For companies that are considering outsourcing the employment of these foreign workers, there are two primary choices available: hiring independent contractors or hiring employees administered by a GEO. 

Each has advantages and disadvantages that can influence this decision, depending on the kind of relationship that is most beneficial to meet business objectives while reducing compliance risks. Additionally, the regulations of the host and home country need to be considered as they may approach employee classification differently.

Advantages & Disadvantages of Hiring an Independent Contractor

If a company hires independent contractors there are certain advantages: 

Reducing the risk of permanent establishment: Since an independent contractor is not strictly under the control of the company, there is less chance of establishing a ‘business presence’ through their activities.  Otherwise, certain tax liabilities could be triggered through the local rules on permanent establishment. 

Reduces compliance problems with local employment laws:  If the independent contractor uses a management firm or umbrella company, the company is insulated if there are any issues that arise with compliance. 

Low administrative burden:  The company does not have to use its own resources for understanding and meeting local requirements, such as payroll, tax withholding, and statutory benefits.

The disadvantages of using independent contractors include: 

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