A UK company that needs more capacity than it can easily hire at home has seven common routes: an embedded offshore team, business process outsourcing (BPO), an Employer of Record (EOR), freelancers, staff augmentation, its own overseas entity, or the onshore baseline, a recruitment agency filling a UK role. At Potentiam we build embedded offshore teams, and the costly mistakes we see usually start with the choice of model, before any supplier has been picked. Six questions decide it, and price only ranks the providers inside the model those questions point to.
Key takeaway
Start with three questions: how many people do you need, how will the work be managed, and how much operational responsibility do you want to retain? As a rule of thumb, an EOR can be suitable for hiring individual employees in another country when you need a local employment solution. An embedded team is ideal when you want people to work together as an extension of your business, under your management and supported by a local partner. Staff augmentation adds skills or capacity to an existing team, while freelancers are often best for specific projects or deliverables. BPO suits high-volume, repeatable processes that you want a provider to manage against agreed service levels. A recruitment agency helps you find talent to hire, while establishing your own entity may make sense when you need a substantial, long-term presence in a country and are ready to take on the associated costs and responsibilities.
If you are still deciding whether to use outside help at all, start with our guide to insourcing versus outsourcing.
Six questions that decide the offshore model
We ask these before anyone discusses a rate card. By the sixth, one or two models are usually left.
1. How many people, in two years? Count the headcount you expect to have, not the number you are hiring this quarter. One or two people in a country is an employment question. Ten people is an organisation, with cover, supervision and retention to run.
2. For how long? If you can name the date the work stops, pay for flexibility: freelancers, staff augmentation or a staffing agency. If you cannot, you are building a permanent function, and the model should employ people rather than rent them.
3. How much control and IP ownership do you need? Decide who should own the process in three years. If a supplier can own how the work is done, BPO is on the table. If the process or the codebase is part of how you win, keep it with people who work only for you, under contracts that assign the intellectual property to you.
4. Does the work need a team or individuals? Specialists who work alone can sit anywhere. People who cover for each other need coordinated cover, shared knowledge and someone to hold the group together, which we provide through a shared office and local management.
5. How fast do you need someone working? If you have already found the person, an EOR can often employ them quickly; confirm the timetable with the provider. If you still need to find them, the search is the long part. We typically take four to six weeks from starting the search to the candidate accepting the offer, or four to eight in São Paulo, and a candidate's notice period can push the start date later. For hard-to-fill roles in the UK we see the same search take six to twelve weeks or longer. In our experience your own entity takes months before the first hire.
6. How much compliance exposure can you carry? Each model puts risk somewhere different: employment status for contractors, local employment law for your own entity, data transfer rules wherever offshore people see UK personal data, and TUPE when work moves between your staff and a supplier.
The seven models compared
| Model | Who employs | Who manages the work | Control and IP | Typical fit | Cost shape | Speed to start |
|---|---|---|---|---|---|---|
| Embedded offshore team | We do, through our local entity in each hub | Your managers direct; our on-site leadership supervises | High: the team works only for you, in your systems. IP remains with you | A function you will keep and grow, even if it starts with one or two roles | Pricing agreed with each client | 4 to 6 weeks to offer acceptance (4 to 8 in São Paulo), then the candidate's notice |
| BPO | The provider | The provider; you govern through service levels | Low day-to-day control: the provider runs the process and the knowledge builds there. IP ownership is set by the contract | High-volume, standardised, stable, non-core processes | Per seat, per FTE or per transaction, margin inside; out-of-scope changes usually charged extra | Set by the transition plan |
| Employer of Record | The EOR, through its own local entity or a partner's | You, usually from the UK | You direct the work. IP depends on the assignment clauses in both contracts | Someone who will work alone, or a country outside our hubs | Salary and employer costs, plus a fee per employee per month or a percentage of salary | Often quick once you have found the person; confirm with the provider |
| Recruitment agency | You | You | Full: the person is your employee | A single senior UK hire or a niche local skill | A one-off placement fee, usually a percentage of first-year salary | A UK search for a hard-to-fill role: 6 to 12 weeks or longer, then notice |
| Freelancers | You do not: they are self-employed or employed by their own company, subject to the real arrangement | You agree the deliverable | Control over the deliverable. You own the output only if the contract or marketplace terms assign it | A defined piece of work with an end date | Hourly, daily or fixed price, plus any marketplace fees | Fast for a defined task |
| Staff augmentation | The supplier or an intermediary | You, day to day | You direct; IP must be assigned through the whole chain | A temporary gap in a team you already manage well | An hourly or day rate with the supplier's margin inside | Quick if the supplier has people available |
| Your own entity | You, through your own local company | You, with local managers you hire | Full | A large, permanent presence in one country | Setup costs and fixed overheads first; a lower average cost per head once scale spreads them | Months before the first hire, depending on the country |
Each model puts different costs inside its price, so compare total cost over the same period and headcount, including your managers' time. If you are still deciding whether to outsource at all, start with our guide to outsourcing pros and cons.
