Back to BlogScaling in Southeast Asia: Why an EOR is your best friend in 2025
Introduction
Southeast Asia, known as The Association of Southeast Asian Nations (ASEAN) is fast emerging as a central powerhouse of global economic growth. With a combined population of around 700 million and GDP of over $4 trillion, the region offers enormous potential for organisations looking to expand globally. But the appeal of ASEAN comes with operational complexities around labour laws, workforce compliance, cultural issues and diverse legal and regulatory environments.
These complexities place pressure on expansion, introducing inevitable delays and heightened risks.
This is where the Employer of Record (EOR) talent model is invaluable.
An EOR is a third-party organisation that takes on the responsibility of hiring and managing the workforce of another company, in another country. The EOR enables companies to expand across ASEAN, without having to set up local, legal entities. The EOR helps companies minimise costs, complexity and risk in their ASEAN expansion.
Today, the EOR model is the smartest, simplest and most cost-effective way to scale across Southeast Asia. And that’s what we’ll cover here.
The Southeast Asia expansion opportunity in 2025
Why ASEAN is a strategic growth region
According to the ASEAN Economic Outlook, IMF, 2024 Southeast Asia is forecast as one of the fastest-growing economic regions globally. With increasing opportunities in tech, manufacturing, financial services and consumer markets as well as a prolific talent supply, it’s a region ripe for companies seeking global expansion. The ASEAN economy alone is predicted to surpass $4 trillion this year, primarily powered by digital transformation and robust consumer demand.
Top countries for EOR-supported expansion
Within the ASEAN region, there are specific countries that are especially attractive for expansion, when supported by an EOR. These include:
- Singapore: positioned as a strategic gateway to the region, Singapore has a robust and stable regulatory environment
- Vietnam: known both for its manufacturing sector and booming supply of technology talent
- Indonesia: where growing, diverse consumer markets are on the rise
- Philippines: renowned for its skilled, English-speaking workforce and thriving Business Process Outsourcing (BPO) sector
- Malaysia and Thailand: particularly strong in manufacturing and logistics, with an expanding digital infrastructure, and workforce uptake.
However, the labour laws vary from country to country, creating barriers to a smooth expansion for companies operating without an EOR. Two current examples include Indonesia and Vietnam. First, consider Indonesia’s Omnibus Law. Despite having recently simplified labour regulations, Indonesia still presents challenges regarding contract employment and termination pay. And second, there’s Vietnam’s laws for foreign workforce management, which have recently tightened, increasing compliance risks for employers.
Without question, an EOR simplifies the process of expansion into the ASEAN region, by ensuring workforce compliance, minimising risk, and accelerating market entry.
Why setting up a legal entity is slower and riskier
On the surface, the idea of setting up a legal entity in multiple ASEAN countries may appear straightforward. But in reality, to do this in one (or multiple) countries typically serves to delay time-to-productivity. Here’s why.
Delays and setup burdens explained
Forming a legal entity in most ASEAN countries can take up to 6 months, or longer, depending on the country. The process often involves bureaucratic delays and a steep financial outlay in the early stages, as well as any (or all) of the following:
- Having to navigate complex registration procedures and manage documentation, unique to each country
- Finding local directors or shareholders (often a legal requirement in some countries)
- Understanding and establishing the systems and operations that comply with local tax, labour, and statutory reporting obligations
- the ongoing administrative costs of running a local entity
- Understanding, foreseeing and managing the risks of non-compliance.
With costs in the tens of thousands per country at the outset, and the burden of understanding and complying with country-specific laws, delays in getting operational as a stand-alone entity, are inevitable and costly. Contrast this process with an EOR, where immediate market access is granted, upfront investments are eliminated and legal complexities taken care of. The EOR can have you onboarding talent within days, not months.
How an EOR solves the biggest expansion challenges
Ensuring local compliance across markets
Labour laws across ASEAN nations vary significantly by country. Deloitte’s 2025 Asia Pacific Financial Services Regulatory Outlook highlighted this fact, and showcased the complex regulatory environment of the region, urging local businesses to remain compliant, or risk devastating penalties, legal challenges and reputational damage.
By engaging an EOR, your organisation will be fully compliant across employment contracts, payroll, benefits and tax regulations for each country you’ve expanded into. The EOR reduces the legal risk, so you can focus on growing your business. The other incredible value here, is the trust and confidence the EOR enables the company to establish with local talent, and authorities.
Cross-border payroll and HR management
If your company expands to multiple ASEAN countries, you’ll be required to manage a payroll with different tax rates, currencies, employment laws and social security systems. The complex nature of these differentials can lead to costly errors, as well as employee dissatisfaction.
By engaging an EOR, a centralised system will take care of everything, managing multi-country payroll, benefits and statutory obligations. This keeps your company reporting and talent payroll management accurate, timely, and compliant irrespective of where your workers are based.
Hiring and onboarding talent at speed
An EOR will allow you to expand into ASEAN countries at speed, so you can engage quality talent that are increasingly in demand across the region. According to McKinsey’s Southeast Asia Perspectives report (2025), the region’s digital economy is booming, and with it, a corresponding demand for tech-savvy workers.
