A practical Vietnam offshoring checklist for Singapore founders and CTOs covering structure, compliance, hiring, tax, costs and scaling.
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Choosing between an Employer of Record and establishing a local entity in Vietnam affects setup costs, compliance requirements, operational control and timeline to market entry. The right approach depends on your business objectives, hiring scale and long-term Vietnam strategy.
An employer of record allows hiring without establishing a legal entity - you deploy staff in weeks, not months. Setting up your own entity gives you full operational control and direct legal ownership, but the process is slower, costlier and demands ongoing compliance management.
Neither option is universally superior; the better choice depends on where your business stands today and where it needs to be in 18 months.
The fundamental distinction lies in legal structure and commercial commitment.
Some global companies use an Employer of Record first before deciding whether to establish their own entity.
An EOR focuses on immediate workforce deployment with shared legal responsibility. Entity setup emphasises long-term operational control and direct legal ownership.
Both approaches enable compliant hiring in the Vietnamese market, but the business relationship with your workforce differs significantly.
An Employer of Record is also distinct from a professional employer organisation, which operates as a co-employment support model rather than the legal employer in Vietnam.
Upfront investment and speed to deployment are often the first considerations for foreign companies evaluating market entry into Southeast Asia.
Using an EOR in Vietnam, setup costs are minimal. Most providers charge a monthly fee per employee, typically in the range of USD 300–600 depending on salary level, city (such as Ho Chi Minh City or Hanoi), seniority and included employee benefits.
Some providers apply a one-off onboarding fee of USD 500–2,000 per hire, though this is sometimes waived.
EOR services can onboard employees in 5 to 14 business days when documentation is ready - dramatically faster than entity incorporation. There are no upfront capital requirements, no incorporation costs and no requirement to register employees with the Department of Planning and Investment.
Budgeting is predictable: fixed monthly costs covering payroll compliance, statutory contributions and workforce management, so employers pay required social and statutory obligations through the provider rather than managing them through a local entity.
Onboarding in Vietnam requires employee identity verification and tax registration, but an experienced EOR handles these steps as part of its standard process.
Setting up a legal entity is a slow, complex and expensive process. Establishing a business entity in Vietnam involves significant registration and licensing requirements, including obtaining an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC).
Establishing a legal entity incurs significant upfront costs - typically USD 8,000 to USD 15,000 for straightforward sectors, rising to USD 25,000 or more for regulated industries. Minimum capital requirements apply in certain sectors in Vietnam.
Entity setup requires registering with the Department of Planning and Investment, and charter capital must be contributed within 90 days of ERC issuance. Failure to do so can trigger fines of VND 30–50 million (roughly USD 1,200–2,000) and a requirement to reduce registered capital.
Setting up a local entity takes 2 to 3 months. The IRC application has a statutory timeline of 15 working days, though 20–45 working days is common in practice. The ERC takes 3 statutory working days, but in practice it typically takes longer.
Conditional or regulated sectors may extend the full process to 3–4 months. Long setup time and high initial investment are factors to consider when establishing a legal entity.
Ongoing operational costs include outsourced accounting and bookkeeping (USD 400–800/month), annual audit (USD 2,000–5,000), office lease, utilities and chief accountant salary.
Setting up a legal entity in Vietnam is designed for long-term direct investment - not short-term experimentation.
Vietnam's strict labour laws - governed primarily by the Labour Code 2019 (effective 1 January 2021) - create substantial obligations for employers. How those obligations are managed differs sharply between the two models.
EOR Compliance Management
The EOR assumes legal responsibility for payroll, statutory benefits, compliance and risk management, and compliance with Vietnamese labour laws. As the legal employer, the EOR must:
Employer of Record (EOR) services in Vietnam also support tax compliance and help reduce filing errors for foreign businesses.
EOR services help mitigate legal risks in Vietnam's labour laws. Vietnam imposes fines from 2 million VND to 200 million VND for labour law violations, making compliance assurance a serious commercial concern.
An experienced EOR with genuine local execution capability - not a remote platform relying on third-party subcontracting provides meaningful risk management. These record services also support outsourced employment administration without requiring your company to run those functions locally.
EORs simplify payroll processing in compliance with local laws, ensuring alignment with tax and insurance authorities without requiring your company to build internal capabilities.
As a local entity, you bear direct responsibility for all employment law compliance, labour regulations and regulatory adherence.
The 2019 Labour Code requires registered local entities to have labour contracts, and employers must provide employees with written contracts in Vietnamese.
Your entity must:
Maintaining a compliant record in Vietnam also requires properly documented employment, payroll and registration processes for your own entity.
Ongoing compliance management is required after entity setup. Full legal exposure for compliance failures and labour disputes sits with your entity.
Employers must contribute to social, health, and unemployment insurance - and errors in calculation, late filing or mis-registration can result in back-dated liabilities and penalties.
Having a legal entity allows for full management of payroll, employee contracts, and corporate culture, but the internal capability to achieve full compliance must be built and maintained.
The level of control over workforce management and business processes is a key differentiator for foreign investors.
