EOR Turns Marketplaces Into Employers
Ved Sinha, Former VP of Product at Upwork, on gig marketplaces
Employer of record turns a freelance marketplace into part staffing agency, and that makes the platform much harder to leave. When the platform is the legal employer, it is handling payroll, tax withholding, benefits, and compliance, so a company is not just buying matching and payments, it is outsourcing the legal burden of employing people. That is a much stickier service than standard 1099 contractor tools, where buyers can more easily move off platform once a relationship is established.
-
On a classic marketplace like Upwork, the main reasons to stay are convenience, dispute handling, time tracking, invoicing, and reputation data. Those tools help, but they are lighter weight than EOR. Once W-2 employment sits inside the platform, leaving means rebuilding compliance, payroll, and onboarding workflows somewhere else.
-
This is why staffing agencies have historically been stickier and more expensive. They often act as the W-2 employer, and Ved Sinha notes traditional staffing firms can take 60% to 75%, versus about 15% for Upwork. The higher fee reflects a much heavier operational role, not just better matching.
-
The gap created room for companies like Deel, Remote, and others to grow by packaging contractor payments, compliance, and in many cases EOR into software. The broader market has shifted from simple freelancer matching toward payroll like infrastructure that lets companies hire globally with less legal and administrative work.
Going forward, the winning labor platforms will keep moving down the stack from marketplace into employment infrastructure. The more they own onboarding, payroll, compliance, and worker records, the more they resemble the system a company runs its workforce on, and the less likely customers are to route spending anywhere else.