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When businesses think about expanding their workforce, Puerto Rico isn’t always the first place that comes to mind—but maybe it should be. This US territory offers a unique blend of talent, tax advantages, and logistical perks, making it an increasingly attractive option for global employers.
Why workforce expansion to Puerto Rico deserves a closer look
Across the globe, businesses are facing three significant pressures: rising labour costs, stricter compliance rules, and growing demand for flexible work.
- In Europe, labour costs rose by 4.6% in the third quarter of 2024 compared to the year before, while in the United States, they climbed 3.8% over the same period.
- At the same time, a PwC global survey found that 85% of organisations say compliance is becoming more complex.
- Data further shows 36% of US workers prefer to work remotely, and more than 60% of remote-only workers say they will most likely pursue other job opportunities if they are denied the option of remote work and flexibility.
There’s one thing these numbers point to. Workforce flexibility is now a top priority worldwide.
With these challenges in play, companies are rethinking where to grow their teams and Puerto Rico stands out as a smart choice.
After all, it’s a US jurisdiction with its own tax system, so it is able to offer business-friendly incentives and legal protections. The island also has a skilled workforce, with around 20% of residents fully bilingual in English and Spanish, and higher fluency among younger professionals.
According to World Bank data, Puerto Rico’s labour force was around 1.15 million people as of 2023. Yet despite this scale and location, many businesses still don’t consider it—or aren’t sure where to begin.
In this article, we at CXC explore the lesser-known but powerful benefits of expanding your workforce to Puerto Rico. We’ll also show how CXC supports organisations in making this transition smooth, compliant, and cost-effective.
Economic and operational advantages of workforce expansion in Puerto Rico
What are the specific upsides of building a workforce presence in Puerto Rico? Let’s take a look.
Tax incentives and cost savings
- Puerto Rico’s Act 60 offers strong tax incentives for eligible businesses, including a reduced corporate tax rate of 4%, and as low as 1% for specific industries.
- Companies can also benefit from full dividend exemptions and up to 100% relief on property taxes.
- Credits are also available for research and development and eco-friendly practices, making the island attractive for established firms and growing sectors.
- Labour costs are another clear advantage. Average hourly wages sit around $13–$14, compared to over $31 in the mainland U.S. With a lower cost of living, especially in housing and utilities, businesses can reduce spending while staying competitive in the local market.
Accessing these incentives requires meeting eligibility criteria, submitting documentation, and ongoing compliance. While the system can be complex, businesses in sectors like tech, biotech, and export services have succeeded by working with experts like CXC to unlock the incentives and stay fully compliant.
Access to a highly skilled, bilingual talent pool
Puerto Rico is building a strong talent pipeline, especially in technology, biosciences, and manufacturing. Here are some illustrations:
- The 21st Century Techforce initiative is leading the way, aiming to train 50,000 skilled workers in digital and STEM fields. Backed by government, universities, and private industry, it’s already delivered hundreds of new graduates through short courses, apprenticeships, and fast-track programmes. This is helping meet the growing demand for qualified, job-ready professionals.
- As noted earlier, around 22.5% of residents speak English well, with fluency higher among younger professionals. English is taught in all public schools and is widely used in business, particularly in sectors like finance and tourism. While Spanish remains the dominant language, Puerto Rico’s bilingual workforce is well-suited to global operations.
- Recruitment is also straightforward. Employers use platforms to find local talent, and many also partner with universities and recruitment agencies to access graduates and experienced professionals across key industries. With the right approach, businesses can tap into a motivated, educated, and bilingual workforce ready to support long-term growth.
Flexibility through contingent workers and contractors
Contingent workers and contractors allow businesses to scale quickly and manage costs without long-term commitments.
In Puerto Rico, this model is widely used across tech, logistics, and professional services, where project-based work and changing demand call for agile workforce strategies. A blended team of employees and independent contractors helps companies stay lean while meeting specific skill needs.
To make the most of this model, businesses must understand how contractors are classified under Puerto Rican law:
- The island generally follows U.S. standards, allowing companies to engage contractors confidently, as long as the working relationship is clearly defined. When implemented correctly, this reduces employer obligations around tax, insurance, and benefits, making operations more efficient.
- Setting up a compliant contractor arrangement involves clear contracts, proper documentation, and ensuring the contractor is registered with local tax authorities. With the appropriate structure in place, this flexible approach gives businesses a smart way to access specialised talent, manage budgets, and grow quickly.
Streamlined hiring, payroll, and HR management
Payroll in Puerto Rico combines US federal requirements with local regulations. As our article about workforce compliance in Puerto Rico mentioned:
- Employers must manage contributions under the Federal Insurance Contributions Act (Social Security and Medicare), the Federal Unemployment Tax Act, and Puerto Rico’s income tax withholding rules.
- They’re also responsible for mandatory benefits like the 13th-month Christmas bonus, sick and vacation leave, and daily overtime pay after eight hours.
However, meeting legal obligations is just the baseline. To truly stay competitive, most companies also offer private health insurance—provided by 87% of employers—along with optional benefits like dental, vision, and retirement plans. Puerto Rico’s bilingual workforce and strong cultural emphasis on workplace connection further support long-term employment relationships.
Effective onboarding practices, such as pre-start engagement, mentor pairing, and local cultural orientation, also help new hires settle in quickly and contribute sooner. Many employers now automate these workflows through payroll software and human resources information systems (HRIS), streamlining administration while ensuring compliance with federal and local labour laws.
How CXC supports seamless workforce expansion in Puerto Rico
Convinced about the advantages of hiring in Puerto Rico? Make the move smoothly and effortlessly with CXC.
Why CXC is the right partner for Puerto Rico workforce growth
Expanding into Puerto Rico doesn’t need to come with red tape or guesswork. That’s where we come in.
As your Employer of Record (EOR), we take on the legal, compliance, and administrative burden of hiring, so you don’t have to go through the complicated ins and outs of setting up a local entity. From employment contracts and payroll to tax obligations and onboarding, we ensure your workforce is compliant, correctly classified, and supported from day one.
Additionally, CXC’s EOR model is designed to scale with your business. So whether you’re a startup entering a new market or a global enterprise managing a multi-country team, our solutions align with your needs. This means:
- We manage benefits administration, severance, and right-to-work checks while keeping you compliant with all employment obligations—including daily overtime rules, public holiday entitlements, and Puerto Rico’s unique bonus schemes.
- Our CXC Comply platform also ensures every contractor you engage is properly vetted and classified, reducing your legal exposure while strengthening operational integrity.
Beyond compliance, CXC offers the tools and local know-how to streamline workforce management. Our systems support automated payroll processing, centralised data oversight, and vendor coordination, so you get full visibility and control without the overhead.
With 99% payroll accuracy, 98% client retention, and over three decades of experience across 100+ countries, we help companies expand into Puerto Rico with speed, flexibility, and complete peace of mind.
Conclusion: unlocking the strategic value of hiring in Puerto Rico
Puerto Rico offers a rare blend of cost savings, tax incentives, and access to skilled, bilingual talent—all within a US legal framework. For businesses looking to grow without the red tape of full international expansion, it’s a smart move.
However, turning potential into results takes more than a good choice of location. Success depends on navigating local regulations, managing payroll properly, and setting up the right systems from day one.
If you’re ready to take that step, CXC helps make it happen. With deep local knowledge and end-to-end workforce support, we make your expansion into Puerto Rico seamless, compliant, and scalable. Speak to our team today to get started.
