India is a global powerhouse of talent. With a population nearing 1.5 billion people and a massive, skilled workforce, it’s a top destination for companies looking to expand. In fact, India has one of the world’s largest English speaking labor forces, with over 125 million people fluent in the language. This incredible combination of technical skill and English proficiency makes hiring in India a smart move.

Tapping into this talent pool, however, comes with a major hurdle: navigating India’s complex employment laws. For companies without a local legal entity, employer of record services India provide the solution. These services allow you to legally hire employees through a third party organization that acts as the official employer, handling all local HR compliance, payroll, and benefits. This offers a fast, compliant, and cost effective way to build your team without the delay and expense of setting up your own company.

What Are Employer of Record Services in India?

An Employer of Record (EOR) in India is a third party organization that legally hires employees on your company’s behalf. Think of it this way: the EOR becomes the official, legal employer for your Indian team members, while you continue to manage their daily work, projects, and performance.

The EOR handles all the administrative and legal heavy lifting, including:

• Issuing compliant employment contracts
• Running monthly payroll and withholding taxes
• Managing statutory benefits like provident fund
• Ensuring full compliance with Indian labor laws

This arrangement allows you to hire top talent in India without the massive headache and expense of establishing your own local legal entity. You get all the benefits of a dedicated team on the ground, while the EOR shoulders the legal and administrative responsibilities.

Key Benefits of Using an EOR in India

Partnering with a provider of employer of record services India offers some serious strategic advantages for any company looking to grow.

• Speed to Market: You can onboard new hires in a matter of days. This is a huge difference compared to the 3 to 12 months it can take to set up your own legal entity. This speed is perfect for companies that need to hire quickly or want to test the Indian market without a huge upfront commitment.
• Reduced Compliance Risk: India’s regulatory landscape is famously complex, with businesses facing over 1,536 laws and more than 69,000 compliance requirements. An EOR has local experts who live and breathe these regulations, shielding your company from costly mistakes and penalties. Local compliance is one of the biggest challenges in global hiring, making an EOR’s expertise invaluable.
• Lower Costs: You completely avoid the high costs associated with setting up and maintaining a foreign subsidiary. You are essentially renting an existing local HR and legal infrastructure instead of building one from scratch. You can also avoid triggering a permanent establishment (PE) for corporate tax purposes, saving you from complex tax obligations.
• Better Employee Experience: An EOR ensures your Indian team receives all their statutory benefits and legal protections from day one, including health insurance and paid leave. This helps you attract and retain top talent by showing you are a responsible and competitive employer.

Platforms like Bolto take this even further by combining these benefits into a single, all in one global hiring solution. This helps you avoid using a fragmented set of tools so you can recruit, hire, and pay your team in India faster than ever.

EOR vs. Setting Up a Legal Entity in India

Choosing between an EOR and establishing your own company is a major decision. The differences in speed, cost, and complexity are stark.

With an EOR, you can be operational in as little as two days. In contrast, setting up a local subsidiary can take anywhere from 3 to 6 months or even longer. The upfront costs are also dramatically different. An EOR typically has zero setup cost, while forming a company in India can easily cost ₹10 to ₹15 lakh (about $12,000 to $18,000 USD) in legal and registration fees.

Then there’s the ongoing compliance burden. With your own entity, you are responsible for navigating India’s 1,536 plus Acts and 69,000 plus compliance obligations. This includes complex issues like transfer pricing, which can add roughly 17% to your total costs in India due to taxes and audits. An EOR completely manages this for you.

So, when does each model make sense?

• Choose an EOR if: You need to hire quickly, are starting with a small to medium sized team, and want to avoid administrative complexity. It’s also the perfect way to test the Indian market.
• Choose your own entity if: You have a long term vision, plan to hire a very large team (often 100 or more employees), and have the resources to manage a full scale local operation.

Many companies start with an EOR to get established quickly and then transition to their own entity once their presence in India becomes large and stable.

EOR vs. PEO in India: A Crucial Distinction

You might hear the term Professional Employer Organization (PEO) used, but it’s important to understand the difference, especially in India. In the United States, a PEO operates under a co employment model where you and the PEO share employer responsibilities. This model requires you to already have your own legal entity in the country.

Here’s the key takeaway: the traditional co employment PEO model is not available in India. India’s laws do not recognize this structure. Therefore, if your company does not have a legal entity in India, you cannot use a PEO. What you actually need are employer of record services India.

