The Contractor-EOR Dilemma: When Is It Time to Substitute Contractors for an EOR?


Global talents are now more accessible than ever with workforce options like employers of record (EORs) and independent contractors. Provided they share your vision, international employees grow your client base and promote diversity and a rich workplace culture. But before you hire internationally, you need a hiring model that suits your business. If you’re eyeing talents from other countries, chances are you’ve faced the contractor-EOR dilemma. Independent contractors may meet seasonal workforce needs, handle short projects, and provide cheap labor, but they’re not ideal for every situation. Here’s when to choose EORs over contractors.

To Own Intellectual Property

Unless otherwise stated, contractors usually have a right over their intellectual property (IP). However, an EOR guarantees ownership of your employees’ creations from the start of your engagement. This means you retain trademarks, copyrights, and exclusive rights. In most cases, the employer of record recommends indirect IP assignment where they receive the property rights before transferring ownership to the hiring company.

To Entice Employees with Benefits

Apart from increasing morale and productivity, benefits promote teamwork, job satisfaction, and employee retention. However, local and international hires might not want the same benefits–priorities differ with individual living standards and cultures. By advising on the expected benefits, your EOR ensures compliance while portraying your company as an employer of choice.

To Ensure Data Security

Addresses, bank information, academic qualifications, insurance details; you name it, safeguarding employee data is your responsibility. If this information falls into the wrong hands, you compromise data accuracy and employee privacy and put your reputation on the line. Ordinarily, independent contractors work on separate platforms, exposing company data to unauthorized parties. However, EORs provide company-approved systems for easier data tracking and protection. The employer of record also implements additional security measures, including encryption, and access restrictions.

To Get Investor Funding

In addition to buying assets, funding boosts your working capital and allows debt restructuring. But before an investor finances your ventures, they need to be sure of your credibility. Thanks to their status as a legal entity, EORs offer access to top talents without the hassle of registering your company in a foreign country. By delegating legal duties to an employer of record, you clear investor doubts and position your business for financing.

What Do You Gain from Our EOR Partnership?

Now that you decided to substitute contractors for employers of record, it’s time to find a dependable EOR. With nextSource, you’re sure of the complete package, from vetting and onboarding to tax reporting and payroll management. Are you still conflicted between an independent contractor and EOR hire? Book a consultation to know what’s best for your business.