Expanding into Latin America offers US tech leaders access to world-class engineering talent, but the hiring model you choose can shape your success. Many companies face a key decision: use an Employer of Record (EOR) for speed and simplicity, or establish a direct legal entity for long-term control.
This article breaks down both approaches, highlights the trade-offs, and shows why Howdy.com often delivers the best of both worlds.
The case for Employer of Record (EOR)
An EOR acts as the legal employer on your behalf, managing payroll, compliance, and benefits. This model is popular for companies that want speed and low overhead.
- Fast market entry. No need to create a legal entity, which can take months.
- Compliance covered. Employment contracts, taxes, and benefits are handled locally.
- Lower upfront costs. No legal or administrative setup fees to get started.
- Scalable for testing. Useful for piloting teams in new markets without long-term commitment.
The case for entity setup
Setting up your own local subsidiary in LatAm provides full control but comes with added responsibilities.
- Direct ownership. Companies manage all aspects of HR, payroll, and compliance directly.
- Stronger brand presence. A local entity signals long-term commitment to employees and the market.
- Customization. Benefits, culture, and policies can be tailored without restrictions.
- Potential cost efficiency. In the long run, managing payroll in-house can reduce third-party fees.
Key trade-offs to consider
The right decision depends on your goals, growth stage, and resources. Leaders should weigh:
- Speed vs control. EOR enables quick hiring while entities provide autonomy.
- Short-term vs long-term. EOR is ideal for testing new markets, while entities suit companies investing heavily in one location.
- Administrative load. Running a subsidiary requires local legal, accounting, and HR expertise.
- Scalability. EOR works well up to a certain team size, after which an entity may make more sense.
How Howdy.com bridges the gap
Choosing between speed and control is difficult. Howdy.com provides an integrated model that balances both, so leaders don’t need to compromise.
- Seamless compliance. We manage all payroll, contracts, and benefits across LatAm markets.
- Access to elite talent. Howdy’s recruiting networks deliver the top 1% of vetted engineers.
- Retention focus. Local HR support and career growth programs ensure stability.
- Scalable growth. Whether you’re hiring five engineers or fifty, Howdy adapts to your needs.
Conclusion
Choosing between an Employer of Record and a local entity comes down to priorities. EOR offers speed, simplicity, and reduced risk, while entities provide control and long-term flexibility.
For US leaders who want both fast entry and long-term success, Howdy.com offers a hybrid solution: compliance and hiring infrastructure handled by experts, combined with deep recruiting networks and retention programs. That means your team can scale quickly and sustainably across Latin America.