Glossary

Offshore hiring glossary

Plain-English definitions of the 51 terms you meet when you hire offshore, from employer of record and staff augmentation to 13th-month pay and time-zone overlap. Each entry explains what the term means in practice and links to the tools and role pages that help you act on it.

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Hiring and outsourcing models

The ways a business adds capacity, from employer of record and staff augmentation to BPO and freelance marketplaces.

Business process outsourcing (BPO): Business process outsourcing (BPO) is contracting a whole business function, such as customer support, claims processing, or back-office data work, to an outside provider. The provider hires, trains, and supervises the staff and usually charges per seat, per hour, or per transaction. You manage the contract and results, not the people.
Contract-to-hire: Contract-to-hire is an arrangement where a worker starts on a fixed-term contract and the company can convert them to a permanent employee at the end. It lets both sides test the fit before committing. Conversion often carries a fee when a staffing agency supplied the worker.
Dedicated remote hire: A dedicated remote hire is one professional who works only for your business, full time, from another location. Unlike a shared assistant or a task service, the same person handles your work every day, learns your systems, and reports to you, so context and quality build over time instead of resetting with each request.
Direct hire: A direct hire is a person your company employs itself, on its own payroll, from the first day. You run or pay for the recruiting, then take on salary, payroll taxes, benefits, equipment, and compliance. It gives the most control, and often the highest fixed cost and the longest time to fill.
Employer of record (EOR): An employer of record (EOR) is a company that legally employs a worker on another business's behalf. It runs payroll, withholds taxes, pays mandatory benefits, and holds the employment contract in the worker's country, while the client business directs the day-to-day work and decides what the person does.
Freelance marketplace: A freelance marketplace is a website where businesses post work and hire independent freelancers, usually per project or per hour, with the platform handling payments and taking a fee. Upwork and Fiverr are well-known examples. You do the screening yourself, and quality and availability vary from one freelancer to the next.
Global capability center (GCC): A global capability center (GCC), also called a captive center, is an offshore office a company owns and runs itself to deliver work for the parent business. The company sets up a legal entity, leases space, and hires its own staff abroad. It gives full control but takes significant time, money, and management.
Independent contractor: An independent contractor is a self-employed person who sells services to your business under a contract rather than as an employee. Contractors control how they do the work, handle their own taxes, and usually serve several clients. Misclassifying someone who works like an employee as a contractor can create legal and tax risk.
Managed services: Managed services is an arrangement where an outside provider takes ongoing responsibility for a defined function, such as IT support, security monitoring, or payroll, under a service-level agreement. You pay for an outcome and a service level rather than for named people, and the provider decides how to staff the work.
Nearshoring: Nearshoring is moving work to a nearby country with a similar time zone, rather than a distant one. For U.S. companies, that usually means Mexico or other parts of Latin America. The appeal is overlapping hours and shorter travel; the trade-off is cost, so compare local pay benchmarks role by role before deciding.
Offshoring: Offshoring is moving work to people in another country, usually one with lower labor costs, a large skilled workforce, or useful time-zone coverage. The workers can be your own employees, contractors, or staff placed by a partner. For U.S. companies, the Philippines is a leading destination for offshore professional and support roles.
Outsourcing: Outsourcing is paying an outside company or person to do work your own employees would otherwise do. The work can be a single project, a recurring task, or an entire function. Outsourcing is about who does the work; offshoring is about where it is done, and the two often overlap.
Professional employer organization (PEO): A professional employer organization (PEO) co-employs your staff in your own country. You stay the employer for daily work, while the PEO shares legal employer duties and handles payroll, benefits administration, workers' compensation, and HR compliance. Small businesses use PEOs to offer larger-company benefits without building an HR team.
Remote staffing: Remote staffing is hiring people who work for your business from their own location, full time or on contract, through a provider that recruits and supports them. The staff work only for you, inside your tools and processes. It differs from freelancing because the arrangement is ongoing and dedicated rather than task by task.
Staff augmentation: Staff augmentation is adding outside professionals to your existing team to fill a skills gap or add capacity. The added people work inside your processes, tools, and management, rather than delivering a finished project. It can be short term for a project or long term as an ongoing extension of the team.
Staffing agency: A staffing agency recruits workers and supplies them to client businesses, either as temporary staff the agency employs or as candidates for permanent roles. The agency typically earns a markup on hourly pay or a placement fee. Agencies vary in how deeply they vet candidates and whether they guarantee the hire.

Roles

The remote roles businesses hire most, and how they differ.