An EOR acts as the sole legal employer, not a co employer. This is the only compliant way to hire employees in India if you don’t have a local company. While some global HR providers may use the terms interchangeably, if they are employing staff on your behalf through their own local entity, they are operating as an EOR.

The Process of Hiring and Onboarding in India

Hiring through an EOR is a refreshingly straightforward process designed for speed and simplicity.

How to Hire Through an EOR

First, you find and select your ideal candidate, just as you normally would. Once you’ve made your choice, the EOR steps in to handle the formal hiring process. They will extend a locally compliant employment contract on your behalf, detailing the salary, benefits, and all other terms. The individual legally becomes an employee of the EOR’s Indian company but works exclusively for you.

The entire hiring process can be completed in about eight steps, from choosing a provider to running the first payroll. Some providers can even onboard your first employee in as little as 48 hours because there is no company setup required.

Onboarding Your New Hire

Once your candidate accepts the offer, the EOR manages a comprehensive onboarding process. This starts with completing all the necessary paperwork, including the employment agreement, tax forms, and bank details for salary payment.

The EOR collects all required documents like ID cards (Aadhaar, PAN), proof of address, and educational certificates. They also manage any necessary background checks, such as police verification.

Next, the EOR enrolls the employee in the payroll system and all mandatory benefit schemes, like the Provident Fund (PF). They can even help with practical tasks like arranging for a laptop or other IT equipment, which is incredibly helpful for overseas companies. While the EOR handles the administrative side, you focus on the job specific onboarding, like introducing the new hire to your team and setting their goals.

Core Compliance Handled by an EOR

A key function of employer of record services India is to manage the complex web of local compliance on your behalf.

Employment Contract Requirements

A well drafted, written employment contract is essential in India. The EOR will create a contract that is fully compliant with Indian law and includes all critical terms:

• Job title, location, and responsibilities.
• A clear breakdown of compensation and benefits.
• Clauses for confidentiality and intellectual property, ensuring that any IP created by the employee belongs to your company.
• Details on the probation period (typically 3 to 6 months).
• Termination conditions and the required notice period (usually 30 days for permanent staff).

Payroll and Tax Compliance

Running payroll in India involves much more than just paying a salary. For a deeper overview of cross‑border payroll approaches, see our global payroll solutions guide. An EOR manages all of it, including:

• Tax Deducted at Source (TDS): Withholding the correct amount of income tax from salaries each month and depositing it with the government. The EOR also files the required quarterly returns and provides employees with their annual Form 16 tax certificate.
• Provident Fund (EPF): Managing contributions to the mandatory retirement savings fund. Both the employee and employer contribute 12% of the basic salary.
• Employees’ State Insurance (ESI): Handling contributions for the social health insurance scheme for employees earning below a certain salary threshold. The employer contributes 3.25% and the employee contributes 0.75%.
• Professional Tax: Deducting and paying this small, state level employment tax where applicable.

Statutory Benefits and Leave Entitlements

Your EOR ensures your Indian employees receive all legally mandated benefits.

• Gratuity: This is a lump sum payment for long service. An employee who leaves after at least five continuous years is entitled to a gratuity payment, typically calculated as 15 days’ wages for each year of service.
• Annual Leave: The statutory minimum is often around 15 paid days off per year, though many competitive employers offer 18 to 21 days. India also observes 3 national public holidays plus numerous state specific holidays.
• Sick and Casual Leave: Most states require employers to provide around 12 days of sick and casual leave per year.
• Maternity and Paternity Leave: India offers a generous 26 weeks of paid maternity leave for the first two children. While there is no statutory paternity leave for private sector employees, many modern companies offer it as a supplementary benefit.

Navigating Indian Labor Law

India’s labor law framework is a complex mix of central and state level regulations. A company with employees in both Mumbai and Bangalore must comply with the distinct Shops and Establishments Acts of both Maharashtra and Karnataka, in addition to federal laws.

With over 1,536 acts and 69,000 compliances to consider, the task is enormous. An EOR acts as your local compliance officer, staying current with all regulations and managing the 100 plus ongoing obligations for each employee. This protects you from the risk of fines and legal disputes.

Special Considerations for Global Teams

When you’re building a distributed team, a few other important topics come into play.

Work Permits and Visas for Foreign Staff

If you need to send a foreign national to work in India, they must obtain an Employment Visa. A Business Visa is not sufficient for employment. To qualify, the employee generally must earn an annual salary of at least $25,000 USD and be sponsored by an Indian legal entity. The EOR can act as this local sponsor, providing the necessary invitation letter and supporting documents. Foreigners staying more than 180 days must also register with the Foreigners Regional Registration Office (FRRO), a process the EOR can manage.

