An Employer of Record (EOR) can help businesses expand into Vietnam by simplifying local hiring, payroll and HR administration, where legally permitted. Photo by Pinterest
Expanding into Vietnam? Hiring local talent could be easier than you think—but choosing the right employment structure can make all the difference to your costs, efficiency and business growth.
Vietnam continues to attract international businesses looking to expand their operations, access skilled talent and strengthen their presence in Southeast Asia.
For companies entering the market, however, finding the right employees is only one part of the challenge.
How do you employ someone in Vietnam if your business does not have a local legal entity? What are the costs of managing payroll, statutory contributions and HR administration? And is establishing a Vietnamese subsidiary necessary when you only intend to hire a small team?
This is where an Employer of Record (EOR) in Vietnam may offer a more flexible approach.
Through an appropriate EOR arrangement, businesses may be able to engage employees in Vietnam while outsourcing relevant employment administration to an experienced local provider.
For companies looking to test a new market, hire a small initial team or manage regional workforce expansion, EOR services can be worth evaluating before committing to a permanent local establishment.
But does EOR actually reduce hiring costs? And when is it a smarter choice than setting up your own company?
Let’s explore.
What Is an Employer of Record (EOR) in Vietnam?
An Employer of Record (EOR) is a third-party organisation that provides employment and HR administration services on behalf of another business.
Depending on the legally permissible arrangement, an EOR provider may serve as the formal employer of workers engaged to support the client’s operations.
Typical EOR services in Vietnam include:
- Employment contracts: Preparing and administering employment agreements under the applicable legal framework.
- Payroll management: Calculating salaries, processing payments and maintaining payroll records.
- Statutory contributions: Administering applicable social insurance, health insurance and unemployment insurance obligations.
- Personal income tax (PIT): Supporting applicable tax withholding, reporting and employment-related filings.
- HR administration: Managing employee records, leave administration and onboarding processes.
- Local employment advisory: Helping businesses understand relevant Vietnamese labour requirements.
The client business typically remains responsible for defining its commercial objectives, expected outcomes and operational requirements, subject to the responsibilities established in the relevant employment and service agreements.
However, EOR is a commercial service description, not an automatic exemption from local legal requirements. Its suitability depends on the employment structure, job scope and applicable regulations.
For foreign businesses, the principal appeal is the opportunity to build a presence in Vietnam without immediately establishing a subsidiary solely for initial hiring needs, where a legally suitable arrangement is available.
The Hidden Costs of Hiring Employees in Vietnam
When international businesses evaluate expansion into Vietnam, their first consideration is often employee salaries.
But the actual cost of hiring in Vietnam involves more than monthly compensation.
Establishing and operating a local entity may create additional expenses and administrative responsibilities that businesses need to factor into their expansion plans.
- Company Establishment and Administrative Costs
Setting up a business in Vietnam may involve company registration, professional advisory services, corporate documentation, accounting arrangements and other administrative requirements.
Depending on the business activity, additional licences or approvals may also be required.
For a company planning to hire only two or three employees, these initial commitments may be significant relative to its immediate workforce needs.
- Payroll and Statutory Compliance Costs
Hiring employees in Vietnam requires businesses to understand local payroll and employment obligations.
These may include employment contracts, mandatory insurance contributions, personal income tax withholding, employee benefits and reporting requirements.
Vietnam’s updated Social Insurance Law, which took effect on 1 July 2025, also highlights the importance of maintaining current knowledge of statutory requirements.
For businesses without an established Vietnamese HR or payroll team, these responsibilities can require substantial internal resources or external professional support.
- Ongoing HR and Operational Overheads
Beyond initial incorporation, businesses may need to maintain local accounting, HR administration, employee records, statutory filings and other ongoing business processes.
These costs can continue even when the company has a relatively small workforce.
- The Cost of Delayed Hiring
Recruitment opportunities do not always align with company establishment schedules.
Your business may identify a suitable software engineer, technical specialist or market development professional before your local operating structure is ready.
Delays in formalising a suitable employment arrangement could affect project timelines, market-entry plans or your ability to secure the candidate.
For some businesses, the opportunity cost of delayed expansion may be just as important as the direct financial cost.
How EOR Services in Vietnam Can Help Businesses Manage Hiring Costs
An Employer of Record arrangement does not automatically make employment cheaper.
Employees must still receive appropriate compensation and statutory entitlements, while the EOR provider charges a service fee.
