Offshore payroll services

Time & cost saving

If managing payroll internally, your accountants would have to cover salary calculations of both in-house and offshore development teams. This means hiring and training additional staff to handle the workload. On top of that, your payroll experts would have to learn the specifics of the foreign payroll rules, regulations, tax systems, etc. to stay compliant.

Getting offshore payroll services, on the other hand, can help you cut costs by avoiding the need to recruit more payroll experts. Instead, you’ll pay a fixed monthly fee for a bundle of accounting services. Plus, it frees up time for your internal team to prioritize core financial activities. 

Compliance & risk mitigation

When hiring developers abroad, it’s vital to ensure your tech business follows all the local laws, especially regarding payroll and taxes. Cooperation with a local payroll provider can shield your company from legal issues and fines, as they know the ins and outs of the local tax laws, wage regulations, and compliance requirements, constantly staying updated on any changes.

Data security

Payroll deals with sensitive employees’ information like social security numbers, salaries, and bank details, which can make tech entrepreneurs reluctant to offshore outsourcing payroll. However, trusted payroll vendors prioritize security, investing in cloud-based servers, data centers, and cyber security software. This ensures maximum protection from embezzlement, identity theft, and other risks.

Effective scalability

Those tech companies looking to rapidly expand their development team abroad often have growing and complex payroll needs. Using offshore payroll services can help them handle fluctuations in employee numbers, benefit plans, and tax requirements, providing scalability without the need for extra internal resources or infrastructure. This approach has been embraced by notable tech companies like People.ai, BigCommerce, ThredUP, Sift, and Dotmatics when expanding development teams abroad.

Inaccuracy & errors

There are cases when vendors delegate payroll management to junior staff without proper monitoring and reviewing of their work. As a consequence, payroll errors and payslip discrepancy may occur, resulting in salary delays for your software developers. When opting for external payroll services, make sure your vendor has a professional team of accountants with extensive experience in managing global payroll and a multilevel accounting check.

Extra expenses 

Some payroll outsourcing firms may charge extra for services like offboarding or benefits management and/or add costs for additional payroll processing services that your company doesn’t necessarily need, leading to overspending. To keep a lid on expenses, it’s wise to team up with payroll processing companies that operate on a pay-as-you-go basis. This way, you only pay for the services you actually use.

Delayed response time 

Working with a third-party vendor isn’t always smooth sailing, as there are lots of things to negotiate to sync up both parties’ processes. Maintaining fruitful communication and dealing with urgent matters asap can be tough, especially with possible time differences. Therefore, opt for professional payroll vendors who offer a 24/7 dedicated account manager support to navigate you through payroll, legal, and other operational matters.

It all begins with identifying your payroll needs and selecting the right service provider. Then you’ll get initial consolations, covering services, pricing model, pay frequency, cooperation terms, timeframes, guarantees, and other details.

Once the terms are agreed upon, the offshore payroll provider collects employee data, sets payroll schedules, configures tax withholding preferences, and establishes secure access for the client to input or review payroll information. From there, the provider starts payroll processing and other tasks outlined in your contract. Most service providers also offer ongoing support, reporting, and analytics.  

Keeping payroll management in-house means extending your team with experts who possess narrow knowledge of the payroll, tax, and compliance specifics of a particular country. This results in additional labor spending. Meanwhile, an offshore payroll processing company already has experienced specialists who are keen on all the intricacies of the local market and have up-to-date knowledge of the latest trends and practices in the field.

Payroll and compliance offshoring also increases the chances of keeping your payroll error-free as opposed to in-house one. Complying with all the local norms can be tricky and time-consuming, sometimes resulting in overspending or fines if doing it incorrectly.

On the flip side, keeping payroll functions in-house grants more control and allows for instant alterations in case of policy updates or restructurings. However, getting a payroll offshoring solution liberates your team from work overload, allowing you to focus on strategic tasks.  

• Qualification & experience: Choose a vendor with experienced payroll and legal professionals in the tech industry. Also check out their case studies, client reviews, and testimonials.
• Pricing structure: Consider offshore payroll companies providers with predictable pricing and detailed invoices to avoid hidden fees and therefore eliminate the risk of overpayment. 
• Technology & security: Check if your vendor uses modern payroll processing software that is reliable and capable of handling your payroll requirements. Additionally, make sure they apply security protocols, encryption standards, and comply with data privacy regulations to safeguard employee information.
• Guarantees: If your vendor provides compensation for mistakes or missed deadlines, has outlined timeframes, and offers pricing transparency, they are a green flag.

No business growth is possible without a powerful team of A-players. And, in order to legally employ such software developers, some tech companies see only two possible solutions:

• establishing their legal entity and managing the employment, payroll, tax payments, and compliance on their own 
• or outsourcing these operations to multiple vendors. 

The good news is that there is a viable alternative — an Employer of Record (EoR) service that allows tech businesses to employ talented software developers without setting up a legal entity and receive all the needed operational support in one place.

Alcor provides an Employer of Record service in Latin America and Eastern Europe. Unlike other EoR vendors, we focus on the technology field, possessing niche knowledge of recruiting and employing Senior, Lead, and C-level software developers on the best terms. We handle everything from HR payroll, onboarding, and employee termination to tax payments, legal compliance, documentation and employee benefits management.

We guarantee:

• 100% compensation for fines caused by our mistake
• 20%-40% cost reduction in comparison with outsourcing
• 100% transparency, with direct salaries instead of rate cards
• Key account manager to assist you in all matters
• No third parties as we do everything in-house
• 2.5 years is the average tenure of our hires