Offshore Staffing Glossary

1099 vs W-2 refers to the two main US worker-pay forms: W-2 is issued to employees and reports wages plus tax withholding; 1099-NEC is issued to independent contractors and reports gross payments with no withholding, reflecting a fundamentally different employment relationship.

Attrition rate is the percentage of employees who leave a company during a given period — the inverse of retention — and a primary indicator of workforce health, hiring-and-management effectiveness, and operational continuity risk.

Benefits are non-wage compensation provided to employees — health insurance, retirement contributions, paid time off, life and disability insurance, stipends, and statutory benefits — typically 20-35% of total compensation cost in the US and wildly variable internationally.

BPO (Business Process Outsourcing) is the practice of contracting an entire business function — support, payroll, accounting, moderation — to a third-party provider that runs it end-to-end on your behalf.

Contractor vs employee is the legal classification that determines how a worker is paid, taxed, and protected — employees get W-2 wages, benefits, and labor-law protections; contractors get 1099 payments with none of those obligations, but misclassification carries steep penalties.

A dedicated team is a group of workers (typically offshore) who work exclusively for one client, integrated into that client's tools, processes, and culture — the opposite of shared-pool staffing where the vendor's workers rotate across multiple clients.

A distributed team is a group of workers spread across multiple locations — cities, countries, or timezones — collaborating via digital tools rather than a shared physical office.

An Employer of Record (EOR) is a third party that legally employs workers on your behalf in countries where you do not have an entity, handling payroll, taxes, benefits, and compliance so you can hire globally without setting up local operations.

IP assignment is the legal transfer of ownership of intellectual property (code, designs, content, inventions) from the creator to another party — typically from a worker or contractor to the company paying for the work.

Managed services is a contracting model where a vendor takes responsibility for an outcome — not just supplying people — and manages the team, process, and delivery against an SLA or scope of work.

A Master Service Agreement (MSA) is the umbrella contract that governs the overall legal relationship between a client and a vendor — covering liability, IP, confidentiality, payment, and termination — so individual projects can be signed quickly via SOWs underneath it.

A Non-Disclosure Agreement (NDA) is a contract that binds one or both parties to keep certain information confidential — used in hiring, vendor relationships, M&A discussions, and anywhere sensitive information has to be shared before a broader agreement is signed.

Nearshore means hiring in a country geographically close to your own — for US companies, typically Latin America — with full or near-full timezone overlap, giving you more real-time collaboration than offshore at moderate cost savings.

Offshore refers to hiring or delegating work to people in a country far from your headquarters, typically with a 6+ hour timezone difference — usually chosen for cost arbitrage and deep talent pools in markets like the Philippines, India, and Vietnam.

Onboarding is the structured process of integrating a new hire into your team — spanning paperwork, tooling setup, role context, relationship building, and ramping to productivity — typically the first 30-90 days of employment and the single biggest determinant of retention and performance.

Onshore means hiring within the same country as your business — for a US company, hiring US-based workers, whether in your own metro, remote across the country, or in lower-cost US regions.

Payroll is the process of calculating and paying employee compensation, withholding and remitting taxes, and administering deductions — along with the legal, regulatory, and reporting obligations that accompany paying workers.

A PEO (Professional Employer Organization) is a US co-employment service that becomes the employer of record for tax and benefits purposes while you retain day-to-day management, giving small businesses access to Fortune-500-grade HR, payroll, and benefits.

RPO (Recruitment Process Outsourcing) is an arrangement where a provider operates some or all of your recruiting function as an extension of your team — handling sourcing, screening, coordination, and sometimes onboarding — billed as a retainer or per-hire.

Remote work is any employment arrangement where workers do their job outside a central office — typically from home, a co-working space, or anywhere with internet access — enabled by digital collaboration tools and async-friendly processes.

Retention is the percentage of employees who remain at a company over a given period — the inverse of attrition — and a leading indicator of operational health, hiring quality, and management effectiveness.

A Statement of Work (SOW) is a document that defines exactly what a vendor will deliver — scope, timeline, deliverables, acceptance criteria, price — usually issued under the umbrella of a master agreement like an MSA.

Staff augmentation is a hiring model where an external provider supplies skilled workers who embed into your existing team and report into your managers — you direct the work, they just supply the people.

A staffing agency is a company that sources, vets, and places workers into client businesses — either temporarily (the agency is the employer of record) or permanently (the agency collects a placement fee and the client takes over employment).

Time zone overlap is the number of hours per day during which a distributed team's members are all simultaneously available for live collaboration — the single most important variable in how smoothly a distributed team operates.