When expanding into Türkiye, one of the first strategic decisions international companies face is whether to hire employees through an Employer of Record (EOR) or establish their own Turkish subsidiary. While cost is often a major factor, comparing these two models is more complex than simply looking at monthly service fees.
An Employer of Record offers speed, flexibility, and reduced administrative responsibilities, whereas a Turkish subsidiary provides greater operational control and a permanent local presence. Over a three-year period, the total cost of each model depends on far more than payroll alone.
At Azkan Group, we help businesses evaluate both options by considering not only direct expenses but also long-term operational efficiency, compliance, and business objectives.
Why a Three-Year Comparison Matters
Many companies compare only their first-year costs.
However, international expansion should be evaluated from a longer-term perspective.
A three-year comparison provides a more realistic view of:
- Initial setup expenses
- Ongoing administrative costs
- Payroll management
- HR support
- Compliance obligations
- Operational flexibility
- Business growth
Looking beyond short-term costs allows companies to make more strategic decisions.
The Cost Structure of an Employer of Record
An Employer of Record allows companies to employ workers in Türkiye without establishing a legal entity.
Typical services include:
- Employment contracts
- Monthly payroll
- Salary payments
- SGK compliance
- Tax reporting
- HR administration
- Labour law compliance
- Employee onboarding
- Employee offboarding
Instead of investing in corporate infrastructure, companies pay a predictable service fee while outsourcing employment administration.
This model is particularly attractive during the early stages of market entry.
The Cost Structure of a Turkish Subsidiary
Operating your own subsidiary introduces a broader range of responsibilities.
Companies generally become responsible for:
- Company incorporation
- Corporate accounting
- Payroll administration
- Tax compliance
- Corporate governance
- Banking administration
- HR management
- Labour law compliance
- Annual corporate reporting
Although direct Employer of Record fees disappear, these responsibilities create their own operational costs.
Businesses should evaluate the complete administrative picture rather than payroll alone.
Year One: Speed Versus Setup
During the first year, an Employer of Record often provides significant advantages.
Companies can:
- Hire immediately
- Avoid incorporation delays
- Reduce administrative work
- Enter the market quickly
- Test commercial opportunities
By comparison, establishing a subsidiary requires additional preparation before operations begin.
For businesses still evaluating the Turkish market, flexibility often has considerable value.
Year Two: Operational Growth
As companies expand, operational requirements become more sophisticated.
Businesses may introduce:
- Larger teams
- Department managers
- Internal HR processes
- Expanded payroll
- Performance management
- Employee development programs
At this stage, management often begins comparing whether continuing with an Employer of Record or operating a subsidiary better supports long-term objectives.
The answer varies depending on each company’s strategy and internal resources.
Year Three: Long-Term Efficiency
After several years of operation, companies typically have a clearer understanding of their future in Türkiye.
Businesses with stable, long-term operations may begin prioritizing:
- Greater operational control
- Internal governance
- Direct management of local activities
- Corporate branding
- Long-term investment planning
For organizations committed to sustained growth, these strategic considerations may become more important than initial setup costs.
Administrative Costs Are Often Overlooked
Many cost comparisons focus exclusively on payroll service fees.
However, companies should also consider the internal resources required to manage:
- Payroll
- Accounting
- HR administration
- Tax reporting
- Corporate compliance
- Legal support
- Internal approvals
- Management oversight
Administrative time has real financial value, even if it does not appear as a direct invoice.
Compliance Costs Should Never Be Ignored
Operating a Turkish subsidiary requires continuous compliance management.
Responsibilities include:
- Payroll reporting
- SGK declarations
- Tax filings
- Employment documentation
- Labour law compliance
- Accounting obligations
- Corporate reporting
Companies should ensure they have experienced local advisors capable of managing these ongoing responsibilities.
Compliance failures may become considerably more expensive than routine administration.
Operational Flexibility Has Financial Value
Flexibility is another important consideration.
An Employer of Record enables companies to:
- Enter new markets rapidly
- Hire without incorporation
- Adjust workforce size more easily
- Reduce administrative burden
- Focus on commercial growth
Although difficult to quantify, operational flexibility often represents a significant business advantage during periods of expansion.
When a Turkish Subsidiary May Become More Cost-Effective
For companies with long-term operations, establishing a subsidiary may become increasingly attractive when they:
- Have an established workforce
- Require a permanent commercial presence
- Need greater operational control
- Manage significant local revenue
- Build long-term business relationships
The decision should always consider operational strategy alongside financial analysis.
No single employee threshold automatically determines the right time to transition.
Common Mistakes When Comparing Costs
International companies frequently make several assumptions that produce misleading comparisons.
Common mistakes include:
- Comparing only payroll fees
- Ignoring internal administrative costs
- Excluding compliance obligations
- Underestimating HR administration
- Overlooking accounting requirements
- Focusing only on the first year
- Ignoring long-term business strategy
A comprehensive comparison should include both direct and indirect costs over several years.
How to Evaluate the Right Model
Rather than asking which option is cheaper, businesses should ask which model creates the greatest long-term value.
Key evaluation factors include:
- Growth plans
- Workforce size
- Business objectives
- Operational complexity
- Internal administrative capacity
- Compliance requirements
- Commercial activities
- Long-term investment strategy
Every business reaches this decision at a different stage of its expansion.
Why Companies Trust Azkan Group
Azkan Group supports international companies regardless of their chosen expansion model.
Our services include:
- Employer of Record (EOR) solutions
- Company incorporation support
- Monthly payroll processing
- HR administration
- SGK compliance
- Tax reporting support
- Labour law consulting
- Corporate compliance
- Ongoing payroll and HR management
Whether you are entering Türkiye for the first time or preparing to establish your own subsidiary, our specialists help you choose the most appropriate solution for your business.
The real cost difference between an Employer of Record and a Turkish subsidiary cannot be measured by monthly fees alone. Over a three-year period, companies must consider setup costs, administrative responsibilities, compliance obligations, operational flexibility, and long-term business strategy.
For some organizations, the efficiency and simplicity of an Employer of Record continue to provide excellent value. For others, sustained growth and increasing operational complexity make establishing a Turkish subsidiary the logical next step.
Azkan Group helps international businesses evaluate both options objectively, providing expert guidance, Employer of Record services, company incorporation support, and fully compliant payroll and HR solutions for every stage of expansion into Türkiye.