Each model in brief, and where to read more
Embedded offshore team
We recruit, employ and house a team that works only for you, in your systems, in one of our five hubs. Your managers set priorities and direct the work; our on-site leadership handles supervision, HR, retention and the workplace. Read how the Embedded Offshore Team Model works.
Business process outsourcing (BPO)
A BPO provider takes over a whole process and runs it with its own people and methods, governed through service levels. It suits a high-volume, standardised, stable process that is not core; the trade-off is that changes outside the agreed scope usually cost extra, and the knowledge builds up inside the provider. In Deloitte's 2024 Global Outsourcing Survey of more than 500 leaders, 70% of organisations had selectively brought outsourced work back in-house over the previous five years, among other reasons to regain control and strengthen internal capability. Compare the two in BPO or an embedded offshore team.
Employer of Record (EOR)
An EOR becomes the legal employer of someone you have found, in a country where you have no entity, and runs their payroll, tax and compliance while you direct the work. For someone who will work alone, a test market or a country outside our hubs, it is usually the better and cheaper choice. Recruitment, local supervision and retention usually stay with you. Start with what an Employer of Record is, then read EOR or an embedded offshore team.
Recruitment agency
An agency finds you a permanent employee for a one-off fee, and everything after the placement is yours. It suits a single senior UK hire or a niche local skill, in a hard market: the CIPD's 2026 Resourcing and talent planning report found that 53% of organisations that tried to recruit in the past year had difficulty attracting candidates, particularly for senior and skilled positions. An agency that finds someone abroad still leaves you needing a legal employer there. See recruitment agency, staffing firm or embedded team.
Freelancers
Freelancers are excellent for a defined deliverable with an end date, and a poor base for a permanent function: the knowledge leaves when they do, and employment status becomes a live question on long, full-time engagements. See freelance marketplaces or an embedded team.
Staff augmentation
Staff augmentation rents you individuals, usually engineers, who join your team under your management, billed by the hour or day. It suits a temporary gap in a team you already run well. We compare it with a supplier-managed dedicated team in dedicated team or staff augmentation.
Your own overseas entity
Your own local company gives you full control, and you carry registration, directors, banking, payroll, employment law, the office and HR, most of it before anyone is productive. In our experience it makes sense for a large, permanent presence in one country; for a first team of five to ten, first-year costs usually come out higher than working with a partner. Read about the hidden costs of an offshore entity.
Not sure which model your function needs?
We can work through the six questions with you, and we will tell you if an EOR, a BPO or a UK hire is the better answer.
When an embedded team is the wrong answer
We would rather you chose the right model than ours. Ours is the wrong answer in six situations.
- Someone who will work alone. If you don't need a connected team or ongoing local support, the cost of an office, team lead and HR partner may be hard to justify. An EOR may be more cost-effective. Compare the total costs of each option.
- A country outside our five hubs. If the right person lives in Lisbon or Manila, a global EOR may be a better fit than a provider that doesn't operate there.
- Work with a defined end date. A six-month migration project may suit freelancers or staff augmentation, which you can usually end with the work, subject to the notice and minimum terms in the contract.
- A process you want run for you. With an embedded team, your managers direct the work. If you want a provider to manage day-to-day delivery against agreed service levels, BPO may be the better fit.
- A senior UK role. Someone who must be physically present with your UK clients, or who holds a UK regulatory sign-off, is usually a UK hire.
- A large, permanent operation in one country. At enough scale your own entity can cost less per head, if you are ready to run it.
The case that catches people out is a company starting with two people but planning to grow to ten. If the destination is a connected team, it can make sense to start with an embedded-team model from the outset, even if it costs more than an EOR initially.
It is a model our founders know first-hand. It is how they built at EnergyQuote JHA, growing offshore teams to around 60% of a company of more than 300 people before its acquisition by Accenture in 2015.
Where location fits
The model decides who employs and directs the people. Location decides when they work and which data rules apply, so choose it second; our guide to offshoring, nearshoring and onshoring keeps the two decisions apart.