And these workers are seeking flexible working arrangements. Traditional hiring practices can be slow and onerous, particularly for a new entity in the region. The EOR will streamline recruitment and talent onboarding by leveraging local networks, and through their deep understanding of the local talent landscape.
From our experience, industries set to benefit most from EORs in the ASEAN region are:
- Technology, IT and digital sub-sectors
- Manufacturing, supply chain and logistics
- Banking, financial services, insurance and consulting
- Life sciences, healthcare and med-tech
- Business Process Outsourcing (BPO)
- Retail and e-commerce
Avoiding contractor misclassification
The EOR will help your organisation mitigate the legal risks associated with contractor misclassification in your ASEAN expansion. The legal and financial repercussions of misclassification varies by country, but typically lead to audits, fines, back payments and worker discontent.
By serving as the legal employer to your workers, the EOR will ensure your workers are correctly classified, and correctly paid. The EOR will also manage all worker contracts, and supply your business with audit-ready documentation and reporting so your business exposure to legal risks is minimised.
Scaling smarter: the EOR advantage in 2025
Faster market entry, lower costs
From our experience, companies seeking to expand their business to Southeast Asia enjoy a 90% faster market entry by using an EOR, than if they were to set up a legal entity. The delays associated with bureaucratic processes and regulatory hurdles are eliminated, as are the costs associated with legal, HR and administrative overheads.
The other advantage here is the ability to test the market. By engaging an EOR, companies looking to expand to the region can test individual markets, scale operations and teams, or pivot to different markets based on their experience; all without having to sink extensive costs or long-term commitments into an individual country.
Supporting remote and distributed teams
With ongoing demand for flexible, remote and hybrid working opportunities, the talent market in Southeast Asia is shifting how organisations utilise digital technologies to engage and manage workers. With distributed teams the norm, managing HR, payroll, compliance and talent management becomes even more complex, so adapting to this new norm is crucial.
This is where EORs can really add value. By managing HR functions across different countries and jurisdictions, and by leveraging digital technologies to do this, companies can scale with ease, flexibility and efficiency. Gartner showed in a 2024 study, the need for organisations to adapt to digital technologies to support remote teams. With an AOR on your side, you’ll achieve this with ease.
What to watch out for – ASEAN market realities
Cultural, language, and market variations
When you engage an EOR, you can’t approach your talent strategy with a ‘set and forget’ mindset. Yes, the EOR will handle all the compliance, legal, and administrative functions for the operational side of talent management. But your organisation has responsibilities too.
To truly succeed in the ASEAN region, we advise you to invest in local market research, become aware of the cultural nuances of the different markets you’re entering, and take time to understand talent sentiment; from who they see as employers of choice to trends in remuneration. To succeed in your ASEAN expansion, local market knowledge and cultural adaptability are crucial, even with an EOR.
Frequently asked questions
What exactly is an Employer of Record (EOR)?
EOR is a third-party organisation that legally employs and manages your workforce, in an international market. The EOR enables your company to quickly and successfully achieve market entry, without establishing a local entity. The EOR handles payroll, tax compliance, benefits and all HR administration, on your behalf.
Why is Southeast Asia attractive for expansion in 2025?
ASEAN is appealing due to its strong economic growth, rapid market digitisation, tech-savvy talent pools, and increasing foreign investment incentives.
Which countries in the ASEAN region benefit most from EOR solutions?
Singapore, Indonesia, Vietnam, Malaysia, and the Philippines are the most popular countries due to their growth potential and economic environments. With complex local laws across each country, the EOR serves as the key for simplified market entry.
Which industries currently benefit most from EOR services in the ASEAN region?
Technology and digital industries, manufacturing, finance, BPO, life sciences, and e-commerce are among the top sectors leveraging EORs for rapid, compliant expansion in Southeast Asia.
Can an EOR manage payroll and HR across multiple countries?
Yes, EORs can provide centralised payroll and HR management across multiple countries, simplifying multi-country operations and ensuring HR reporting accuracy and workforce compliance.
How fast can I hire with an EOR versus setting up a legal entity?
With an EOR, you can engage and onboard talent within 2–4 weeks. Conversely, setting up a legal entity in each market takes at least 3–6 months (sometimes longer).
Are there still challenges when using an EOR in Southeast Asia?
Yes. Companies are recommended to be knowledgeable about the cultural, linguistic, and market-specific nuances across the region, as well as being aware of local workplace laws and regulatory changes.
Conclusion – confident, compliant growth with an EOR
Scaling your business successfully into the ASEAN region in 2025 offers incredible growth potential. And partnering with an expert Employer of Record (EOR) like CXC is the most effective solution for you to achieve:
- Fast market entry: you can avoid the delays you would otherwise encounter in setting up separate legal entities in each country
- A cost effective means for scaling across multiple countries
- Workforce compliance and minimised risk across diverse legislatures
- A centralised system for managing payroll, statutory obligations and all facets of HR for distributed teams
CXC will enable you to leverage the knowledge of local experts while you focus on growing your business.
If you’re ready to expand your operations in the ASEAN region, get in touch with one of our experts, today.