AI Implementation Specialist: An AI Implementation Specialist is a professional who finds the repetitive work in a business and automates it with AI tools and integrations. They map workflows, connect apps, build prompts and agents, test the results, and document how everything works, so the team gets reliable automation instead of one-off experiments.
Executive assistant (EA): An executive assistant (EA) supports one senior leader, managing their calendar, inbox, travel, meetings, and priorities so the leader can focus on decisions only they can make. A strong EA acts as a gatekeeper and a second brain: anticipating needs, following up on commitments, and keeping projects moving without being asked.
Remote employee: A remote employee is a person on a company's payroll who works from home or another location instead of an office. They have the same employment status, benefits, and obligations as office staff. The term covers domestic remote staff and, through an employer of record, employees in other countries.
Sales development representative (SDR): A sales development representative (SDR) works at the top of the sales funnel, researching prospects, sending outreach by email, phone, and LinkedIn, and booking qualified meetings for account executives or founders. SDRs are measured on activity and meetings booked rather than closed deals, which keeps closers focused on selling.
Virtual assistant (VA): A virtual assistant (VA) is a remote professional who handles administrative, operational, or specialist work for a business from another location. Typical work includes inbox and calendar management, data entry, customer messages, bookkeeping support, social media, and research. VAs can work for one business full time or for several clients.
Virtual assistant vs executive assistant (VA vs EA): A virtual assistant handles a set of tasks, often for several people or functions, while an executive assistant owns the workload of one leader and manages it proactively. The difference is scope and judgment: a VA completes assigned work well; an EA decides what needs doing and protects the leader's time.

Hiring in the Philippines

Benefits, rules, and working norms to know when your hire is based in the Philippines.

13th-month pay: 13th-month pay is a mandatory annual benefit in the Philippines, equal to at least one-twelfth of an employee's basic salary earned during the calendar year. Presidential Decree No. 851 requires it for rank-and-file employees, and it must be paid on or before December 24. It is a legal requirement, not a bonus.
English proficiency: English proficiency is how well a person reads, writes, speaks, and understands English for work. For offshore hiring, it decides whether someone can handle customer calls, write client emails, and follow written instructions without errors. The EF English Proficiency Index ranks countries on adult English skills each year.
Night shift differential: Night shift differential is extra pay required under the Philippine Labor Code for work between 10 p.m. and 6 a.m.: at least 10% of the employee's regular hourly wage for each hour worked in that window. It matters for offshore roles because U.S. business hours fall overnight in Manila.
Philippine Data Privacy Act (RA 10173): The Philippine Data Privacy Act of 2012 (Republic Act No. 10173) governs how personal information is collected, stored, and processed in the Philippines. It is enforced by the National Privacy Commission and requires security safeguards, lawful processing, and breach notification. It applies alongside the privacy rules of your own country.
SSS, PhilHealth, and Pag-IBIG: SSS, PhilHealth, and Pag-IBIG are the three mandatory social contributions for employees in the Philippines. The Social Security System covers pensions and sickness benefits, PhilHealth covers health insurance, and the Pag-IBIG Fund covers housing savings and loans. Employers and employees each contribute a share every month.

Costs

How to compare what a hire really costs, wherever the person works.

Employer cost multiplier: An employer cost multiplier is the ratio of total compensation to wages: how many dollars an employer spends for each dollar of pay once benefits and payroll taxes are added. Multiply a salary by it to estimate fully loaded cost. In the U.S., the Bureau of Labor Statistics publishes the inputs every quarter.
Full-time equivalent (FTE): Full-time equivalent (FTE) is a unit that measures workload or headcount in terms of full-time positions. One FTE equals one person working a full-time schedule, usually 40 hours a week in the U.S. Companies use FTE to plan capacity, budget roles, and compare staffing options on a like-for-like basis.
Fully loaded cost: Fully loaded cost is the total an employer pays for a worker, not just the salary. It adds payroll taxes, paid leave, health insurance, retirement contributions, and other benefits, and sometimes equipment, software, and office space. Comparing fully loaded costs is the only fair way to compare hiring options.
Labor arbitrage: Labor arbitrage is the cost advantage a company gains by having work done where wages and living costs are lower, while selling in a higher-cost market. It is the economic engine of offshoring. Done well, it funds better coverage and growth; done badly, it trades quality for a cheaper hourly figure.

Managing remote work

Habits and tools that make a remote hire productive and keep them for the long term.

