Guide: Hiring and Paying Remote Software Developers Abroad
As the global economy continues to expand, more and more businesses are looking to hire remote software developers abroad. While this can offer a wealth of new opportunities, it can also be a daunting task for employers who are unfamiliar with the hiring process and laws in other countries.
There are a few things to keep in mind when hiring remote workers abroad. First, companies can choose to hire remote workers as contractors or employees, depending on their needs. It's important to ensure compliance with local laws when hiring either type of worker. Each country has its own criteria on who it considers to be a contractor versus who is an employee.
This guide will explore how to hire workers as contractors, how to hire workers as employees, as well as popular global compliance and payroll platforms that offer Employer of Record services. These global Employer of Record platforms allow employers to employ staff in countries where they do not currently operate without the need to set up a legal entity.
How to hire remote workers as contractors
Hiring remote contractors as opposed to employees can be an attractive option for employers.
One of the key benefits of hiring remote contractors is that they are generally responsible for their own taxes and invoicing. This can make payroll and compliance easier for businesses, as they don't have to worry about withholding taxes.
Contractors are also a great option for companies that need someone who can hit the ground running or work on a short-term project. Many contractors have significant experience in their field which means they do not need much training to get started on a project. If it is a one-off project or short-term work, it might make sense to hire contractors as well.
However, contractors might not be the best choice in all cases. Because of the more informal tenure associated with contractors, companies might struggle to build a cohesive work culture. It's also challenge to integrate contractors into the existing work culture, unless steps are taken to treat them in a similar way to employees.
It is also important to be aware of the local laws pertaining to contractors. In some cases, it may be illegal to classify a worker as a contractor when they should legally be classified as an employee.
Failing to comply with local laws can lead to significant penalties, so it is important that companies do their research before hiring anyone remotely.
In the US, for example, state and federal agencies like the IRS often carry out audits to ensure workers are appropriately classified as independent contractors.
Where to find contractors
There are plenty of websites where companies can hire contractors. Some platforms pride themselves on rigorous vetting procedures, whereas others have low barriers to entry, placing the onus on the employer to carry out vetting procedures.
Hiring remote software developers can be time-consuming and costly. Here are three great options to consider:
If you are willing to hire and vet software developers yourself, Upwork could be a good option. You will post a job description and software developers will bid on the job. You will then select candidates to interview before you hire a contractor. You either pay a flat monthly fee or a processing fee per hire, depending on the plan you have selected.
If you hire through UpWork, you let UpWork manage the contractor relationship. You are not contracting the software developer directly.
If you wish to take the relationship off Upwork, you will have to either pay a conversion fee or wait two years. After the two-year period lapses, you are entitled to leave the platform and manage your payroll and contracts yourself. This will save you platform fees and allows you to redefine your relationship with your contractor on your own terms.
Upwork can often be a race to the bottom, as many businesses choose to hire the cheapest candidate. But it’s a good option if you’re on a tight budget and don’t need to work with an expert developer.
Toptal is a great platform to use if you’re looking for experts in your field. Toptal claims to only match companies to the top 3% of freelancers. However, this makes Toptal an expensive choice with freelancer rates starting at around $60 per hour, but fees between $150-$180 are not uncommon.
As with UpWork, Toptal's contractors are not managed by you directly, nor are they your employees.
You also need to pay a refundable $500 deposit which you get back if you do not hire a freelancer through them. If you do, it is added as credit to your account.
If you are looking for value for money and quality, ReadyTal is a great option to consider. Our candidates undergo rigorous vetting processes before they are added to our platform. We meet each candidate personally to verify their identity and language skills, and send them personalized coding tests to ensure their tech skills are up to scratch. We then match developers with companies and only charge a fee after a successful placement.
ReadyTal is a great place to hire both remote contractors and remote employees depending on your needs.
By going with ReadyTal, you will save time and money on the first stages of vetting, and hire pre-screened developers in the time zone you're seeking quickly. We offer the best of both worlds, providing you with both value for money and quality candidates.
How to maintain good relationships with contractors
Contractors can be a great asset to any business. They bring with them a wealth of skills and experience, and can often be more cost-effective than hiring a full-time employee. However, freelancers are also individuals, with their own needs and preferences. As such, it's important to remember that there is a person on the other side of the contractor-employer relationship.
