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Across many industries, companies are increasingly turning to independent contractors to meet their growing business needs. This shift is happening for several reasons. Businesses today often require specialised skills that aren’t always available in-house. Remote work has also made it easier to access talent from around the world. On top of that, many organisations are looking for more flexibility in how they build and manage their teams, especially during periods of growth or change.
In fact, a recent report from Staffing Industry Analysts found that nearly half (49%) of mid-to-large enterprises have expanded their contingent workforce programs in the past year. This shows that contingent workers, including independent contractors, are no longer seen as short-term solutions. Instead, they have become an important part of many companies’ long-term workforce strategies.
However, managing independent workers, especially across different countries, brings legal and compliance challenges that can slow down business operations if not handled properly. This is where the Agent of Record (AOR) model can help your business.
Understanding the fundamentals of AOR
Before using an AOR model, it’s important to understand what is an AOR, how it works, and why it’s an important solution for any growing business that want to engage independent contractors in a compliant and efficient way.
In the simplest terms, an AOR is a third-party organisation that manages the legal and administrative aspects of engaging independent contractors. It acts as an intermediary between the company and the contractor, taking responsibility for key aspects like verifying contractor status, handling onboarding documents, ensuring compliance with local laws, and managing payment processes.
Defining AOR in a global workforce context
When companies hire freelancers or consultants across different regions, they face a variety of legal, tax, and regulatory requirements. Without proper oversight, their business can be exposed to risks such as worker misclassification or non-compliance penalties.
The AOR model helps you navigate these challenges by providing a structured and compliant way to engage independent workers anywhere in the world. It does not replace your internal HR, procurement, or legal teams. Instead, AOR complements them by taking over the more detailed, country-specific tasks involved in working with independent contractors. This allows your company to focus on other important aspects of the business.
Why companies use an agent of record
There are several reasons why businesses opt for an AOR solution, including:
Legal protection
Hiring independent contractors in different jurisdictions comes with risks, especially around classification. Missteps can lead to fines or back payments. An AOR helps mitigate this by managing documentation and legal oversight.
Efficiency
Building internal systems to manage contracts, onboarding, tax documentation, and payments for a global contractor workforce can be costly and time-consuming. An AOR streamlines these processes, reducing administrative workload and speeding up onboarding and payments.
Local compliance expertise
Each market has its own legal and regulatory requirements for engaging independent contractors. An AOR brings country-specific compliance knowledge to the table, helping businesses avoid mistakes that could lead to costly penalties or reputational damage.
How AORs help with worker classification
One of the biggest risks companies face when engaging independent contractors is misclassification. Every country defines independent contractors in different ways. If a worker is classified as an independent contractor but should legally be treated as an employee, the company can face serious consequences. These can include back payments for taxes, social security contributions, employee benefits, and potential legal disputes.
An AOR can help your company mitigate this risk by reviewing working arrangement before engaging with the contractor. This includes examining whether the contractor has control over how they deliver their work, whether they use their own tools, and whether they can work for multiple clients—factors that many countries consider when determining worker status.
In the U.K, for instance, regulations such as IR35 make it essential to carefully assess whether a contractor is genuinely self-employed or should be treated as an employee for tax purposes. A contractor working through their own limited company might still be considered an employee under IR35 rules if they work under the control and direction of a client.
On the other hand, in the Philippines, while independent contractors are legally recognised, there are different sets of requirements. Contractors often need to register with the Bureau of Internal Revenue (BIR) as self-employed individuals and issue official tax invoices. Moreover, labour regulations require companies to demonstrate that they are not exercising direct control over independent contractors, otherwise the working relationship could be challenged under local employment laws.
If you don’t have local expertise, your company might easily misclassify workers based on their home country’s standards, not realising the legal expectations vary significantly.
This is where the AOR provides real value. By understanding these differences across markets, the AOR ensures that every contractor is properly classified from the beginning, helping companies avoid unexpected liabilities later on.
Who needs an AOR? Use cases for enterprises and SMEs
Whether you’re just starting to engage contractors globally or already managing a large global team, an AOR can provide the structure and legal support needed to operate compliantly and efficiently.
Here are a few examples of how different companies can benefit from AOR services:
Startups expanding internationally
Startups moving into new markets often turn to independent contractors to stay flexible and control costs. However, without an in-house legal or HR team experienced in international compliance, managing freelancer engagements across different countries can quickly become overwhelming. An AOR helps these businesses navigate local labour laws, tax obligations, and documentation requirements, allowing them to expand without exposing themselves to legal risks.
Mid-sized companies scaling quickly
As mid-sized companies grow and enter new markets, they may face unfamiliar regulations regarding contractor engagement. These businesses often lack the resources to set up fully localised compliance processes in every region. An AOR steps in to manage country-specific rules, ensuring that workers are correctly classified and paid according to local standards while the company stays focused on its core growth objectives.
Large enterprises managing a global contractor network
Multinational corporations that work with hundreds or even thousands of independent contractors across multiple countries deal with a high volume of contracts, tax documents, and legal requirements.
Without a centralised system, inconsistencies and compliance risks can arise. An AOR provides a unified solution, standardising contractor engagement processes and reducing the administrative burden on internal teams. It also helps ensure that company policies are consistently applied across all regions.
