Hire Employees in India: Three Routes Compared

Advertised prices, verified

How hiring in India through an EOR works

1. Choose the route for this stage. Contractors fit genuinely independent, project-based work. An EOR fits full-time hires while you have no Indian entity. A subsidiary fits a committed, growing operation. Most companies start with an EOR for the first hires and revisit the entity question once the team and revenue justify it.
2. Verify the vendor's Indian employing entity. Ask which legal entity in India will hold the employment contract and whether it belongs to the vendor or to a local partner. The answer determines who actually carries employer obligations, how stable the arrangement is, and what happens to your team if the vendor's partnership changes.
3. Agree gross salary and the on-cost stack. Indian employment carries statutory costs on top of gross salary: employer provident fund contributions, state-level taxes where they apply, insurance for eligible salary bands, and gratuity that accrues with service. Have the EOR itemise every line in the quote rather than quoting a single loaded figure.
4. Onboard on a compliant local contract. The EOR issues an employment contract under Indian law reflecting the agreed role, salary, leave and notice terms, registers the employee for the statutory schemes, and starts monthly payroll. You direct the work day to day; the EOR carries the legal employer duties and invoices you monthly.

What Indian employment actually obliges you to do

Employing someone in India means joining several statutory schemes rather than just paying a salary. The provident fund system takes contributions from both employer and employee each month, employees within certain salary bands must be covered by the state insurance scheme, several states levy a professional tax the employer deducts, and gratuity, a service-linked terminal payment, accrues once an employee crosses the qualifying length of service. Leave entitlements and working-time rules come from state shops and establishments legislation, which means the applicable rules shift with the employee's location, and India's consolidation of its labour codes has been enacted but implemented unevenly, so current practice still follows the older statutes in many respects.

Termination is the sharpest difference from at-will jurisdictions. Indian employment ends through notice or pay in lieu, with documentation expectations that grow with seniority and service, and disputes can run long. An EOR does not make these rules go away; it makes them someone's full-time job, applies them through a contract template already tested in the state where your hire lives, and prices the whole stack into one monthly invoice. Nothing here is legal advice, and the employment contract and the statutes control in every case.

Contractor, EOR or subsidiary: the honest comparison

Contractors are fastest and cheapest until they are not. Indian authorities and courts look at the substance of a relationship, and a full-time, long-running, single-client contractor directed like an employee is an employee misclassification risk with back-contributions attached. Use contractors for genuinely independent work; do not use them as a permanent substitute for employment.

An EOR trades a monthly per-employee fee for the entire compliance surface: its Indian entity employs your hires, runs payroll and statutory contributions, and carries the employer liability while you manage the work. The vendors in our index that publish pricing are compared in the table on this page, verified against their own pages, and India is one of the markets where fee differences between vendors are wide enough to check rather than assume. A subsidiary flips the economics: meaningful setup effort and ongoing secretarial, tax and audit obligations, but no per-head fee, full control of employment terms, and a real base for a large team. The usual crossover argument lands somewhere in the tens of employees, and the practical path many companies take is EOR now, subsidiary when the numbers argue for it, transferring staff onto the new entity's payroll at a clean year boundary.

Common questions

Can a US or UK company employ someone in India directly?

Not without an Indian presence. Direct employment requires an entity registered in India that can join the statutory schemes and run payroll. Without one, the lawful options are an employer of record or a genuine contractor relationship.

What does an EOR in India cost?

Vendors charge per employee per month, and the verified table on this page shows the advertised range and the median $499 across providers that publish prices. Statutory employer costs, provident fund and the rest, are added on top of gross salary, so compare itemised quotes rather than headline fees.

Is hiring Indian contractors instead of employees safe?

For genuinely independent, project-scoped work, yes. For full-time roles under your direction it is a misclassification risk that can surface as claims for back contributions and employment rights. If the role looks like a job, employ the person through an EOR or your own entity.

Who owns the employment relationship under an Indian EOR?

The EOR's Indian entity is the legal employer: it signs the contract, runs payroll and statutory filings and carries employer liability, while you direct the day-to-day work. Confirm whether that entity is the vendor's own or a partner's, because your team's stability depends on it.

Coverage by country

• Employer of record vendors covering Singapore
• Employer of record vendors covering Mexico
• Employer of record vendors covering Spain
• Employer of record vendors covering Colombia
• Employer of record vendors covering United Kingdom
• Employer of record vendors covering France
• Employer of record vendors covering Hungary
• Employer of record vendors covering New Zealand