The potential cost advantage comes from reducing the organisational and administrative overhead associated with establishing and managing a local employment function.
Here are four areas where businesses may find value.
- Avoid Unnecessary Upfront Entity Establishment Costs
For businesses entering Vietnam with a small initial team, setting up an entire local subsidiary may not always be the most economical first step.
Where a suitable EOR structure is legally available, businesses may be able to defer some company establishment expenses while evaluating commercial opportunities.
This allows management to allocate more of its initial investment towards talent, business development and market validation.
- Reduce the Need for Dedicated Local HR Administration
Managing Vietnamese payroll, employment documentation and employee-related filings requires time and specialised knowledge.
Outsourcing these functions through EOR services can reduce the need to develop every HR process internally from the outset.
Instead of building a complete local administrative structure for a small number of employees, businesses can access relevant local support through an external provider.
- Make Workforce Costs Easier to Forecast
An EOR arrangement typically combines employment-related costs with an agreed service fee.
This can help businesses create a clearer view of recurring workforce expenditure.
For example, companies can budget for employee remuneration, statutory employer contributions, benefits and EOR administration fees without separately building the same level of internal HR administration.
However, organisations should still review potential onboarding charges, deposits, additional services, contract termination costs and any variable fees before selecting a provider.
- Support Flexible Market-Entry Planning
Not every international expansion begins with a large office or permanent local operation.
Some businesses enter Vietnam by exploring customer demand, evaluating suppliers, conducting market research or establishing a small initial team.
An appropriate EOR arrangement may support certain stages of this process while the business evaluates its longer-term plans.
The key is choosing an employment structure that matches the activities being performed and the company’s intended business presence.
Employer of Record vs Setting Up a Company in Vietnam: Which Is More Cost-Effective?
One of the most common questions from foreign businesses is whether to use EOR services in Vietnam or establish a local entity.
There is no universal answer.
The best option depends on your headcount, business activities, expected duration in Vietnam and long-term commercial objectives.
|
Consideration |
Employer of Record (EOR) |
Local Entity |
|
Initial establishment costs |
May avoid setting up a subsidiary solely for eligible hiring arrangements |
Company registration and establishment costs |
|
Employment administration |
Relevant functions can be handled by the EOR provider |
Managed internally or through outsourced providers |
|
Cost structure |
Employee costs plus EOR service fees |
Employee costs plus entity operating and administration expenses |
|
Flexibility |
May suit eligible small-team or early market-entry arrangements |
Often better suited to established long-term operations |
|
Business operations |
Scope depends on the legal and contractual arrangement |
Broader direct operational capacity, subject to licences and regulations |
|
Long-term suitability |
Depends on workforce structure, activities and legal limitations |
May become more practical as headcount and business operations expand |
When EOR May Be More Cost-Effective
Consider a foreign company planning to establish an initial team in Vietnam to assess market opportunities.
If the company is hiring a small number of employees for activities that qualify under an appropriate EOR structure, the cost of establishing and maintaining a separate legal entity may outweigh the EOR service fees during the initial phase.
In that situation, EOR could offer a more cost-efficient way to manage employment administration.
When Setting Up a Local Entity May Be Better
For companies planning substantial long-term operations, large teams, local commercial activities or functions not suitable for EOR, direct establishment may be the better route.
As headcount increases, recurring EOR fees may also become less economical than establishing an internal employment and HR infrastructure.
The smarter choice is not necessarily the cheapest monthly option. It is the structure that balances total cost, operational requirements, legal suitability and long-term business value.
When Should Your Business Consider EOR Services in Vietnam?
An EOR arrangement may be worth exploring in several business scenarios.
Scenario 1: A Foreign Company Exploring the Vietnam Market
Your business wants to assess demand in Vietnam before making a larger investment.
Rather than immediately committing to a local subsidiary, you may wish to explore whether an eligible employment arrangement could support your initial market-entry activities.
Scenario 2: An International Business Hiring Its First Few Employees
Your regional operations team has identified potential candidates in Vietnam, but the company does not yet maintain an established local HR function.
An EOR provider may be able to support employment administration where the role and engagement structure meet applicable legal requirements.
Scenario 3: A Technology Company Accessing Vietnamese Talent
An international technology business wants to engage technical talent in Vietnam to support regional activities.
Before using EOR, the business should evaluate the nature of the technical work, employee supervision, intellectual property arrangements and the permitted employment structure.
