A PEO shares employer duties for employees you already have in the US. An EOR (employer of record) becomes the legal employer of someone you choose, usually in another country. A contractor of record (CoR) holds the contract with an independent contractor and pays them, so the person works on your team without being anyone's employee. The other acronyms you'll meet (BPO, RPO, HRO, staff augmentation) answer different questions: who runs a process, who runs your recruiting, who runs your HR tasks, and who supplies extra hands.
Not legal or tax advice. This is a plain-language overview of how these models are structured. Whether a particular arrangement is employment or contracting depends on the facts and on the law where the person works. Talk to a qualified attorney or CPA about your own situation.
What question does each model answer?
Most confusion comes from comparing models that solve different problems. Sorted by the question each one answers:
- "Who is the person's employer?" PEO, EOR, or nobody (a contractor of record, where the person is an independent contractor).
- "Who finds the person?" A recruiting agency or an RPO. Some EORs and contractors of record do this too.
- "Who does the work?" A BPO vendor, which takes on a whole process or outcome.
- "Who handles HR admin?" An HRO provider, which takes on tasks like payroll processing and benefits administration.
- "Who supplies extra people?" A staff augmentation firm, which adds people you manage.
sourceBOLD sits across two of these. We find and vet people, and we act as their contractor of record for as long as they work with you. That's why we get mistaken for a recruiting agency, and why the comparison below matters.
How do the models compare side by side?
| Model | Who the person works for, legally | Who finds them | Who directs the work | Status of the person | Typical pricing shape |
|---|---|---|---|---|---|
| PEO | You, with the PEO as co-employer | You | You | Your employee | Per employee or a share of payroll |
| EOR | The EOR, as legal employer | Usually you | You | The EOR's employee | Salary, plus employer costs, plus a monthly fee per employee |
| Contractor of record (sourceBOLD) | sourceBOLD, under a contractor agreement | sourceBOLD | You direct the work; they decide how to do it | Independent contractor | One monthly fee per person, their pay included |
| Platform CoR or agent of record | The platform, under a contractor agreement | You | You | Independent contractor | Platform fee per contractor, on top of their pay |
| Recruiting agency | You, once they're hired | The agency | You | Your employee | One-time fee per hire |
| RPO | You | The RPO, as your recruiting team | You | Your employees | Management fee, per-hire fees, or both |
| Staff augmentation | The vendor | The vendor | You manage them day to day | Vendor's employee or contractor | Hourly bill rate |
| BPO | The vendor | The vendor | The vendor runs the process | Vendor's people | Per seat, per transaction or by outcome |
| HRO | You | You | You | Your employees | Per employee or per service |
| Freelance marketplace | Usually you, under the platform's terms | You | You | Freelancer | Freelancer's rate plus platform fees |
What is a PEO, and when does it fit?
A professional employer organization takes on a share of the employer's duties for your existing employees: payroll, benefits, workers' compensation and some HR compliance. This is called co-employment. You stay the employer for the day-to-day work, and the PEO handles the administration, often with access to group benefits a small company couldn't get alone.
A PEO fits when you already employ people in the US through your own company and want the HR and benefits load off your desk. It isn't a way to work with someone in another country, because it needs you to be an employer where the employees work. Providers that call themselves a "global PEO" are usually offering an employer of record.
What is an EOR, and when does it fit?
An employer of record is the legal employer of a person you choose, in their country. It runs local payroll, withholds taxes, provides the benefits local law requires, and handles employment contracts and terminations under local rules. You direct the person's work as if they were on your staff, without opening a company in that country.
An EOR fits when you want an employee in all but the paperwork: set hours, your benefits and equity, a long-term place on your org chart. The cost is the person's salary, the employer's statutory costs in that country on top of it, and the provider's fee, and ending the relationship follows local employment law. Contractor of record vs employer of record goes through that choice in detail.
What is a contractor of record, and when does it fit?
A contractor of record holds the contract with an independent contractor and pays them. The person works on your team, but neither you nor the contractor of record employs them. They run their own business, invoice for their work and handle their own taxes.
There are two kinds. A platform CoR (sometimes called an agent of record) papers and pays a contractor you found yourself, for a fee on top of their pay. A sourcing CoR, which is what sourceBOLD is, finds and vets the person first, then holds their contract for as long as they stay. A contractor of record fits when you want a dedicated contractor on your team who directs their own methods, hours and tools, while you set the deliverables and deadlines. What is a contractor of record? covers the structure.
Where do BPO, RPO, HRO and staff augmentation fit?
These four aren't employer models, so they rarely compete directly with an EOR or a contractor of record. They answer the other questions in the list above:
- BPO (business process outsourcing) hands a whole process to a vendor: a support desk, a billing operation, a software project with a fixed outcome. The vendor's people do the work and the vendor manages them. You buy the result, not the person.
- RPO (recruitment process outsourcing) hands your recruiting to a vendor that works as your hiring team. The people it finds become your employees. RPO vs recruiting agency vs contractor of record compares it with agencies and with us.
- HRO (human resources outsourcing) is a broad term for handing HR tasks to a provider: payroll processing, benefits administration, HR software. The employees stay yours.
- Staff augmentation adds people from a vendor to your team, usually billed by the hour, and you manage them day to day. Staff augmentation vs outsourcing explains the difference and where a contractor of record fits.
Does the model decide whether someone is an employee?
No. The model decides who signs the contract. Whether a person is legally an employee depends on how the work actually runs. In the US, the IRS looks at who controls how the work is done, who controls the business side (tools, expenses, other clients), and what the relationship looks like. For someone working in another country, that country's law usually decides. Mexico, for example, presumes an employment relationship between a person who does personal work and whoever receives it, so the facts have to show genuine independence.
That's why a contractor of record isn't a label you can put on an employee. With sourceBOLD, the contractor agreement is between us and the contractor, and our MSA says you have no employment relationship with them. Whether that holds depends on how you work together: you direct the work (the deliverables and deadlines), and you don't direct the person (their hours, location, tools or methods). If you want to set someone's hours and give them benefits, an EOR is the safer model.
Which model should you choose?
Start from the relationship you want with the person, not the acronym:
- You want an employee abroad, with your benefits and set hours. Use an EOR.
- You already employ people in the US and want HR handled. Use a PEO or an HRO provider.
- You want someone to fill a permanent role you'll employ yourself. Use a recruiting agency or an RPO.
- You want a vendor to own a process or a project outcome. Use a BPO vendor.
- You want a dedicated remote tech expert on your team, without becoming their employer. Use a contractor of record. sourceBOLD finds and vets them, you pick who joins and direct the work, and we contract and pay them for as long as they stay.
In short
PEOs and EORs make someone an employee; a contractor of record keeps them an independent contractor; BPO, RPO, HRO and staff augmentation answer different questions about who does the work, who finds people and who handles HR. Pick by the relationship you want, and make sure the way the work runs matches the model. For our prices, see what it costs; for how we compare with specific providers, see the comparisons.