By tapping into international markets, global companies unlock access to exciting new growth opportunities. To quickly scale and carry out specialized projects, businesses often leverage the expertise of independent contractors, avoiding the long-term commitments that come with permanent hires.
A best-in-class Employer of Record (EOR) can help companies of all sizes navigate the complexities of global hiring, reducing business expenses and eliminating the need to establish legal entities. Let’s delve into the benefits of hiring independent contractors — and how an EOR can help maximize their potential.
Why do some companies hire independent contractors instead of full-time employees?
Companies often opt to work with independent contractors instead of hiring employees because it’s a flexible solution to complete specific projects, and ultimately simpler and more cost-effective. The difference between independent contractors vs. full-time employees lies in the nature of the working relationship and the degree of supervision and control over the professional and the work that’s performed. With independent contractors, companies are not responsible for withholding taxes or covering employment benefits like workers’ compensation, insurance, Social Security, or Medicare taxes (in the U.S.).
There are benefits to being an independent contractor as well. Self-employed professionals — including global contractors and U.S.-based 1099 workers — enjoy greater flexibility in managing their work and schedules, along with advantages like diverse opportunities, tax deductions, and improved work-life balance.
What are the benefits of hiring independent contractors?
The advantages of hiring independent contractors include access to top international talent and specialized skills, cost savings, simplified scalability, quick expansion into new markets, and a competitive edge.
1. Increases access to top international talent and in-demand skills
Hiring contractors allows companies to quickly tap into specialized skills for short- and long-term projects. By bypassing employment constraints, businesses gain access to a broad talent pool, unlocking opportunities for new projects and growth that may have previously seemed unattainable.
2. Reduces operational costs
Hiring independent contractors is often more cost-effective than employing full-time staff, particularly for short-term projects. This helps reduce operational costs, as companies are not required to provide benefits such as paid time off or health insurance.
Independent contractors also allow companies to test new markets without the expense of hiring permanent employees. A best-in-class Employer of Record like G-P can help companies build and manage global teams — quickly and compliantly — without setting up new entities.
3. Enables flexibility and scalability
Independent contractors enable companies of all sizes to quickly scale up or down to meet the demands of the business. For example, small businesses can swiftly expand to tackle large projects and scale back once the project is completed. This also unlocks access to international opportunities, enabling companies to establish a presence in emerging markets.
4. Simplifies taxes and compliance
Companies only need to report payments to independent contractors, simplifying the tax process. Companies are not responsible for filing tax forms or withholding income tax for independent contractors. Each contractor manages their own taxes.
Working with an EOR to engage independent contractors also ensures seamless compliance abroad. Companies can tap into top talent worldwide without the need to establish legal entities or navigate complex, ever-changing international labor laws.
With a best-in-class EOR like G-P, companies can also leverage AI tools like G-P Gia. Powered by our proprietary knowledge base, Gia is the smartest AI global HR advisor that provides nuanced advice and expert insights to help you make informed decisions. Whether you need guidance on local labor laws or help updating employment contracts, Gia provides expert global employment and compliance guidance backed by verified, expert reviewed sources.
5. Reduces the need for supervision
Contractors work under a specific independent contractor agreement that outlines objectives, timelines, and payment terms. With full control over their schedule, location, and how they perform their work, contractors require less oversight, allowing you to focus on more critical tasks.
However, this is not just a benefit, but a requirement when working with independent contractors. An increased degree of control over a contractor can lead to worker misclassification. For example, imposing specific work schedules may suggest an employer-employee relationship. Companies can face hefty fines or penalties if a misclassification claim arises.
6. Provides a competitive advantage
Hiring independent contractors allows businesses to access specialized skills and respond more quickly to market demands, both domestically and internationally. For instance, independent contractors typically require a shorter hiring process, leading to faster time to market. All these benefits give companies an edge over their competition.
7. Offers new insights and perspectives
Hiring independent contractors brings fresh ideas and perspectives, challenging conventional ways of thinking. This is particularly valuable when entering new markets. International contractors, with their local market knowledge, can provide critical insights for a successful expansion.
Hire and pay independent contractors with G-P Contractor.
With our Contractor offering, companies can easily hire and pay contractors in 180+ countries. Our new self-serve portal enables you to streamline the hiring and invoicing process with just a few clicks.
Pay contractors seamlessly in your preferred currency through options like digital wallets, ACH, bank transfers, wire transfers, or credit/debit cards. Real-time tracking ensures complete visibility into payments and invoices, maintaining accuracy. Plus, with our EOR solutions, you can also convert contractors to employees — quickly and easily — without the need to establish legal entities.
