Although outsourcing is legal and common in a lot of countries, the Mexican government recently decided to pass a series of reforms focused on combating some undesirable practices that have taken place.
A lot of companies that hire Mexican talent are asking if this new law will affect them, and the answer is that you have nothing to worry about if you use Workana to hire independent professionals who live in other Latin American countries.
What Does the Outsourcing Law in Mexico Say?
Outsourcing is when a company legally hiring the contractor isn’t the same as the service provider. It tends to be a good choice for projects that are necessary but ancillary to achieve the company’s main objective like human resources, accounting, and maintenance.
The main goal of outsourcing is to save time and money on hiring staff that isn’t directly related to their main field of activity. The problem is that because outsourcing isn’t very regulated, a lot of Mexican companies used outsourcing as a way to shirk tax and employer responsibilities, mainly with fake records about the job that an employee really does, what they earn, and their seniority. This has caused serious problems with tax collection and profit sharing, among other things.
Generally speaking, this didn’t disappear with the advent of the new Outsourcing Law (site only available in Spanish) in Mexico. It allows companies to solely outsource for activities that can be deemed service activities that aren’t part of the company’s objective (IT, cleaning, payroll, specialized recruitment, marketing, etc.) The law is now more restrictive, and the penalties for unjustified outsourcing are harsher.
How does the Outsourcing Law in Mexico affect me if I want to hire remote talent?
Workana isn’t an outsourcing company. It’s a remote talent consulting firm. The main difference is that we work with professionals who are registered as independent contractors on their tax forms. In other words, they fall under the category of professional service providers, not employees.
When you hire an employee, they begin a dependent working relationship with you. When you hire an independent contractor, they provide service on a per-project basis. You use the platform as an intermediary to ensure that everything is done securely for both parties. Then, you handle payment like any other expense.
Some confuse outsourcing with freelance platforms like Workana because there are three parties involved. When outsourcing, you have the employer, the contractor, and the contracting party. Workana is the contractor, the service provider or freelancer, and the intermediary is also a service provider.
What both models have in common is that the final contractor doesn’t take on any direct labor liability with the employee. In cases of outsourcing, the outsourcer pays an external company to “take care of it” while freelancers are the professionals who manage these expenses and tax withholdings in order to pay for their own benefits. This simplifies things for the company.
A few other advantages of hiring remote talent are:
- Save time and cut costs.
- A more agile workforce.
- Strengthening your company’s main activity.
- Improved quality of specialized work.
- The opportunity to add remote workers to your team during busy periods.
If you’re a foreign company looking to hire Mexican talent for full-time positions with an exclusive working relationship, you can also rely on an Employer of Record or EOR. An EOR is a local company that you hire on your behalf to manage all of the formal hiring tasks like payroll, taxes, etc. in a 100% legal manner so you don’t have to open up a branch in Mexico.
As you can see, you have plenty of secure, efficient, and safe ways to enjoy all the benefits of working with Mexican professionals. We’d like to invite you to check out and use Workana Enterprise. It’s one of the most agile ways to get your work done and make the most of in-demand talent as quickly as possible. Best of all, Workana gives you the freedom to choose the candidate that’s the best fit for your company or your project.
We look forward to working with you!
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