Article
13 min read
How to Hire & Manage International Contractors in 2025
Contractor management
Author
Michał Kowalewski
Last Update
May 02, 2025
Published
May 17, 2024
Key takeaways
- Hiring international contractors offers significant advantages, including access to global talent, cost efficiency, business agility, and 24/7 operations across time zones. However, it requires careful attention to compliance with different countries’ classification laws to avoid misclassification penalties.
- Successful management of international contractors involves setting clear expectations, signing localized contracts, building a collaborative environment with appropriate communication tools, providing continuous support, and establishing transparent payment terms that account for currency considerations and payment methods.
- Compliance with local regulations is crucial when hiring international contractors, specifically regarding contractor classification criteria, tax considerations, permanent establishment risks, and data protection laws, which vary significantly by country and can result in substantial penalties if not properly addressed.
The international hiring landscape is evolving fast, and in 2025, savvy organizations are capitalizing on the advantages of hiring global contractors—tapping into worldwide talent, increasing agility, and operating across time zones.
Yet, hiring international contractors entails compliance hurdles, from ever-changing worker classification laws to complex tax obligations and data protection requirements, which can quickly escalate into costly mistakes if managed incorrectly.
With Deel's expertise in supporting compliant workforces worldwide, we understand these challenges and have built our platform to support compliant contractor hiring and management in 150+ countries.
In this guide, you’ll discover clear, practical steps for hiring, onboarding, and managing international contractors — plus the essential compliance best practices, payment strategies, and workflow tools needed to stay a step ahead.
Using Deel’s cutting-edge platform and industry-leading contractor services, your business can confidently build and scale a global contractor workforce without legal or operational setbacks.
Read more: Employee Misclassification: Contractor vs. Employee
Key challenges when hiring contractors globally
Hiring global contractors offers great benefits, but also creates serious compliance risks. Here’s what you need to watch out for:
Contractor classification by country
Every country has different rules regarding contractor classification. For example, the US uses a 20-factor test, while the UK has IR35 legislation. Get it wrong, and you face back payments, tax penalties, and legal fines.
Misclassification Risks
Misclassifying employees as contractors can result in:
- Back payment of wages and benefits
- Tax penalties and interest
- Legal fines
- Damage to company reputation
Many countries have been strengthening worker classification laws, making it more important than ever to ensure proper categorization of your international workforce.
Tip: Use Deel’s misclassification assessment to mitigate compliance risks and ensure you’re classifying your workers correctly.
Global Hiring Toolkit
Tax considerations
You might need to withhold taxes from payments, register for VAT/GST, or file annual reports. Clear contracts must state who handles tax responsibilities.
Working with a global payroll provider like Deel is the best way to guarantee compliance with these complex tax considerations.
Permanent establishment risk
Your business could become taxable in another country if contractors sign contracts for you, work under your direct control, or exclusively represent your company there. This is known as permanent establishment risk.
Data protection regulations
When working with international contractors, you must comply with local and international data protection laws, such as GDPR in Europe, CCPA/CPRA in California, PIPL in China, and many more globally.
Failure to comply with these regulations can result in substantial fines and penalties.
Insurance needs
When working with contractors, you need to consider various insurance types, including general liability, professional indemnity, and cyber protection.
How to hire international contractors: Step-by-step
The first step in leveraging independent contractors is sourcing the right talent. In the current talent market, businesses can easily tap into a diverse pool of skilled professionals from all over the world.
Here’s how:
1. Define your needs
Before beginning your search, clearly define:
- Specific skills and experience required
- Project scope and deliverables
- Timeline expectations
- Budget considerations
- Time zone requirements or preferences
2. Source global talent
There are multiple channels for finding international contractors:
- Global freelance platforms: Deel Talent, Upwork, Fiverr, Toptal
- Specialized job boards: GitHub Jobs, Behance, ProBlogger
- Social media: LinkedIn, Twitter, Discord communities
- Referrals: Your existing network or current contractors
- Global hiring partners: Deel's global hiring platform
3. Screening and interviewing
When evaluating international candidates:
- Review portfolios and past work samples
- Check references from previous clients
- Conduct video interviews to assess communication skills
- Assign small paid test projects to evaluate skills
- Assess English proficiency or relevant language skills
- Consider cultural fit with your team
4. Verify legal status
Before finalizing any agreement:
- Confirm the contractor has the legal right to work in their country
- Verify that they have any required business licenses or registrations
- Check if they have professional liability insurance, if relevant
- Consider running background checks where legally permitted
Doing background checks with Deel has always been good to us! The process is very straightforward. I can easily send a request and receive the results right away. Fast and convenient service!