Asynchronous communication: Asynchronous communication is any exchange where people do not need to be available at the same moment, such as email, recorded videos, shared documents, and task comments. It lets distributed teams work across schedules without constant meetings. It works best with clear writing, defined response times, and one place for decisions.
Delegation: Delegation is handing ownership of a task or outcome to another person, along with the context, authority, and resources to complete it. It is different from dumping tasks: good delegation defines the result, explains why it matters, sets checkpoints, and lets the other person decide how to get there.
Distributed team: A distributed team is a team whose members work from different locations, often across cities, countries, and time zones, with no single shared office. The team relies on written communication, shared tools, and clear ownership to stay coordinated. Many small businesses become distributed when they add their first offshore hire.
Employee retention: Employee retention is a company's ability to keep good people over time. It is usually measured as the share of staff who stay over a year. Retention depends on fair pay, steady work, respect, growth, and a manager who gives clear goals and feedback. Every departure costs recruiting and ramp time.
Follow-the-sun: Follow-the-sun is a working model where tasks pass between teams in different time zones at the end of each workday, so work continues around the clock. Support tickets, monitoring, and development are common uses. It depends on clean handoffs: written status updates, shared queues, and clear ownership of every open item.
Key performance indicator (KPI): A key performance indicator (KPI) is a measurable value that shows whether a person, team, or process is meeting its goals. Good KPIs are few, tied to outcomes, and tracked on a regular cadence. For a remote hire, KPIs replace watching someone work with checking the results they deliver.
Non-disclosure agreement (NDA): A non-disclosure agreement (NDA) is a contract in which one or both parties agree to keep specified information confidential and use it only for an agreed purpose. Businesses use NDAs with employees, contractors, and offshore hires who will see client data, finances, product plans, or other sensitive material.
Onboarding: Onboarding is the process of bringing a new hire up to speed: setting up accounts and access, explaining the business, training on tools and processes, and agreeing on goals and check-ins. Good onboarding shortens the time to full productivity and gives a remote hire the best start.
Standard operating procedure (SOP): A standard operating procedure (SOP) is a written, step-by-step description of how a recurring task is done in your business, including the tools, inputs, decisions, and expected result. SOPs make work repeatable, let new hires ramp up faster, and turn knowledge in one person's head into a company asset.
Time-zone overlap: Time-zone overlap is the number of working hours two people or teams share live on the same day. More overlap means faster answers, live meetings, and fewer overnight delays. Offshore hires can create full overlap by working the client's business hours, which is standard for professionals in the Philippines serving U.S. companies.
Workflow automation: Workflow automation is using software to run the steps of a business process without manual work, such as moving data between apps, sending follow-ups, creating records, or routing requests. Modern tools add AI for steps that need reading or judgment. It works best on processes that are frequent, stable, and documented.

Recruiting, vetting, and hiring terms

From the job description to the trial week: the steps and terms of a hire.

Candidate vetting: Candidate vetting is the process of checking that an applicant can really do the job before you hire them. It combines résumé review, skills tests, work samples, structured interviews, communication checks, and reference or background checks. Thorough vetting is the biggest single difference between remote staffing providers.
Job description (JD): A job description (JD) is a written summary of a role: its purpose, main responsibilities, required skills and tools, working hours, and how success is measured. A clear JD attracts the right candidates, screens out the wrong ones, and gives the new hire and manager a shared picture of the job.
Notice period: A notice period is the advance warning one side must give before ending a work arrangement, set in the contract or by law. For staffing services, it is how far ahead you must tell the provider to pause or cancel. Shorter notice periods mean more flexibility and less long-term commitment.
Ramp time (time to productivity): Ramp time, or time to productivity, is how long a new hire takes to perform the role at the expected level without extra help. It depends on the complexity of the work, the quality of onboarding and SOPs, and how quickly the manager gives feedback. Shorter ramp time means value sooner.
Replacement guarantee: A replacement guarantee is a staffing provider's promise to find a new candidate at no extra cost if a placed hire does not work out within a set period. Terms vary on how long the guarantee lasts, how fast a replacement arrives, and whether a refund is available instead.
Role scorecard: A role scorecard is a one-page definition of what success looks like in a job: the mission, three to five measurable outcomes, and the competencies needed to deliver them. Interviewers rate candidates against it, and managers use it after the hire to review performance against the same expectations.
Time to hire: Time to hire is the number of days between a candidate entering your process and accepting the offer; time to fill measures from opening the role to the accepted offer. Both show how long work goes undone while you recruit, which is a real cost for a small team.
Trial period: A trial period is a set time at the start of a hire when both sides test the fit on real work before fully committing. In offshore hiring, a trial lets you check skills, communication, and reliability in your own workflow. The key question is what happens if it fails: a replacement, a refund, or nothing.
Work sample test: A work sample test asks a candidate to complete a small, realistic piece of the actual job, such as drafting a client email, reconciling a short ledger, or editing a clip, before an offer. It shows real ability better than interviews alone. Keep it short and clearly scoped, and pay for longer tasks.

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