What is an Employer of Record (EOR)?
An Employer of Record (EOR) is a company that legally employs talent in another country on your behalf. The EOR holds the local employment contract and handles payroll, statutory benefits, and tax filings in the talent’s home country, while you direct the day-to-day work. Pricing is typically a flat per-employee monthly fee on top of the talent’s salary — Deel, one of the best-known providers, lists $599 USD per month (about $820 CAD) per EOR employee as a global rate on its published pricing page.
The critical thing an EOR does not do is find people. The model assumes you have already sourced, interviewed, and selected the candidate. It also leaves performance management with you: if the hire underperforms, finding a replacement happens on your timeline and at your cost.
An EOR is the right tool when the person is already found. It converts an informal cross-border arrangement into a compliant employment relationship without you opening a foreign entity, in 150+ countries, at predictable per-seat pricing.
What is independent contracting?
An independent contractor is a self-employed professional who invoices you directly. There is no payroll, no statutory benefits, and no employment contract — just a services agreement and invoices. Engagements are usually billed per hour or per deliverable, can start within days, and can end without notice periods or severance complexity.
Contracting is the most flexible of the three models, and for the right work it is the correct answer. A three-month systems integration, a seasonal design backlog, or a fractional specialist working a few hours a week all map cleanly onto contractor terms. The structure rewards work with a defined scope and a defined end.
The model degrades when the relationship stops looking independent. A contractor who works full-time for one client, on the client’s tools and schedule, embedded in the client’s team, starts to look like an employee — and that is where misclassification risk lives. Contractors also legitimately serve several clients at once, so dedicated full-time attention is not part of the deal.
What is managed outsourcing?
Managed outsourcing puts sourcing, vetting, employment, and management under one roof. The partner finds the candidate, runs the vetting, holds the working agreement with the professional in their home country, and carries payroll, HR compliance, and the ongoing working relationship. You pay one flat monthly fee under a single B2B contract — no local salary to benchmark, no per-seat platform fee to stack, no recruiting fee for the search.
Obelisk Talent runs this model for Canadian companies. We are Canadian-incorporated and place pre-vetted, full-time dedicated professionals — Middle Eastern talent recruited from Egypt, Jordan, Lebanon and the wider region. Tiers are flat CAD rates: Junior $1,500–$2,000, Mid $2,500–$3,500, Senior $3,500–$5,000, and Lead $5,000–$6,500 per month, all-in — we handle HR, payroll & management, plus the sourcing, vetting, and onboarding in front of it. Placements typically reach Day-1 about 10 days after your brief, carry a 30-day replacement guarantee, and work a shifted Cairo schedule that gives 6–7 hours of overlap with Canadian Eastern time.
Managed outsourcing is distinct from Recruitment Process Outsourcing (RPO), where an external team runs your hiring funnel but the hire lands on your payroll, and from recruiting agencies, which charge roughly 20–25% of first-year salary one-time and exit after placement. In managed outsourcing the partner stays accountable for the seat staying filled.
What are the compliance and misclassification risks?
Misclassification is the main compliance exposure in the contractor model. In Canada, the Canada Revenue Agency (CRA) looks past the contract’s label to the substance of the relationship: who controls the work and schedule, who provides the tools, whether the worker carries financial risk, and how integrated the worker is into the business. A contractor who fails those tests can be found to be an employee in substance, with back-payroll obligations following.
An EOR removes that exposure by making the employment formal: the talent becomes a genuine employee of the EOR’s local entity, with statutory benefits and withholding handled in-country. Managed outsourcing achieves the same effect with a different structure — the partner holds the agreement with the professional, and your only relationship is a B2B services contract between two companies. There is no individual worker on your books to classify.
None of this is legal advice. Classification is fact-specific, the rules differ by province and by the talent’s home country, and the cost of getting it wrong is asymmetric. If you run long-term, full-time contractors today, have employment counsel review the arrangement.
How do the costs compare?
The anchor for all three models is the local alternative: a senior full-time hire in Canada runs about $140,000–230,000 CAD in year one once salary, payroll taxes, benefits, equipment, and recruiting are counted. Each remote model comes in under that number, but they get there differently — and they hide different costs.
The honest comparison is about which costs are visible. EOR pricing looks lean per seat but excludes sourcing and replacement. Contractor pricing looks lean per hour but is variable and unmanaged. Flat-fee outsourcing trades some per-seat optimization for predictability and one accountable counterparty. Judge each model on the ROI of a filled, productive seat — not on a rate card.
- Independent contractor: hourly or per-deliverable rates, no payroll burden. Lowest commitment to start; total cost scales with hours and is hard to forecast for ongoing work.
- EOR: the talent’s local salary plus a per-seat fee (Deel’s published global rate: ~$820 CAD/month), plus whatever the search cost — a recruiting agency at 20–25% of first-year salary, or your own pipeline hours.
- Managed outsourcing: one flat monthly fee — Obelisk’s tiers run $1,500–$6,500 CAD by seniority — covering the search, HR, payroll, and management. No recruiting fee, no salary negotiation, no platform fee.
Which model fits which situation?
Canadian companies are not choosing between these models in a vacuum. CFIB reports that 53% of Canadian SMBs cite labour shortages as a major barrier to growth (April 2025). The real decision is which part of the problem — finding, employing, or managing — you want to keep in-house, and which you want a partner to own.
| Situation | Best-fit model | Why |
|---|---|---|
| You already found the person | EOR | The sourcing is done. An EOR employs your chosen candidate compliantly — paying a partner to re-run a finished search adds no value. |
| You have an open role and no pipeline | Managed outsourcing | Sourcing, vetting, employment, and management under one contract. An EOR alone leaves the hardest part — finding the person — with you. |
| You need someone for a 3-month project | Independent contractor | A scoped deliverable with a defined end date is what contracting is built for; the genuine independence keeps misclassification risk low. |
| You’re testing a new function | Managed outsourcing | Full-time dedicated attention without building hiring infrastructure for a function you may unwind; a 30-day replacement guarantee limits the downside. A contractor works if the test is project-shaped. |
| You want zero employment admin | EOR or managed outsourcing | Both move payroll, benefits, and filings to a third party. Choose by sourcing: EOR if you bring the candidate, outsourcing if you bring only the role. |
| Budget is per-hour and variable | Independent contractor | Invoicing maps directly to hours and deliverables. EOR and managed outsourcing both assume a full-time monthly commitment. |
How do you decide in one pass?
A reasonable test: if you can name the person, you need an EOR. If you can scope the project, you need a contractor. If you can only name the role, you need a partner who will find the person, engage and pay them, and keep the seat productive — that is managed outsourcing, and it is the gap Obelisk is built for.
The models are not rivals, and a growing company will likely use more than one — contractors for genuine projects, an EOR for the standout candidate a founder met directly, and a managed partner for open roles where running an international search in-house is not a good use of anyone’s week.