Day-to-day workforce management remains with your company. You direct work, set KPIs, evaluate performance and manage team output. The EOR manages the employment infrastructure: contracts, payroll management, statutory contributions and regulatory filings.
Using an EOR allows you to hire and manage employees without a local legal entity. Flexibility for scaling your workforce up or down is a core advantage - hiring through an Employer of Record can bypass entity setup delays, and there is no requirement to liquidate a legal entity if you decide to exit. EORs handle contracts, payroll, and compliance for employers, reducing administrative friction.
Limitations exist. You cannot issue contracts under your own company name. Certain HR policies and employee benefits beyond statutory minimums may be constrained by the EOR's standard frameworks. For foreign employees in leadership roles, work permit sponsorship flows through the EOR entity, which may introduce complexity.
As the entity owner, you hold complete operational authority over workforce policies and procedures. Direct employment relationships mean full HR policy control - salary structure, private health insurance, performance frameworks, company culture and branding are entirely yours.
A registered entity allows legal signing of client contracts and opening of local corporate bank accounts. You can hold IP locally, issue invoices in Vietnam, and establish proprietary business processes. This is essential for companies with customer-facing operations, regulated-sector requirements, or long-term investment horizons.
Greater complexity but maximum operational flexibility. You must build local teams - legal, HR, payroll, accounting - and manage disruptions from law changes, inspections and administrative requirements. The trade-off is full control at the cost of increased ongoing compliance and administrative overhead.
Team size and hiring projections directly impact cost efficiency and the optimal market-entry model.
For small teams of 1–5 people, EOR is typically the lower-risk, faster path. EOR services allow hiring without establishing a legal entity, and the per-employee cost is manageable.
As headcount grows toward 8–10 employees, the recurring monthly EOR fees begin to approach the cost of running an entity. Once teams exceed 20–30 employees and remain stable, the fixed costs of your own entity become proportionally lower per employee.
EOR services can become expensive at scale due to higher per-employee monthly fees.
Conversely, entity operational costs - office lease, accounting, HR staff, audit - are largely fixed regardless of whether you employ 15 or 50 people. The break-even point depends on your specific salary levels, city of operation and service requirements.
Vietnam's skilled workforce is concentrated in Ho Chi Minh City, Hanoi and Da Nang. Competitive labour costs relative to regional peers in Southeast Asia attract global businesses across technology, SaaS, fintech and creative sectors.
Whether you use an EOR or establish your own entity, accessing local talent requires understanding of salary benchmarks, benefits expectations and recruitment dynamics.
An EOR may limit your ability to offer non-standard perks, equity participation or bespoke leadership benefits. An entity gives you full control over talent acquisition and employer branding, but requires a local presence and recruitment capability to compete effectively.
Your decision should align with your broader Vietnam strategy and commercial objectives.
EORs are often used to test the market or hire small teams before establishing a legal entity. If your plan is to validate demand over 6–18 months with a pilot team, an EOR is best for fast, low-risk market entry.
You avoid locked-in infrastructure and can exit without entity dissolution - minimising legal risks and capital exposure.
When you see Vietnam as a permanent operational base - for customer-facing teams, product development, local revenue generation or IP holdings - entity setup is usually the stronger choice.
Using an EOR enables immediate hiring without establishing a local subsidiary, but it does not replace the strategic positioning of your own legal entity for long-term business growth.
Certain industries - finance, education, healthcare, logistics - require conditional sector licences or impose foreign ownership restrictions. In those cases, establishing a foreign-invested enterprise is often mandatory for ensuring compliance with local regulations.
Vietnam's Investment Law 2025 (effective 1 March 2026) has relaxed entry requirements in certain sectors, but sectors still subject to conditional entry requirements must adhere to full regulatory requirements.
Understanding Vietnam's business environment - from complex labour laws to evolving tax regulations - helps determine strategic fit.
A structured approach to global hiring in Vietnam means matching your entry model to your actual commercial position, rather than defaulting to the cheapest or fastest option.
Choose an EOR if you want rapid market entry, cost-effective workforce deployment and shared compliance responsibility.
An EOR handles compliance, payroll, and taxes for your employees, allowing you to hire within days and focus on business execution rather than administrative setup.
Choose entity setup if you require complete operational control, a long-term presence in Vietnam, and direct legal ownership. A registered entity is the foundation for sustained operations, local contracting, revenue collection and proprietary culture-building.
A practical framework based on business stage:
Many companies begin with an EOR arrangement and transition to their own entity once scale and permanence justify the investment. Hyer Talents supports employment, payroll, and workforce management in Vietnam - and can assist this transition, managing the early-phase workforce through EOR or managed-team arrangements while supporting migration to a full entity when the business case is clear.
Both models can successfully enter the Vietnamese market with proper execution. The right choice is the one that matches your current position, hiring scale and strategic intent - with room to evolve as your Vietnam operations mature.
A practical Vietnam offshoring checklist for Singapore founders and CTOs covering structure, compliance, hiring, tax, costs and scaling.
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