Local, nearshore or EOR: deciding where your next engineering leader sits
Juan Molina ·
Hiring a senior engineering, product or QA leader involves two separate decisions: where the person lives, and who legally employs them. Make them in that order, and let the hard constraints go first.
When a CEO or CTO asks me whether their next VP of Engineering should be local, in Europe or in Latin America, the question usually hides a second one: how do we employ this person? Direct hire through our own entity, an employer of record (EOR), or a contract?
Those are two decisions. After more than twenty years in executive search, my view is that most of the trouble starts when companies make them as one. Decide where the leader should sit first. Then pick the legal model that fits that location and that role.
1. Check the constraints that make the decision for you
Some roles have to be filled by people in the US, and by specific people in the US.
If the leader will handle export-controlled technology, sharing it with a foreign national counts as an export even inside the United States. Under the Export Administration Regulations, releasing controlled technology or source code to a foreign person in the US is a "deemed export" to that person's most recent country of citizenship or permanent residency (15 CFR 734.13). ITAR has the same concept for defense technical data (22 CFR 120.50), and defines a "U.S. person" as a lawful permanent resident or a protected individual under US immigration law (22 CFR 120.62).
Security clearances are narrower still. The Defense Counterintelligence and Security Agency states plainly that non-US citizens do not qualify for a security clearance, with only a limited, project-specific exception (DCSA).
Licenses for foreign nationals exist for some export-controlled work, but that is a question for export-control counsel, and it should be settled before anyone writes a job description. In practice, if either rule applies, plan on a local search, and restrict the pool only as far as the rules require.
2. Count the overlap hours honestly
Time zones matter more for a leader than for anyone else on the team. Here is the overlap between two standard 9:00-18:00 local workdays, computed from the IANA time zone database for July and January 2026:
| Company HQ | Leader in | Overlap (July) | Overlap (January) |
|---|---|---|---|
| San Francisco | Berlin | 0 h | 0 h |
| San Francisco | Bogotá | 7 h | 6 h |
| San Francisco | São Paulo | 5 h | 4 h |
| San Francisco | Mexico City | 8 h | 7 h |
| New York | Berlin | 3 h | 3 h |
| New York | Bogotá | 8 h | 9 h |
| New York | São Paulo | 8 h | 7 h |
| Berlin | Bogotá | 2 h | 3 h |
| Berlin | São Paulo | 4 h | 5 h |
| London | São Paulo | 5 h | 6 h |
The numbers move with the seasons because the US and Europe observe daylight saving time and much of Latin America does not. Colombia has none, Mexico abolished it in most of the country in 2022 (Ley de los Husos Horarios, DOF), and Brazil ended it in 2019 (Decreto 9.772).
My view: an individual contributor can work well with three hours of overlap. A leader usually cannot. A VP of Engineering spends the day in unplanned conversations with the CEO, product, sales and their own managers. If the only shared hours are the leader's evening, you get a burned-out leader or one who is absent when decisions are made.
For a US West Coast company, that makes a European engineering leader a hard sell unless most of the team is in Europe too. The same logic applies in reverse: a leader running a Berlin-based team belongs close to Berlin.
3. Be careful with cost claims
For a US reference point, the Bureau of Labor Statistics puts the 2025 median annual wage for Computer and Information Systems Managers at $175,140 (O*NET, using BLS data). That category also covers IT managers, so use it for context only. It says little about what a VP at a Series C company earns.
I am not going to quote you a percentage saving for Europe or Latin America. Public, comparable data on senior leadership compensation in those markets is thin, and many of the figures I see come from vendors with something to sell. My own view is that the gap narrows as seniority rises, because strong leaders in any market get approached by US and EU companies. If cost is your main reason to look abroad, you will likely compete on price for the people least likely to stay.
4. Pick the engagement model that matches the job
Direct hire through your own entity. The cleanest option when you have, or plan to build, a real team in that country.
Employer of record. A third party is the legal employer in the leader's country, runs payroll and local benefits, and you direct the work. It is a sensible bridge when you want to hire one or two people somewhere before you commit to an entity.
Independent contractor. Fast to set up and the riskiest for a senior leader.
The reason is how regulators define a contractor. The IRS looks at behavioral control, financial control and the type of relationship, including whether the work "is a key aspect of the business" (IRS). The US Department of Labor's current proposal would treat control over the work and opportunity for profit or loss as the two core factors (DOL). That rule was still a proposal when I wrote this, so check its status.
Europe applies its own tests. In the UK, the off-payroll working rules (IR35) generally make a mid-sized or large client responsible for deciding whether a contractor working through their own company would be an employee for tax purposes (HMRC). Germany's pension insurance authority lists signs of sham self-employment such as being bound by instructions and required working hours, and says the actual working relationship outweighs the contract (Deutsche Rentenversicherung).
A VP of Engineering who manages your people, follows your roadmap, attends your leadership meetings and works only for you fails most of those tests on day one. A contract can work for a genuinely time-boxed interim role. For a permanent leader, I would not use one.
5. Know when an EOR stops being enough
An EOR makes someone else the legal employer. Your company's tax exposure in that country is a separate question.
Under the OECD Model Tax Convention, a company can have a taxable presence in a country if someone there "habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts" on its behalf (OECD Model, Art. 5(5)). The 2025 update to the OECD commentary adds that a home office is generally not a place of business if the person works there less than 50 per cent of their working time over twelve months (OECD 2025 update). A full-time remote leader will usually be above that threshold, which leaves it to the facts, and a senior leader who negotiates vendor or customer deals raises the other risk too. Treaties vary, so ask your tax adviser.
Local labor law matters as well. Mexico's Federal Labor Law, as amended in 2021, prohibits subcontracting of personnel (LFT, Art. 12), so ask any provider exactly how its Mexico arrangement fits that rule. In the EU, the Pay Transparency Directive requires employers to share the starting pay or pay range before the interview and bars questions about pay history, as each member state writes it into national law (European Commission).
My rule of thumb: an EOR is a good way to hire your first leader in a country. Once that leader is building a team of their own there, start planning an entity.
6. What changes when the hire is a leader
For an individual contributor, location is mostly about skills, cost and overlap. For a leader, add three questions.
Where the team is. A leader should sit where most of their people are, or where the next hires will be. A VP in Bogotá running a team in Poland gets two or three shared hours a day with that team.
Access to the executive team. My view: leaders who rarely see the CEO and board in person drift out of the decisions. Budget for real travel.
Career path. Strong leaders leave when they see a ceiling. If the leader is on an EOR contract in a country where you have no entity and no plans, they will notice. Say clearly what the path looks like, including whether equity works the same way for them as for US staff.
A short checklist
- Does the role touch export-controlled technology or classified work? If yes, talk to counsel first and expect a local search.
- Where is most of the team this person will lead, today and in 18 months?
- How many working hours overlap with the CEO and the team?
- Will the leader be treated as an employee in practice? If yes, employ them.
- Will they sign or negotiate contracts in their country? Ask your tax adviser before you choose EOR over an entity.
If you are working through this for a specific role, you can register it or send me a short brief at www.exectechlabs.lat. I run searches across the US, Europe and Latin America, and I will tell you which pool and which model I would start with, including when the answer is to hire close to home.
This article is general information, not legal or tax advice. Rules change; confirm the current position with counsel in each country before you hire.