We run five hubs in four countries: Cape Town and Johannesburg in South Africa, Iași in Romania, Bengaluru in India and São Paulo in Brazil. On a 9 to 6 local day, South Africa (one hour ahead of the UK in British Summer Time, two in winter) works 8am to 5pm UK time in summer and 7am to 4pm in winter, covering most of your day. Iași (two hours ahead all year) works 7am to 4pm UK time, covering your morning and early afternoon. Bengaluru (4.5 hours ahead in summer, 5.5 in winter) works 4.30am to 1.30pm UK time in summer and 3.30am to 12.30pm in winter, so the overlap falls in your morning. São Paulo (four hours behind in summer, three in winter) works 1pm to 10pm UK time in summer and 12pm to 9pm in winter, covering your afternoon and evening. Full-day or out-of-hours cover needs agreed shifts.
In our experience, labour cost savings typically run at 30 to 50% against the UK in Cape Town and Johannesburg and 40 to 50% against Western European rates in Iași. In São Paulo, operating costs for equivalent roles typically run 30 to 50% below the UK, and in Bengaluru salaries often run 40 to 70% below the UK, especially for mid-to-senior roles. The ranges are measured on different bases, so they do not rank the hubs; the function does. Read our comparisons of the best offshore location for a technology or MSP team, a finance and accounting team and a sales and marketing team, and our location guides for each hub in depth.
The compliance points that change with the model
Contractor status. HMRC's off-payroll working rules (IR35) apply where a worker provides services through their own intermediary, such as a personal service company. In most cases the client decides the worker's status; where the client is small and outside the public sector, the worker's intermediary decides. For contractors who live and work entirely outside the UK, the main exposure is usually misclassification under local law. People employed by an EOR, by us or by your own entity are employees, though local employment rules still apply.
Data protection. The ICO treats making personal information accessible to a separate organisation outside the UK, including by remote access to your systems, as a transfer. Under an EOR, a BPO or our model the people work for a separate entity, so offshore access to UK personal data will usually be a restricted transfer. Romania is covered by UK adequacy, so no IDTA or transfer risk assessment is needed there, although other UK GDPR duties still apply. South Africa, India and Brazil need an appropriate safeguard such as the International Data Transfer Agreement, with a transfer risk assessment, which we work through with you before anyone has access.
TUPE. If UK employees do the work today, handing it to a supplier, moving it between suppliers or bringing it back in-house can be a service provision change under TUPE. Any model that employs people abroad can also raise local tax questions for your company; take tax and legal advice.
Frequently asked questions
What are the main offshore models?
The main offshore models are an embedded offshore team, business process outsourcing (BPO), an Employer of Record (EOR), freelancers, staff augmentation and your own overseas entity, with a recruitment agency filling a UK role as the onshore alternative to compare them against. They differ on who employs the people, who directs the work, who owns the process and how the cost is structured.
How do I choose between an EOR and an embedded offshore team?
Ask whether the people you need will work as a team, and whether you want local support around them. Someone who will work alone, or a country outside our hubs: an EOR. A function you expect to keep and grow: an embedded team, even if it starts with one or two roles. An EOR can often employ someone you have already found quickly, while an embedded team includes the search.
When is BPO the right choice?
BPO is the right choice for a high-volume, standardised, stable process that is not core, and that you want a provider to run to a service level. It is a weaker fit for work that changes often, because changes outside the agreed scope usually become chargeable, or that builds knowledge you want to keep.
Is it cheaper to set up your own offshore entity?
At large scale in one country it can be, once your volume covers the fixed overheads. For a first team of five to ten people, in our experience it rarely is, after registration, the office, payroll, HR, compliance and management time are counted, most of them before anyone is productive.
Do freelancers and contractors avoid employment risk?
No. HMRC's off-payroll working rules can apply where a contractor works through their own company, and in most cases the client must decide their status. A freelancer working full time under your direction for months can also be an employee in law. Take advice.
Does the offshore model change my UK GDPR obligations?
You stay responsible for UK GDPR whichever model you choose. Where offshore people employed by a separate organisation can access UK personal data, that will usually be a restricted transfer. Romania is covered by UK adequacy. South Africa, India and Brazil need a safeguard such as the International Data Transfer Agreement plus a transfer risk assessment.
If you would like to test your own case against the six questions, book a discovery call to discuss your offshore strategy.
Sources: Deloitte, Global Outsourcing Survey 2024; CIPD, Resourcing and talent planning, September 2026; HMRC, Understanding off-payroll working (IR35); ICO, What is an international transfer?; ICO, Complying with the transfer rules; GOV.UK, Business transfers, takeovers and TUPE.
