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Driving business beyond national borders could be a daunting task, especially considering the convoluted nuances of local labor laws and tax regulations. The utilization of an Employer of Record (EOR) service streamlines this process, acting as your “man on the ground” to legally employ your international workforce, eliminating the need to set up an entity in each new country and freeing you to focus on collaboration and integration. Plus, if you are considering offshoring, EOR is a good option to hire tech talents outside the US.
Although the EOR market is growing dramatically, I know hiring internationally can feel intimidating at first. In this article, I’ll walk you through all the steps so you can start seamlessly expanding your tech team across borders. My goal is to make global hiring feel as comfortable as hiring in your hometown!
To do that, let’s start with the basics.
So, what exactly is an Employer of Record (EOR)?
An Employer of Record (EOR) acts as the “official employer” for tax reasons, even though the tech employee produces work full-time for you.
To make the concept as easy as pie to understand, let me walk you through a non-tech example.
Imagine you’re a renowned chef, eager to spread your culinary magic into new global markets. The thought of dealing with the local laws and customs of each new country is overwhelming. You just want to focus on crafting your masterpiece dishes (or, in your case, software products). That’s where an Employer of Record comes in.
Think of an EOR as a “Global Cooking Institution” you partner with, that is professional and handles all the intricate details. The EOR becomes the legal employer of your new cooks and waitstaff around the globe, in multiple countries.
The EOR ensures the smooth operation of all 'kitchen' procedures – from onboarding new international employees, handling payroll, and taking care of benefits, to ensuring compliance with local employment laws.
TurnKey is such a “Global Cooking Institution” – but instead of culinary teams, we serve you software developers and ensure they stay with you longer than one tourist season.
So despite delegating these “administrative” tasks, you, the chef, still control the everyday workings of the kitchen and have your new team turn out your signature dishes in no time. In essence, this is what record services or what some call a professional employer organization do.
Why bring in this “Global Cooking Institution”?
In essence, an Employer of Record is your “Global Cooking Institution” in the world of global business, helping clients focus on what matters most: your core business.
When expanding your tech startup globally, partnering with the right EOR service provider is key. EORs act as legal employers of your software team in each country, allowing you to hire top talent worldwide without establishing local entities. According to TechRadar and SelectSoftware Reviews, who are some of the top California and San Francisco-based EOR services for hiring developers?
Hiring via EOR is one of the services TurnKey Labs provides. We have all the mechanisms in place to hire talent in 16 countries. We came up with a perfect services formula and called it Yourshoring: custom recruiting, onboarding, benefits management, HR support, legal and IT support at all levels. Our clients speak for themselves – R1 RCM, Ripple, Headspace, and many other guys who are just starting their big Silicon Valley journey.
Top three reasons why TurnKey is your best choice to hire tech employees via EOR:
Deel offers EOR services in over 150 countries, handling payroll, benefits, compliance with local labor laws, and smooth onboarding. With expertise in international labor regulations, Deel helps global giants like Shopify and Coinbase hire abroad with confidence.
Remote offers EOR services in over 150 countries, handling payroll, benefits, compliance, and onboarding. Remote’s expertise in global employment laws has attracted clients like Webflow and Fiverr.
Remofirst is an EOR operating in over 90 countries. They manage international payroll, benefits, compliance, and onboarding for fast-growing companies like Uber, Red Bull, and Toptal.
Rippling provides EOR services and HR software in over 50 countries. Their automated platform handles payroll, benefits, and compliance, serving clients like Better.com, Ledger, and Outschool.
Now that you know the top EOR options, the benefits of EOR services for simplified global growth.
Think of an Employer of Record (EOR) as an international expeditor. This expeditor can take care of many things for your company. Here’s how it works:
What’s in the expeditor’s toolbox?
First, it has a “time-turner” for managing payroll. This means your company can work better and faster. With this tool, you’ll see instant improvements in cash flow, how your HR team works, and the benefits your employees receive.
Second, this expeditor is like having a tour guide who can take you to new markets with ease, handling international payroll without breaking a sweat. This means your company can save more money and can use these savings to grow or reach your goals faster.
Third, an EOR isn’t just a worker-hiring service. It’s more like a magnet that attracts talent and handles payroll processing swiftly. This means your company can grow faster. While some EORs work with agencies that find workers, they are EORs that manage everything.
So, in a nutshell, using an EOR has many perks, like a cost-effective way to handle your payroll system, making sure you’re following all the payroll compliance rules, and even dealing with tricky stuff like payroll taxes.
Don't Let Geographical Barriers Limit Your Growth. Call TurnKey to Hire Quality Developers Anywhere in the World.
An ideal place to start using EOR services is offshoring. Take a one-minute summary from our CEO, Sterling, to get the straight goods on if this is the right time for you to consider it:
If you are ready to start building your team abroad, you may want to use an EOR provider in these situations:
Now that you are thinking EOR, let’s discuss the benefits of this model for expanding your tech teams.
There are so many intricacies to deal with when hiring globally, In Argentina, for example, there’s a regulation requiring salaries to be paid in local currency. This law means that if you’re an international company paying employees in a different currency, you’d need to convert it into Argentine pesos. This requirement can create complexities for tech companies not accustomed to dealing with currency conversion and exchange rates, which are quite high there because of inflation. In fact, for us, this requirement was a factor in our decision not to offer services in Argentina.
