How a US SaaS Company Built an Engineering Hub in Italy Without an Entity

This is a scenario, not a case study. It shows how a US SaaS company can build an engineering hub in Italy without opening a local company. The steps are the ones most teams follow.

The starting point  

A US software company has a product that is growing. The engineering team is stretched. The founders want strong backend and platform engineers, and they want them in a time zone that overlaps with both the US East Coast and their European customers.

They look at Italy. The talent pool is deep. Engineers there are used to working with distributed teams. The cost of senior talent is lower than in San Francisco or New York.

The obstacle is not hiring. The obstacle is the paperwork behind hiring.

The first instinct: set up a subsidiary  

Most founders start here. They ask a lawyer how to incorporate in Italy. They learn that an entity needs a registered address, a legal representative, a bank account, accounting, payroll registration and social security enrollment. Each step has its own office and its own language.

None of this is impossible. But it takes time, and it assumes the company already knows the hub will work. At this stage, nobody knows that yet.

The team is also worried about a second risk. If they hire an Italian resident as a contractor and manage them like an employee, they may create a misclassification problem. Italian labor rules are protective of employees. A contractor arrangement that looks like employment can be challenged.

So the company wants real employment contracts, but not a real entity. That is the gap an Employer of Record fills.

The second path: an Employer of Record  

An Employer of Record (EOR) is a local company that becomes the legal employer of your people. You choose the person. You direct the daily work. The EOR signs the Italian employment contract, runs payroll, handles tax withholding and social security, and keeps the employment file in order.

For the US company, this changes the project. It no longer needs to build a legal and administrative structure first. It needs to find the right engineer.

How the hub grows  

The first hire. The company picks a senior engineer who can work independently and who will help interview the next people. The EOR prepares a contract that follows the national collective agreement for the sector. The engineer gets a proper Italian employment contract, with the protections and benefits that come with it. The company does not draft any of this itself.

The first months. Payroll runs every month through the EOR. The engineer receives a normal Italian payslip. The US finance team receives one invoice from the EOR, not a set of local filings. That makes budgeting simple.

The next hires. Once the first engineer is settled, hiring gets easier. The engineer refers former colleagues. The company adds a second and a third person to the hub. Each new hire follows the same process. No new setup is needed.

Relocation and visas. Some candidates live outside Italy. If the company wants to bring a non-EU engineer to Rome or Milan, the EOR can support the visa process and the move. The company does not need to sponsor from a foreign entity.

What the US team still owns  

An EOR does not replace management. The US company still owns the work.

• It sets goals, reviews code and gives feedback.
• It decides who to hire, promote or let go, within the rules of the contract.
• It protects its intellectual property through the agreements signed at hiring.
• It keeps clear notes on how the engineer works, so the relationship stays that of an employee and employer.

The EOR owns the compliance side. The company owns the product and the team culture.

When the entity makes sense  

The hub eventually reaches a size where an entity may be worth it. The signs are simple. The team is large and stable. The company plans to stay in Italy for the long term. Leadership wants a local manager, a local office or local sales activity.

By then the company has real data. It knows what the hub costs, how well it performs and how hard it is to hire there. The decision to open an entity is made with facts, not guesses. Many companies move their EOR employees onto their own entity at that point. The people stay. Only the legal employer changes.

The lesson from the scenario  

The company did not skip Italy’s rules. It used a partner that already works inside them. That let the hub start with real contracts, real payroll and real engineers, without building a legal structure for a team that did not exist yet.

If you are planning something similar, start by modeling the full cost of an Italian hire. Include salary, employer contributions and the EOR fee, so the numbers are clear before you commit.

Try the HiringItaly cost calculator to see what your first Italian hire would cost.