Elitez Asia Vietnam can also support the recruitment side of workforce planning through its specialist talent acquisition services.
Scenario 4: A Regional Business Evaluating Workforce Expansion
A company already operates across several Asian markets and is considering Vietnam as its next location.
It may wish to compare EOR services, direct establishment and other outsourcing arrangements before choosing a workforce model.
An experienced regional HR partner can help management evaluate these options alongside its commercial objectives.
Is EOR Legal in Vietnam? What Businesses Should Know
Before selecting an EOR provider in Vietnam, understanding the legal structure is essential.
Vietnam does not have a standalone statutory framework that makes every arrangement marketed as EOR automatically permissible.
In particular, arrangements that constitute labour leasing or labour subleasing are regulated under Articles 52–57 of Vietnam’s Labour Code and Decree 145/2020/ND-CP.
Labour subleasing is subject to licensing, permitted job categories, qualifying circumstances and a maximum assignment duration of 12 months.
Other service arrangements may operate under different legal and commercial structures, but their actual substance must be assessed.
This means businesses should not assume EOR can be used for every position, indefinitely, or for unrestricted commercial activities.
Companies should clarify:
- Whether the proposed job and employment structure are legally permitted.
- Which organisation will be the contractual employer.
- How payroll, insurance contributions and tax obligations will be managed.
- How supervision, employment responsibilities and potential liabilities will be allocated.
- Whether the activities could create corporate tax, permanent establishment or other regulatory obligations for the overseas business.
EOR can simplify parts of workforce expansion, but it does not eliminate the need for legal and tax due diligence.
How Much Do Employer of Record Services Cost in Vietnam?
The cost of EOR services in Vietnam varies depending on the provider, employee profile, engagement structure and required scope of services.
Rather than evaluating the EOR service fee alone, businesses should calculate their total anticipated employment cost.
A typical cost review should include:
- Employee gross salary and contractual benefits.
- Applicable employer statutory contributions.
- EOR service and administration fees.
- Any onboarding, immigration or additional HR service charges.
- Contract-related, transition or termination expenses where applicable.
The comparison should also account for the cost of operating a local entity over the same period.
For example, a company hiring a small initial team for a defined market-entry project may reach a different conclusion from a manufacturing group planning a substantial long-term workforce.
That is why a customised cost assessment is more useful than relying on a generic EOR price.
Why Consider Elitez Asia Vietnam as Your EOR Partner?
Choosing an Employer of Record provider should go beyond comparing monthly service fees.
Businesses also need access to relevant local HR knowledge, clear employment processes and a partner that understands their wider workforce objectives.
Elitez Asia Vietnam, part of the Singapore-headquartered Elitez Group, supports organisations with recruitment, staffing, Employer of Record services, payroll outsourcing and HR consultancy.
Our services include:
- Employer of Record support
Helping businesses assess and manage suitable local employment arrangements, including relevant employment documentation, payroll and administrative responsibilities.
- Payroll and HR administration
Supporting salary processing, applicable statutory contribution administration and employment-related HR processes.
- Recruitment and executive search
Assisting organisations with talent acquisition for sectors including IT, manufacturing, industrial operations, logistics and other specialised functions.
- Regional market understanding
Drawing on Elitez’s regional network and local Vietnam operations to support companies navigating cross-border workforce requirements.
Rather than looking at employment administration in isolation, we help businesses consider how their workforce structure supports their broader expansion plans.
Whether you are evaluating your first hires in Vietnam or looking to streamline existing HR processes, our team can discuss which available services best match your needs.
Build Your Vietnam Workforce with the Right Employment Strategy
Expanding into Vietnam presents opportunities for international businesses, but every company needs to consider how its hiring strategy affects costs, administration and long-term growth.
An Employer of Record arrangement may help reduce unnecessary setup expenditure, simplify certain HR processes and support a more flexible entry into the Vietnamese market.
However, the real value of EOR lies in choosing the right workforce model—not simply outsourcing employment responsibilities.
Whether EOR, direct company establishment or another HR outsourcing arrangement is best for your business will depend on your specific requirements.
Planning to Hire Employees in Vietnam?
Before committing to a local entity or an employment service provider, understand your options and potential costs.
Speak with Elitez Asia Vietnam to explore suitable Employer of Record services, payroll administration and workforce solutions for your business.
Request a Vietnam EOR Consultation
Elitez Asia Vietnam — Your Regional HR Partner for Recruitment, Staffing and Workforce Solutions.