEO services” to companies without an Indian entity are, in practice, delivering EOR services.
Structural Comparison: PEO vs. EOR in India
| Factor | EOR in India | PEO in India |
|---|---|---|
| Legal employer | The EOR’s Indian entity | Your company’s Indian entity |
| Local entity required | No | Yes |
| Compliance liability | Held by the EOR | Retained by your company |
| Speed to onboard | As little as 24 hours with Asanify | Slower, limited by your own entity’s setup and processes |
| Best used for | Companies with no Indian entity | Companies that already have one and want HR/payroll support |
Deep Dive: EOR in India
- Mechanism. The EOR’s own Indian entity becomes the legal employer of record, issuing a compliant employment contract under Indian law. You continue to direct the employee’s day-to-day work.
- Statutory handling. The EOR manages Provident Fund (PF), Employees’ State Insurance (ESI), and Tax Deducted at Source (TDS) on your behalf, along with the filings each requires.
- Control and liability. You keep full operational control over the employee’s work. The EOR carries the compliance liability.
Deep Dive: PEO in India
- Mechanism. Because Indian law recognizes only one legal employer, a “PEO” in India functions as co-employment in name only: your registered entity stays the legal employer, and the provider supports administration alongside it.
- Statutory handling. PF, ESI, and TDS remain your company’s legal obligation; the provider typically processes them on your behalf, but the liability sits with you.
- Control and liability. You retain both operational control and legal liability, which is the key difference from an EOR.
India Statutory Employer Costs
Whichever model you use, these employer contributions apply on top of gross salary for employees in India:
| Statutory contribution | Typical rate |
|---|---|
| Provident Fund (EPF) | 12% of basic salary |
| Employees’ State Insurance (ESI) | 3.25% of gross salary |
| Gratuity accrual | 4.81% of basic salary (after 5 years of continuous service) |
| Employer NPS (optional) | 10% |
In most cases, total employer cost in India runs approximately 18% to 22% above an employee’s gross salary once these are included.
Which Should You Choose for India Hiring?
- No Indian entity, and you want to hire fast. Use an EOR. It’s the only legally compliant path to a full-time hire in India without incorporating first.
- You already have a registered Indian entity and want administrative support. A PEO-style arrangement, or an ASO if you don’t want shared liability, can reduce your HR workload without changing who the legal employer is.
- You’re hiring fewer than 30 employees in India. An EOR is typically the faster and more cost-effective route, since it avoids paying for both entity setup and ongoing HR support at once.
For the full breakdown of Asanify’s India EOR pricing and country-specific detail, see Employer of Record in India and EOR cost in India.
When to Choose an EOR vs a PEO
Choose an EOR if:
- You don’t have a legal entity in the country where you want to hire
- You’re testing a new market and want to avoid committing to entity setup before validating demand
- You need to hire fast, sometimes within days rather than months
- You want to minimize compliance risk in an unfamiliar regulatory environment
Choose a PEO if:
- You already operate through a local entity
- You need HR and payroll support, not a legal employer
- You want access to benefits negotiated across a larger pooled group
- You want to keep direct legal employer status while outsourcing administration
In short: no entity means EOR. An existing entity, with a need for HR support, means PEO. An existing entity, with a need for admin support only, means ASO.
Employer of Record vs PEO: What Services Do They Offer?
Both models can look similar on the surface, but the scope differs. An EOR takes on the full role of legal employer: contracts, payroll, tax and compliance, benefits, and visa support, in a country where you have no presence. A PEO shares employer responsibilities under co-employment: payroll and compliance support, benefits access, and HR administration, for a company that already has a legal entity in place.
A Payroll Service Provider (PSP) is narrower still. A PSP calculates salaries, processes payments, and handles tax compliance, but doesn’t take on the broader HR, benefits, or compliance support a PEO or EOR provides.
FAQ
No. A PEO shares employer responsibilities through co-employment while the client stays the legal employer. An EOR becomes the legal employer itself, which is why it can hire on your behalf in countries where you have no entity.
The core difference is who the legal employer is and whether you need a local entity. An EOR is the legal employer and needs no entity from you. A PEO co-employs your staff, but only if you already hold a registered entity in that country.
Not in the co-employment sense used in the US. Indian law recognizes only one legal employer per employee, so a “PEO” in India only works if your company already owns the registered entity and remains that legal employer. Without one, you need an EOR.
For a company without a local entity, EOR is usually cheaper overall because it avoids the $10,000 to $50,000-plus cost of setting one up. A company that already has an entity may find a PEO’s 2% to 12% of payroll sufficient without extra setup costs.
Generally no. Most PEOs require the client to already have a legal entity in the country where employees are hired. A company without a local entity typically needs an EOR instead.
“Global PEO” is a common but often misleading term. It’s usually used to describe EOR services rather than a true PEO, since traditional co-employment PEO structures are largely a US-specific model.
Both offer flexibility in different ways. A PEO offers flexibility in domestic HR management and scaling headcount. An EOR offers flexibility in global expansion, since it removes the need to set up a legal entity in each new country.
No. That is the core function of an EOR: it employs your team through its own registered entity in that country, so you can hire compliantly without setting up a subsidiary yourself.
Asanify’s EOR in India starts from $99 per employee per month, covering payroll, statutory compliance, and HRMS access. Statutory employer contributions such as PF and ESI apply on top of gross salary; see EOR cost in India for the full cost breakdown.
Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.