If the thought of hiring talent internationally currently feels like navigating a foreign city without a map, this next section will be your GPS. I pulled together this table for you that covers all countries where TurnKey operates.
So let me give you the summary, if you’re looking for the biggest talent pool, take a closer look at Brazil; for the best technology expertise, choose Ukraine; for maximum cost optimization, consider small countries with low taxes like Guatemala.
Want to Learn All the Ins and Outs of Employment in Different Countries? Our Top Legal Team Has a Complete Guide to Every Location.
Now, as I touched on the talent agencies earlier in the post, let’s discuss the main differences between them and EOR companies.
An EOR becomes the legal employer for a client company. A staffing agency just connects employers to job seekers. Most don’t handle the work of being an employer.
Many of these agencies are not set up to provide HR training or handle payroll services properly. They may not understand all the rules about risk, health insurance, and benefits. In most cases, they won’t be willing to take on all the responsibilities of being an employer. But your expeditor, the EOR, can!
Some key differences:
In general, EORs take on the legal and compliance burden while staffing agencies offer hiring assistance.
Another term that is often mistakenly used as a replacement for EOR is PEO (professional employer organization.)
Though they may seem similar, an Employer of Record and a Professional Employer Organization (PEO) offer different services. The differences are centered around whose responsibility it is to manage the rules, and handle the insurance, and business registration.
A PEO handles HR functions for all your employees. However, an EOR hires your workers and manages them.
This means that if you work with a PEO, you still handle the employment contracts. But if you work with an EOR, they handle the contracts and you work out a service agreement with them.
This is crucial because if you don’t understand the difference, you could face legal risks. The reason is that PEOs and EORs deal with risks differently.
A PEO is more like a limited partner. You still take on all the responsibilities and risks. But an EOR is the legal employer of your workers. This means they take on the risks. Also, any problems with employment contracts are the EOR’s problem, not yours.
PEOs can’t always fully manage your developers, like when hiring in another country. Every region has its own rules that you must follow, and some PEOs can’t do this for you.
However, an EOR deals directly with your employees, so they are more involved in managing payroll compliance and other legal concerns. So, if you want to spend less time worrying about following rules, an EOR is usually better than a PEO.
When you hire a PEO, you also pay for their insurance and your own. But with an EOR, your staff is covered under the EOR’s insurance. EORs know how to handle all the insurance rules, especially health care, which they also offer to your team.
If you hire a PEO, you still need to register your business in every place you operate. This can be a difficult process and expensive, plus you would need to understand the corporate law in each location.
But EORs are already registered in the places they offer services. This means you don’t need to register your business in different countries to have local staff in those countries.
Struggling with International Hiring? TurnKey is Just One Call Away to Solve Your Global Staffing Needs.
Choosing an EOR is like picking the perfect teammate for a game. Here’s what you should look for:
By now, you are likely wondering how much it might cost to hire a developer with the help of an Employer of Record (EOR). Of course, there is not a one size fits all answer as the costs depend on the model and services. Three popular pricing models are:
Remember, the total cost to hire a developer can include other things too. You might need to pay to find the right person for the job. There could be costs to your own team while they wait for the new hire to start.
When an EOR checks all these boxes, it’s a good sign they can support your global workforce well and help you grow your tech business!
Since EOR is part of a bunch of handcrafted services, our mission is to help you make your team’s international growth seamless.
Are you thinking about hiring a full-time software development team? At TurnKey, we make it simple. Here’s how our process works:
Like everything, there are some disadvantages to using EOR services, but here at TurnKey we have found a way to diminish them. For instance:
But don’t just take our word for it…
Here’s what our clients say!
TurnKey played a pivotal role in scaling up a company called R1. We helped them onboard a powerful team of 40 full-time staff spread across various functions like UI/UX design, DevOps & Infrastructure, Implementation & Integration, and Customer Support. The result was a significant boost in productivity, as evident from their impressive performance – 51 product updates per year. This high-paced work rhythm equates to an almost weekly release cadence. As the folks at R1 put it when asked about their EOR team members, “We often forget they’re not in the same building as us.”
To sum up, we’re ready to find a solution for your needs within EOR services and beyond.
Using an Employer of Record (EOR) is often easier. Opening an entity requires understanding local laws, regulations and setting up operations. An EOR already has all that in place.
Yes, an EOR can help onboard contractors. They manage the hiring and payroll process, ensuring compliance with local laws.
EORs are present in many countries worldwide. TurnKey has all mechanisms in place to hire talents in the 16 countries, including: US, Mexico, Colombia, Brazil, Costa Rica, Guatemala, Ecuador, Uruguay, Ukraine, Romania, Poland, Bulgaria, Czech Republic, Latvia, Lithuania, Estonia.
Tech talents in some countries like Mexico prefer official employment to direct contract, so having the option to work through the EOR model means a bigger chance of them joining your crew.
EOR costs can vary. They usually charge a percentage of the tech employee's salary, often between 10% and 40%. This includes taxes, insurance, and service fee.
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