Here are some tips for maintaining good relationships with freelancers:
Remember that contractors are people too. Just like your employees, they deserve to be treated with respect and courtesy. Make small talk, be respectful of boundaries, and communicate frequently.
Ensure that guidelines and expectations are clear from the start. This will help to avoid miscommunications down the line. Both parties should agree on a timeline, budget, and scope of work. The contractor should also be aware of any special instructions or preferences. By taking the time to establish clear guidelines, you can help to ensure a smooth and successful contractor relationship.
Offer feedback promptly, but always start on a positive note. The feedback sandwich (i.e., starting with a positive comment, followed by constructive criticism, and ending with another positive comment) is a great way to deliver feedback effectively while maintaining a positive relationship and showing you value the work your contractor is doing.
Pay all invoices promptly. Freelancers rely on timely payments to maintain their livelihoods, so make sure you're not putting them in financial hardship by paying late. This may sound obvious, but a third of contractors say they’ve been paid late at least once. Getting the basics right is key to a long, fruitful relationship with your contractor.
If you’re struggling with payroll, check out the global EOR platform section below. There are some great one-click options for managing contractor payrolls.
How to hire remote workers as employees
When hiring remote workers, there are two primary ways to engage them - forming a legal entity in the employee’s country of residence or hiring them through an Employer of Record (EOR).
Forming a legal entity in the employee’s country of residence is a challenging, lengthy and expensive process. It is only appropriate in very limited circumstances, such as when a company plans on expanding operations in that country anyway.
When hiring an employee, the company must comply with the labor laws and regulations of the country in which the employee will be based. This can be a challenging and time-consuming process, particularly if the company is based in a different country.
An Employer of Record (EOR) can help streamline this process by assuming compliance responsibility for the employee. In addition, an EOR can provide valuable support services such as payroll, benefits administration, and compliance assistance. For companies looking to hire remote workers quickly and efficiently, working with an EOR is often the best solution.
Forming a legal entity
When expanding their business into a new country, companies often face the decision of whether or not to form a local legal entity. There are several factors to consider when making this decision, including the company's hiring plans, existing experience with hiring workers in the target country, and the costs and compliance requirements associated with setting up a new entity.
Companies that are planning to expand operations globally and to hire several employees in their target country may find it more advantageous to set up a local entity. This allows them to better manage their operations and ensure compliance with local laws and regulations.
However, it is important to note that setting up a new legal entity can be a costly and time-consuming process. It can take upwards of two months to a year to set up an entity, and costs start from around $15,000.
Companies need to carefully research the requirements for doing business in their target country and make sure they are prepared to meet all the necessary legal and financial obligations. If they are not in compliance with local regulations, they may face hefty fines.
There is also always the risk that setting up a new entity may not be successful, so companies need to weigh the potential benefits against the risks before making a final decision.
Using a global Employer of Record (EOR) platform
For companies hiring remote employees abroad, using an employer of record (EOR) can be a convenient and compliant solution. EORs are third-party service providers that manage employment compliance and payroll for companies hiring in new markets.
This option is particularly well-suited for companies that are looking to try remote hiring for the first time, or don't have a physical presence in the country where they're hiring.
EORs generally create locally compliant contracts, manage on-boarding and off-boarding, ensure compliance with all local employment laws, handle payroll and tax filing, provide HR support, and are liable if any taxes are misfiled.
This comprehensive approach to managing international hiring takes the burden off of companies, allowing them to focus on their core business. And because EORs have extensive experience managing employment in multiple countries, they can provide valuable insight and guidance throughout the hiring process.
Breakdown of EORs
There are several popular Employee of Record (EOR) services available to employers interested in employing staff in countries where they do not currently have a legal entity. EORs ensure all employment contracts are compliant and usually take care of payroll and HR issues.
This allows companies to focus on working with their new employee without worrying about the legal implications of hiring abroad.
Most EOR companies also offer a contractor service for companies that want to outsource specific services like payroll, for example. Contractor services are generally a lot cheaper because the company doesn't have to act as an EOR for the contractor and compliance is less complicated.