How AORs improve the contractor and client experience
A smooth onboarding process for freelancers and consultants
For contractors, onboarding can sometimes feel like a bureaucratic maze. Different systems, unclear requirements, and inconsistent documentation can slow things down. AORs standardise this process, offering clear, unified onboarding across geographies.
This often includes automated contract generation, identity verification, tax documentation collection, and payment setup—all in one place.
Consolidated invoicing and payment systems
When multiple contractors work across time zones and currencies, keeping up with invoicing and payments becomes a time-consuming task. AORs take on this responsibility by offering centralised invoicing systems.
Contractors submit their hours or deliverables through a single platform, and the AOR processes payments on behalf of the client. This ensures timely payments, consistent documentation, and easier reconciliation for finance teams.
Maintaining consistency across global engagements
Companies that work in several countries often find themselves managing a patchwork of legal requirements and cultural norms. AORs provide a layer of consistency by implementing standardised processes across the board, while still customising for local compliance needs.
This balance allows businesses to maintain operational efficiency while avoiding the risk of non-compliance or cultural missteps in contractor relationships.
Enhancing the relationship between client and contractor
The AOR solution also improves communication and clarity between companies and contractors. By managing contracts, legal documents, and dispute resolution, AORs serve as a neutral third party that helps prevent misunderstandings.
If issues arise like disagreements over scope or payment timelines, the AOR can step in to mediate and clarify expectations based on agreed-upon terms. This enhances trust and reduces the likelihood of conflicts escalating.
Common misconceptions about AOR services
AOR Is not the same as employer of record (EoR)
When it comes to workforce solutions, AOR and EOR serve different functions. An EoR becomes the legal employer of a worker, handling benefits, taxes, and employment compliance. This is typically used for full-time employees in foreign countries.
An AOR, on the other hand, does not employ the contractor. Instead, it facilitates the engagement, helping ensure the contractor remains compliant as an independent worker. The difference matters because using the wrong model can lead to unexpected legal exposure or misaligned expectations.
AORs aren’t just for large enterprises
While enterprise clients often have the resources to explore AOR solutions early, small businesses and startups have just as much to gain—perhaps even more. For companies that lack in-house legal or HR teams, working with an AOR provides structure and reduces legal risk.
The belief that AORs are too complex or costly for smaller firms is outdated. In fact, the model can be tailored to different company sizes and budgets.
AOR doesn’t replace legal counsel but complements it
An AOR doesn’t substitute for a lawyer. Instead, it works in tandem with legal teams to ensure engagement practices align with local laws. For internal legal departments, this means they’re supported by a partner that already understands the nuances of workforce compliance in multiple regions.
AORs bring the practical experience of engaging thousands of independent contractors across jurisdictions, making them a valuable resource even for well-established legal teams.
AORs don’t limit contractor flexibility
Some contractors worry that going through an AOR will restrict their autonomy. In reality, AORs support contractor independence by providing clear contracts, payment reliability, and legal protections that reduce ambiguity.
Rather than adding red tape, AORs help freelancers work confidently with global clients, knowing that essential details like payment terms and intellectual property rights are already clearly outlined.
How CXC can help as your AOR partner
Tailored AoR solutions for global and local needs
Every business is different, and so are the needs of their contractor workforce. CXC recognises that a one-size-fits-all approach does not work when it comes to engaging independent contractors across different markets.
That’s why our AOR solutions are tailored to meet your specific business needs. We focus on building solutions that address your unique workforce structure, ensuring that compliance, onboarding, and contractor management processes are aligned with your business goals.
Scalable infrastructure for growing businesses
As companies expand internationally, managing independent contractors can become more complex. Different legal systems, tax regulations, and cultural practices can quickly create challenges that are difficult to manage without the right support.
CXC’s infrastructure is built with scalability in mind. Our systems can accommodate growing contractor networks, increasing transaction volumes, and expanding compliance requirements without adding unnecessary complexity for your teams. From onboarding and documentation management to contractor support and payment processing, our platform evolves with your business—helping you maintain consistency and compliance as you grow.
This means you can focus on finding the right talent while CXC manages the administrative and legal aspect of engaging with independent contractors.
A trusted partner with a proven global track record
With decades of experience in workforce solutions and contractor compliance, CXC has established itself as a trusted partner for companies around the world. Its proven track record includes successful AOR implementation across industries such as tech, healthcare, and finance.
Whether you need help managing a few contractors in one country or building a large network across multiple regions, CXC works alongside your team to make sure each engagement is handled efficiently and in line with local regulations.
Build your global team with CXC
Managing independent contractors, especially across different countries, can quickly become overwhelming. Every market has its own legal requirements, tax rules, and cultural expectations. And without the right support, small issues can easily grow into bigger problems. CXC’s Agent of Record (AOR) services simplify this complexity and give your business the confidence to engage global contractors compliantly.
Based on your business needs and operational footprint, CXC builds a tailored AOR solution that supports compliant onboarding, proper classification, and consistent payment processes.
With the right structure in place, you can focus on growing your business while knowing that your independent contractor relationships are being managed properly.
Want to learn more? Get in touch with our team of experts today.
