Employer of Record or Nearshore teams: Are all remote hire and collaboration models equal?

Curated by: Sergio A. Martínez

Selecting the best for you

• First, think of your company’s needs. What kind of software development do you need? Do you need someone with experience in a specific programming language or platform? If you have a good understanding of this, you can start to narrow down your search.
• Although cost is an important consideration, the quality of the work will make a difference, so going for the cheaper option might not always be advisable, especially with the type of expertise required to develop complex software products that might need a trustworthy team behind it.
• And finally, don’t forget to factor in language barriers. Unless you’re looking for talent in a country where English is widely spoken, you’ll want to make sure the developers you’re considering are fluent in the language your company uses and ease up communication between everyone.

With these factors in mind, you’ll be well on your way to finding the best talent for your software development needs, with a few options out there that are important to understand. For example, you might see the term “Employer of Record” (EOR), alongside alternatives like offshore outsourcing, or Nearshore augmentation. So, if this is your first time giving it a go working with an outside team, then knowing what to expect and how to approach each of these options is the best course of action for you, so let’s break down what they offer you and what advantages you might get with either approach. 

What kind of team do you need to set up?

Any company in the business of developing software knows that having talented developers on staff is crucial to success, which is why many companies choose to tap into a global pool of talent. Developers from different parts of the world can bring a unique perspective to the table, which can help create better products and can help to foster a sense of diversity and inclusion. This, in turn, can make the workplace more creative and innovative.

 Employers of Record (EOR) and Nearshore Development Companies are both business models that provide foreign companies with the ability to hire employees in another country, with a few key differences between the two. On one hand, an Employer of Record provides various employment-related services to client companies which can include payroll, benefits administration, workers’ compensation, and compliance with employment laws, typically working with companies that do not have their own human resources departments or that outsource their HR functions. An EOR is responsible for hiring, onboarding, and paying employees on behalf of a client, and this type of arrangement is often used when a company wants to hire employees in a country where they don’t have an established presence.

By working with an EOR, companies can save time and money on HR-related tasks, as well as help companies navigate the complex world of employment law, especially in different countries where these practices might look very different. For these reasons, EORs are an increasingly popular solution for companies looking to outsource their HR functions.

A Nearshore augmentation option, on the other hand, refers to a group of software developers who work close to their clients, typically in the same country or region, in an arrangement that offers several benefits, including improved communication, faster turnaround times, and a deeper understanding of the client’s needs. Nearshore development teams are often used for complex projects that require close collaboration between developers and clients, taking advantage of time zone differences and tapping into a talent pool that may be difficult to access otherwise.

“One of the best things about working with a Nearshore team is the chance to build strong relationships with other professionals”, explains Luis Aburto, CEO, and Co-Founder of Scio. “Unlike working with an offshore team, you’re much more likely to have regular face-to-face interactions with your colleagues, giving you the chance to get to know them as people, rather than just co-workers. As a result, you’re more likely to develop a strong sense of trust and camaraderie.”

Expertise matters

In other words, EORs typically handle all payroll and compliance-related matters for their clients, whereas Nearshore teams focus primarily on developing software, and thus, have vastly different scopes and objectives when considered on their own. An EOR typically acts like the middleman between a company and the talent pool in another territory, locating employees to work for your organization, and taking care of everything on the more legal side. Beyond that, things like career paths, growth, and training are still the responsibility of the company hiring these services.

A Nearshore company, however, is more like a partner, whose expertise and roster of developers and engineers are ready to integrate with your project, understand it from top to bottom, ready to share knowledge to arrive at the best solution possible for any challenging product development. And this comes from the experience and growth that we share as part of our organization’s culture, offering the people with the perfect skill set from the get-go to join your team right away.

“Any software development project comes with a certain amount of risk. There’s always the chance that something will go wrong, or that the finished product won’t meet the client’s expectations. That’s why it’s so important to seek out experienced people who can help to minimize the risk and ensure a successful outcome”, says Adolfo Cruz, Partner and PMO at Scio. “Seasoned developers have seen it all before, and they know how to anticipate and avoid a problem and have a wealth of knowledge and technical expertise that can be vital in ensuring the success of any project. And more importantly, they also know how to communicate with other members of the development team and can provide valuable insights throughout the project.” 

In that sense, looking for a Nearshore partner that not only is close enough geographically to ensure synchronization and easy collaboration between teams, but also can offer tailor-made teams for every challenge of your product development is the best option to choose. This is more difficult to achieve when setting up a remote office through an Employer of Record, whose advantages lie in creating branches or new offices overseas, but still require bringing a team up to speed in matters of preparation and skill sets. Ultimately, the right partner for your business will depend on your specific needs and goals. But by understanding the difference between these two types of providers, you can make an informed decision about which one is right for you.

The Key Takeaways

• Working with remote talent is becoming the better option these days, and you should always have your organization’s needs as a priority.
• Among all the options, Employers of Record and Nearshore development companies are some of the most popular, and they have key differences.
• An EOR lets you set up a remote team and take care of the HR side of things, making it easy to navigate the compliance rules of another country.
• While a Nearshore partnership offers developers and engineers ready to join and collaborate with a project, ready to offer experience from the get-go.

Scio is an established Nearshore software development company based in Mexico that specializes in providing high-quality, cost-effective technologies for pioneering tech companies. We have been building and mentoring teams of engineers since 2003 and our experience gives us access not only to the knowledge but also the expertise needed when tackling any project. Get started today by contacting us about your project needs – We have teams available to help you achieve your business goals. Get in contact today!