Some of the top EOR choices include Deel, Multiplier, Oyster, Papaya Global, Remote, Lano, and RemotePass.
In this section, we have outlined how they differ in terms of services offered and price points.
Deel helps companies hire employees from 60+ countries and contractors from 150+ countries. They can also take care of onboarding, payroll, and compliance.
Deel’s key services include:
Starting at $49 per month per contractor, Deel’s contractor service allows companies to hire contractors from 150 countries ‘in minutes’.
The service also includes automatically generated locally compliant contracts, a streamlined payroll, compliance and onboarding process, and the ability to easily pay contractors in over 120 currencies.
The service also includes their one-click automated payroll system to allow companies to easily fund payroll.
Starting at $599 per employee per month, Deel’s employee service includes management of payroll, tax filings, expenses, and pension contributions. They provide a localized benefits package for employees as well.
With this option, Deel becomes the Employer of Record on behalf of the company to ensure a smooth process.
As with the contractor service, companies are able to use the automated payroll system to fund their payroll with one click.
Good to know
Deel offers enterprise solutions for large businesses. These solutions come with bespoke functionality and custom pricing. Further, VC-backed startups with less than $10m in funding get 50% off their first year as part of the startup contractor discount.
Multiplier is designed to make it easy to take care of global payroll, taxes, social contributions and local insurance policies. They offer an EOR solution and have a presence in 150+ countries. They are an all-in-one platform, allowing companies to onboard, pay and manage international employees in one place.
Their key services include:
Starting from $40 per freelancer per month, Multiplier allows companies to make use of their international payroll solution and send out multilingual contracts to freelancers.
Onboarding full-time employees
Starting from $300 per employee per month, Multiplier offers companies the opportunity to employ people around the world without having an entity in each country. This is their EOR solution.
Their fee includes multi-lingual contracts, international payroll, benefits administration and expense & leave management.
Good to know
Multiplier also offers a ‘payroll and benefits’ service for companies that do not need an EOR but want to outsource their payroll and benefits. The price for this service is available on enquiry.
Oyster offers an EOR solution that allows companies to hire their candidates based abroad within three days. Through Oyster, companies can manage both contractors and employees.
Oyster’s EOR solution is split into three tiers:
This option is free and allows companies to auto-generate compliant contracts and pay up to two contractors per year. It also comes with access to their platform, the Oyster Academy training program, and other resources like the hiring starter pack which includes customizable employment agreements.
This option starts at $399 per employee per month for hiring in low cost countries. However, hiring in high cost countries costs $699 per employee per month.
It includes all of the above, as well as compliant hiring and payroll in 180+ countries. They also offer local guidance around business protection and IP agreements, and onboarding support for employees.
This option includes all of the above as well as global compliance support, providing guidance for circumstances like country transfers, immigration, and visas. It is a custom price model.
Oyster has a solution for companies that want to manage contractors as well. Companies can hire and pay up to 2 contractors for free under their Lite plan. It costs $29 per month per contractor after that. The service includes hiring, paying, and providing benefits to freelancers and contractors around the world.
Good to know
Oyster allows startups and nonprofit organizations to hire their first employee for free for a year. Also, nonprofits benefit from 30% off the Oyster platform for up to 10 full-time hires.
Oyster also offers a global health insurance product that can be added on to any of its employer plans. This provides health coverage for all international employees under a single company plan starting at $90 per month.
Papaya Global is a global payroll platform operating in more than 160 countries and covering all types of employment.
Papaya’s key services include:
The payroll services on offer range from $20 per month per employee. This service is available to companies that have their hiring, onboarding, and compliance in order but are looking for someone else to handle their payroll. Papaya runs the entire payroll process as part of this service.
Papaya also operates as a global EOR. Prices start from $650 per month per employee. Papaya’s in-country partners serve as employers of record for your overseas employees. This includes payroll, workforce management, and compliance. They also take care of 3rd party payments including national insurance and pension schemes where applicable.
Papaya's contractor management offer costs from $25 per employee per pay cycle. It includes most of the features offered under the Global EOR package, with the exception of 3rd party payments. This is because contractors usually take care of pension schemes and other contributions themselves.