—Cynthia Le,
Program Manager, Reddit
Background checks
5. Hire compliantly
To avoid legal risks when hiring contractors internationally:
- Ensure correct worker classification based on local laws
- Use localized contracts that comply with regional regulations
- Include clear terms on intellectual property, confidentiality, and termination
- Specify payment details and tax responsibilities
- Document the independent nature of the relationship
For complete compliance protection, consider Deel's Contractor of Record service, which handles classification, contracts, payments, and tax filings while eliminating misclassification risk in 150+ countries.
Deel Contractor of Record
6. Onboarding process
Create a structured onboarding process:
- Provide clear project briefs and expectations
- Share access to necessary tools and resources
- Introduce them to key team members
- Schedule regular check-ins during the first few weeks
- Create documentation of processes and standards
- Set up secure communication channels
With Deel, you can cut onboarding time in half through automated background checks, equipment provisioning, and a streamlined setup process—all manageable with just a few clicks.
How to effectively manage your team of contractors
Effectively managing remote contractors involves more than supervising their tasks. It’s important to integrate them into the team and provide the necessary support they need to be productive, engaged, and secure. Here’s how to successfully manage a team of international contractors.
Set clear expectations
Before the work begins, provide detailed briefs outlining the project scope, deadline, and specific requirements. It’s important to communicate the expected quality of work. Where possible, you should use examples or benchmarks to set clear targets.
Define the role explicitly, especially when contractors need to interact with internal teams. This will help prevent confusion and streamline communication between employees and contractors.
Once the contractor has started their work, establish a routine for gathering updates and tracking progress. This is your opportunity to make any necessary adjustments. From here, you can set up a structured process for timely and specific feedback to help contractors understand areas for improvement or strengths.
Deel’s self-serve HR platform can help you empower your contractors. Here, they can upload documents, track payments, manage time off and expenses, get tax help, and handle administrative tasks independently. This autonomy increases contractor satisfaction while reducing your team’s workload.
Build a collaborative environment
There are many ways to build a collaborative work environment. A great place to start is using communication tools like Slack, Microsoft Teams, or Zoom.
Project management software like Asana, Trello, or Monday.com can be used to monitor project timelines, assign tasks, and manage deadlines clearly and efficiently. This software can often be integrated with document sharing tools like Google Drive or Dropbox, which allow contractors to work collaboratively.
When working with international contractors, always be aware of and respect cultural differences in communication styles to avoid misunderstandings and enhance working relationships.
Boost collaboration and culture with Deel HR plugins for Slack that reduce context-switching and strengthen team connections. These seamless integrations include PTO management, recognition systems for kudos, referral programs, organizational charts, and more—all accessible within the communication tools your team already uses.
HR Plugins
Provide continuous support and supervision
Help your contractors feel welcome with a thorough introduction to how your company works and who’s on the team. Before they start, you should always ensure they have access to all the tools and software needed to do their job effectively.
Once they’ve joined, be clear about how you’ll measure success in their role and regularly check in on these metrics. Finally, give them a main point of contact—someone they can turn to with questions, who’ll also monitor their progress and help them become part of the team.
Retain top talent and foster a high-performance culture with Deel Engage, our AI-powered people suite. This comprehensive platform allows you to manage development, performance, and training programs all in one place, making it easier to support your international contractors.
Deel Engage
How to pay independent contractors
Establishing transparent and fair payment terms upfront is crucial for a positive working relationship with contractors. Clear terms align both parties on payment schedules, amounts, and conditions, preventing disputes and confusion.
