Rule of thumb: use EOR until you have 15–25 employees in a single country, then evaluate entity setup. But the breakeven varies enough by market that you need the actual numbers.
The core trade-off: EOR lets you hire in days with zero setup cost. Entity ownership is cheaper per employee at scale and gives you full control. The question is when you hit that scale — and in most Asian markets, it’s later than people expect.
The Core Trade-off
| EOR | Own Entity | |
|---|---|---|
| Time to first hire | Days | 1–6 months |
| Setup cost | None | $3,000–$60,000+ |
| Ongoing overhead | $400–$800/mo per employee | $15,000–$80,000+/year |
| HR/compliance burden | EOR handles all | Your responsibility |
| Employment branding | Employee sees EOR as employer | Employee sees your company as employer |
| Exit ease | Cancel EOR contract | Wind-down process (3–12 months) |
| Control | Limited — bound by EOR’s processes | Full |
| Scalability | Flexible | Fixed cost base |
Cost Model — EOR vs Entity
Singapore
| Headcount | Annual EOR Cost (Multiplier) | Annual EOR Cost (Deel) | Annual Entity Cost |
|---|---|---|---|
| 3 | $14,400 | $21,564 | $22,000–$30,000 |
| 5 | $24,000 | $35,940 | $25,000–$35,000 |
| 8 | $38,400 | $57,504 | $28,000–$40,000 |
| 12 | $57,600 | $86,256 | $30,000–$45,000 |
| 15 | $72,000 | $107,820 | $32,000–$50,000 |
Entity cost includes incorporation ($2,000–$5,000), registered office, local director (if required), accounting, payroll provider, and annual filing fees. Does not include HR staff cost.
Singapore EOR breakeven: ~8–12 employees (Multiplier) or ~5–8 employees (Deel/Remote).
India
| Headcount | Annual EOR Cost (Multiplier) | Annual Entity Cost |
|---|---|---|
| 5 | $24,000 | $40,000–$60,000 |
| 10 | $48,000 | $45,000–$70,000 |
| 15 | $72,000 | $50,000–$80,000 |
| 20 | $96,000 | $55,000–$90,000 |
| 25 | $120,000 | $60,000–$100,000 |
India entity setup is expensive and slow (3–6 months for a Private Limited Company). Annual compliance includes CA fees, ROC filings, GST returns, TDS filings, PF/ESIC administration.
India EOR breakeven: ~15–20 employees with Multiplier. Higher with Deel/Remote.
Philippines
| Headcount | Annual EOR Cost (Multiplier) | Annual Entity Cost |
|---|---|---|
| 5 | $24,000 | $30,000–$45,000 |
| 10 | $48,000 | $35,000–$55,000 |
| 15 | $72,000 | $40,000–$65,000 |
Philippines EOR breakeven: ~10–15 employees.
Indonesia
| Headcount | Annual EOR Cost (Multiplier) | Annual Entity Cost |
|---|---|---|
| 5 | $24,000 | $45,000–$70,000 |
| 10 | $48,000 | $50,000–$80,000 |
| 20 | $96,000 | $60,000–$100,000 |
Indonesia PT PMA (foreign-owned company) setup costs $20,000–$50,000 and takes 2–4 months.
Indonesia EOR breakeven: ~15–25 employees.
Japan
| Headcount | Annual EOR Cost (Deel/G-P) | Annual Entity Cost |
|---|---|---|
| 3 | $21,564–$25,200 | $50,000–$80,000 |
| 5 | $35,940–$42,000 | $55,000–$90,000 |
| 10 | $71,880–$84,000 | $65,000–$110,000 |
| 15 | $107,820–$126,000 | $75,000–$130,000 |
Japan KK setup costs $30,000–$60,000 and takes 2–3 months. Annual compliance is among the highest in Asia.
Japan EOR breakeven: ~20–35 employees.
