If you're going to hire overseas engineers to perform work for your U.S. based company, you should be mindful of federal and state laws, as well as the laws of the foreign country where your engineers live and work. First, determine whether you want these individuals to be employees of your company, or merely serve as subcontractors hired to complete specific tasks. Generally, the subcontract relationship is easier from a compliance, reporting and tax perspective. When hiring a non-U.S. contractor, the contractor completes an IRS withholding certificate in order to verify the individual or company is not a U.S. tax resident. Foreign individuals sign a Form W-8BEN, a foreign corporation would complete W-8BEN-E, while a foreign partnership would complete a Form W-8IMY. So long as the foreign contractor is performing the work outside of the U.S., there should not be any U.S. tax withholding issues. It can become complicated if, on occasion, you have the developers travel to the U.S. to perform work. The nonemployee compensation could be considered U.S. source earnings and subject to federal and state taxes in the U.S.