1. Discuss payment terms
Firstly, you’ll need to agree on payment terms with the contractor. Here are some common options:
- Fixed-rate payments: Agree on a fixed rate for the project scope, paid in regular cycles, suitable for predictable workloads
- Advance payments: Use advance payments to secure commitment, typically ranging from 10% to 50% of the total fee
- Milestone payments: For long-term projects, release payments as project stages are completed to maintain momentum and provide steady income
- Final payments: Specify when final payments are due, usually upon project completion, to prevent delays
- Late payment terms: Review contract terms for late payment fees—delays can trigger penalties or interest, and strain relationships
What types of payment contracts does Deel offer?
- Fixed rate contracts: Perfect for ongoing work with predictable workloads, allowing payments on a regular schedule (weekly, bi-weekly, or monthly)
- Pay-as-you-go contracts: Ideal for variable workloads, where you pay based on actual hours worked or tasks completed, offering maximum flexibility
- Milestone contracts: Designed for project-based work where payments are released upon completion of predefined project stages, ensuring deliverables meet expectations before payment processing
2. Agree on a payment currency
When paying international contractors, you’ll need to decide whether to pay in:
- Your local currency
- The contractor’s local currency
- A stable international currency (USD, EUR)
The choice affects who bears the exchange rate risk and may impact your contractor’s willingness to work with you.
With Deel, we offer 15 flexible payment options. Your team can withdraw their earnings in 150 currencies, including Crypto, Wise, Revolut, and many more. And the best part is that you don’t have to lift a finger.
3. Choose your payment method
Common options for paying international contractors include:
- International wire transfers: Traditional but often expensive and slow
- Payment platforms: PayPal, Wise, Payoneer
- Cryptocurrency: Increasingly popular, but has regulatory considerations
- Global payroll solutions: Deel's platform offers multiple payment options in 120+ currencies
Deel offers flexible payment processing options for both you and your client. You can each select different payment methods based on your preferences. For instance, while your client may pay via international wire transfer, you have the freedom to choose your preferred withdrawal method—whether that’s a bank transfer, PayPal, Payoneer, or even cryptocurrency—and in whatever currency you desire.
Read more: How Deel can help you streamline contractor payments
Deel Global Payroll
Ready to transform how you hire and manage international contractors?
Hiring talent abroad shouldn’t come with legal risk or manual admin. Deel makes it easy to compliantly hire, pay, and manage contractors in 150+ countries. Our platform automates HR tasks, ensures on-time payments, and helps mitigate misclassification risk, so you can expand your team without adding complexity.
With unmatched compliance coverage and flexible payment options, Deel is the trusted partner for thousands of businesses managing global contractors.
To see how Deel helps you build a compliant, efficient, and scalable international workforce, request a demo today.
FAQs
What is an independent contractor?
An independent contractor is an individual or entity that provides services to another business or individual under specific terms outlined in a contract, while maintaining control over how they perform their work.
Independent contractors operate under their own business or trade name, offering services based on the terms specified in a contract or freelance agreement.
Unlike traditional employees, independent contractors are autonomous. They use their tools and methods, set their schedules, and are responsible for their business expenses and taxes.
What are the benefits of hiring international contractors?
Hiring international contractors gives businesses access to global talent and specialized skills not available locally. It’s often more cost-effective than hiring employees, especially from regions with lower living costs.
Contractors also provide flexibility to scale teams quickly as needs change. They bring valuable local knowledge when expanding into new markets. And with team members in different time zones, businesses can also maintain round-the-clock operations.
What is the difference between contractors and employees?
The distinction between contractors and employees typically centres on autonomy and integration. Contractors generally maintain independence in how they perform work, use their own equipment, set their own schedules, and serve multiple clients simultaneously. They’re responsible for their taxes and business expenses, don’t receive employment benefits, and aren’t covered by most labor protections.
Conversely, employees work under company direction, use employer resources, follow set schedules, and typically work exclusively for one organization while receiving benefits and legal protections that vary by country.
Why does proper employee classification matter?
Understanding the differences between contractors and employees is crucial to avoid legal disputes, financial penalties, and reputational damage. Many countries have strengthened worker classification laws, making proper categorization of your international workforce more important than ever.
More resources
About the author
Michał Kowalewski a writer and content manager with 7+ years of experience in digital marketing. He spent most of his professional career working in startups and tech industry. He's a big proponent of remote work considering it not just a professional preference but a lifestyle that enhances productivity and fosters a flexible work environment. He enjoys tackling topics of venture capital, equity, and startup finance.