Timeline Comparison
| Country | EOR (Time to First Hire) | Entity Setup | Comments |
|---|---|---|---|
| Singapore | 1–3 days | 1–2 months | Fastest entity setup in Asia |
| India | 3–7 days | 3–6 months | ROC approval takes time |
| Philippines | 3–7 days | 2–4 months | SEC registration process |
| Indonesia | 5–14 days | 2–4 months | PT PMA notarization required |
| Japan | 5–14 days | 2–3 months | Bank account opening is a bottleneck |
| Malaysia | 3–7 days | 1–2 months | Sdn Bhd straightforward |
| Vietnam | 5–10 days | 3–5 months | LLC or Joint Stock Company |
| China | 7–14 days | 3–6 months | WFOE registration complex |
In every market, EOR is months faster than entity setup.
When to Use EOR
- Testing a new market — validate demand and team quality before committing to incorporation
- Below the breakeven threshold — fewer than 10–20 employees in a single country
- Speed is critical — you need someone productive in days, not months
- High regulatory complexity — Japan, Indonesia, China, and India require specialist compliance that EOR providers maintain at scale
- Pre-entity — use EOR while your entity is being incorporated in parallel
When to Set Up Your Own Entity
- Above the breakeven — 15–25 employees in a country is typically the threshold (varies by market and EOR provider)
- Employment branding matters — key hires prefer direct employment with your company
- Local contracts or licences require it — regulated industries (financial services, healthcare, some government contracts) require a local entity
- You want full HR control — EOR providers have their own processes and policies
- Long-term strategic commitment — building a significant team in one market for 5+ years
The Hybrid Approach
Many companies run both simultaneously: EOR for new-market testing and initial hires, entity incorporation running in parallel, then employees transferred from EOR to own entity once the entity is operational and the team is validated.
EOR providers support this transition. They issue termination documents for the EOR employment and help with new contracts under your entity. Expect a 30–90 day transition period.
Country-by-Country Entity Setup Summary
| Country | Entity Type | Setup Cost | Timeline | Min. Capital |
|---|---|---|---|---|
| Singapore | Pte. Ltd. | $2,000–$5,000 | 1–2 months | S$1 |
| India | Private Ltd. | $15,000–$30,000 | 3–6 months | None |
| Philippines | Domestic Corp. | $10,000–$20,000 | 2–4 months | None (domestic) |
| Indonesia | PT PMA | $20,000–$50,000 | 2–4 months | Varies by sector |
| Japan | KK / GK | $30,000–$60,000 | 2–3 months | ¥1 (nominal) |
| Malaysia | Sdn Bhd | $5,000–$15,000 | 1–2 months | RM1 |
| Vietnam | LLC | $15,000–$30,000 | 3–5 months | None |
| Thailand | Ltd. Co. | $10,000–$25,000 | 2–3 months | Varies |
| South Korea | LLC / Corp. | $15,000–$30,000 | 2–3 months | ₩100M recommended |
| Hong Kong | Ltd. Co. | $1,500–$5,000 | 1–2 weeks | HK$1 |
| China | WFOE | $15,000–$40,000 | 3–6 months | Varies by industry |
Frequently Asked Questions
At what headcount should I switch from EOR to my own entity? Singapore: 8–12 employees. India: 15–20. Philippines: 10–15. Indonesia: 15–25. Japan: 20–35. These are rough guides — run the actual cost model with your specific salary levels and your EOR’s pricing before deciding.
Can I run EOR and my own entity at the same time in the same country? Yes. Many companies use EOR for new hires while their entity is being set up, then transfer employees once the entity is operational. Some keep EOR for specific roles even after entity setup.
Does setting up a local entity mean I can stop using an EOR? Yes, once your entity is operational you employ staff directly. You still need a local payroll provider and HR/compliance support — you just no longer pay the EOR service fee.
How long does it take to wind down a local entity if you exit a market? Singapore: 3–6 months. India: 12–24 months. Indonesia and China: 12–18 months. Japan: 6–12 months. Factor this into your market exit planning before you decide to incorporate.
Is EOR cheaper than an entity? For small headcounts, yes. For larger teams, no. The crossover is typically 10–25 employees depending on the country.