Good to know
Papaya also offers a separate ‘intelligence’ suite with prices starting at $250 for its annual plan. This includes workforce spending insights, and consolidation of data from payroll partners, EOR, and contractors to provide an overview of workforce spending in one dashboard.
Remote offers several services including EOR, global payroll, contractor management, and remote relocation.
Their key offer includes:
There are free resources on the platform to help companies onboard international contractors quickly and compliantly. Remote's contractor management offer is free, and it allows companies to use their platform to automatically generate documents, manage invoices and pay contractors with no exchange fees.
Employer of Record
Remote’s Employer of Record service is among the most affordable, starting at $299 per employee per month. Fees differ depending on the country where you choose to hire, however. Companies can employ their first employee for free. This service includes local payroll managements, benefits, taxes, and compliance, as well as local HR and legal support.
For companies that do have entities in several countries but want to outsource their payroll, Remote offers a multi-country payroll service. The service purports to reduce costs by centralizing payroll management. Interested companies can get a bespoke quote from Remote.
Global enterprises can benefit from custom solutions to suit their needs, including onboarding multiple employees at once, customized benefits and payroll administration, as well as a dedicated support team to answer queries. Interested companies can get a bespoke quote from Remote.
Good to know
Remote has special offers for startups, including offering 2 months free for all employees during the startup’s first year.
Nonprofits, charities, trusts, benefit corporations and social enterprises can also benefit from special offers, including 25% off the EOR service for up to 10 employees.
Lano allows companies to hire and pay remote employees and contractors in 150+ countries. They offer an inclusive service ranging from compliance to payroll to quick onboarding.
Their key offer includes:
Payroll starts at EUR15 per month per team member and includes access to Lano Wallet which allows companies to automate payments. Payroll for global teams can be managed via one platform. Lano also boasts the lowest exchange rates around, allowing companies to pay their teams in 50+ currencies.
Lano's EOR service starts at EUR400 per month and includes full global compliance coverage, as well as access to local tax and employment expertise.
Contractor management starts at EUR15 per contractor per month and ensures compliance, free local payment in 50+ currencies, and approving and paying invoices in minutes.
Good to know
Lano offers a lot of free features. This means companies can set up an account and get a feel for the platform before committing to a paid plan. It also boasts a fast, 7 day onboarding process.
RemotePass is designed to limit the time and paperwork burden for HR teams. It offers one-click mass payments in multiple currencies as well as automated expense reports.
RemotePass offers three key services:
The contractors’ option allows companies to hire contractors in more than 120 countries with full compliance with local laws. This option includes one-click payroll, automated onboarding, and locally compliant contracts, among other features. The monthly fee starts at $35.
This is the EOR option offered by Remote Pass. Costs start from $299 per month to hire full-time employees in 120 countries. This option includes all relevant features in the contractor’s package, but also includes health insurance and early payment features.
Enterprise is designed for larger teams that need additional security and control. Pricing is bespoke, as is the service offering. Companies with 50 or more employees will need to get in touch with RemotePass directly to explore this option.
Good to know
RemotePass offers a no-commitment free trial allowing companies to test the tool before they commit to a paid option.
Playroll is specialized in its offering. If you want to hire contractors, you’ll need to go elsewhere. But it is a great option if you wish to use an EOR service, with a presence in over 160 entities worldwide and transparent pricing structures based on the country where your employee is located.
Payroll’s key service offering is its EOR service. This all-inclusive service allows companies to hire global teams and relocate talent compliantly and without having to set up local entities.
Pricing varies based on the country where the employee is based. There are four categories with transparent pricing structures ranging from $399 to $699. There is also a fifth category of countries where the price is available on request.
But popular remote software developer countries like India, Brazil, Serbia and Ukraine are priced between $399 to $499 per employee per month, making this a competitive option.
Good to know
Playroll is backed by the VAT IT Group which is used by 50% of Fortune 500 companies. They have a global network of EOR entities in over 40 locations worldwide as a result of 20 years of relationship-building within VAT IT.
ReadyTal connects companies with the best remote software developers around the world. Our candidates come from more than 60 countries and have passed robust language and technical assessments. If you’re looking for talent, get started here.