Protecting Your Intellectual Property

Protecting your IP is non negotiable. The EOR will ensure the employment contract contains strong clauses that explicitly state that any intellectual property created by the employee during their employment belongs to your company. This is complemented by strict confidentiality and non disclosure clauses. Platforms like Bolto make sure their EOR agreements have robust IP assignment terms, giving you peace of mind that your source code, designs, and inventions are legally yours.

Data Protection and Privacy

In 2023, India enacted the Digital Personal Data Protection Act (DPDP), a comprehensive privacy law. This law requires companies to protect employee data, minimize data collection, and report breaches. Non compliance can lead to staggering fines, with penalties for failing to protect data reaching up to ₹250 crore (about $30 million USD). A compliant EOR will have strong data governance practices in place to manage employee data securely and in line with the DPDP Act, shielding you from this significant financial risk.

Offboarding: Managing Terminations Compliantly

Terminating employment in India must be handled carefully, as “at will” employment is not recognized. Termination must be for a just cause, such as proven misconduct or redundancy, and proper procedures must be followed.

A minimum notice period of one month is typically required for permanent employees. If an employee classified as a “workman” is terminated for redundancy, they are entitled to severance pay of 15 days’ average pay for each year of service. Furthermore, any employee with five or more years of service is entitled to their gratuity payment. The EOR manages this entire offboarding process, from calculating the final settlement to issuing the necessary relieving and experience letters, ensuring a smooth and legally sound exit.

How to Choose the Right EOR Provider in India

Selecting the right partner for employer of record services India is critical. For a side‑by‑side comparison, see our EOR service providers guide. Here’s what to look for:

• Local Expertise: The provider should have a deep, proven understanding of India’s HR and legal environment.
• Rigorous Compliance: Ask how they stay updated on legal changes and what their internal processes are for ensuring compliance.
• Transparent Pricing: Look for clear, upfront pricing without hidden fees. A simple flat monthly fee per employee is often the most predictable model.
• Quality of Support: Do they offer a dedicated account manager? Is support available across time zones? Responsive, human support can make a world of difference.
• Technology and Scope: Consider if their platform can integrate with your existing systems and whether they offer services in other countries you might expand to.

A provider like Bolto is a great example, offering clear pricing, support across 150 plus countries, and an integrated platform that grows with you. If you need a reliable partner, it’s worth seeing how their employer of record services India stack up. Learn more about Bolto’s global EOR.

Understanding EOR Costs and Pricing in India

The cost of employer of record services India is typically structured as a flat monthly fee per employee. This fee can range from around $300 to $600 USD per employee per month. For example, Bolto offers its global EOR service for a flat rate of $599 per employee per month, with no hidden setup fees.

This predictable fee is a major advantage over the alternative. You avoid the significant upfront investment of setting up an entity, which can be $12,000 to $18,000, and the ongoing administrative costs.

Your total monthly invoice from the EOR will typically include:

1. The employee’s gross salary.
2. The employer’s statutory contributions (like PF, which is about 13% of basic pay).
3. The EOR’s flat service fee.

This model converts a host of complex and unpredictable costs into a single, manageable line item, making it easy to budget for your expansion into India. Before you commit, always get a detailed quote to understand the full cost. Book a demo with Bolto to get a clear picture of your potential costs.

Frequently Asked Questions

1. What do employer of record services India actually do?

An EOR in India acts as the legal employer for your staff. They handle everything from payroll and taxes to benefits administration and labor law compliance, allowing you to hire in India without creating a local legal entity.

2. Can I hire employees in India without a registered company?

Yes, this is the primary benefit of using employer of record services India. The EOR uses its own registered Indian entity to legally employ your chosen candidates, making it possible for you to build a team without setting one up yourself.

3. How quickly can I hire someone using an EOR in India?

The process is incredibly fast. Since the legal infrastructure is already in place, you can often onboard a new employee in just a few days, sometimes as quickly as 48 hours. This is a massive advantage compared to the months it takes to establish a subsidiary.

4. Is using an EOR in India expensive?

Compared to the alternative of setting up and maintaining a legal entity, an EOR is very cost effective. You pay a predictable monthly fee per employee and avoid large upfront legal costs, ongoing administrative overhead, and the financial risk of non compliance.

5. What’s the difference between an EOR and a PEO in India?

A PEO requires you to have your own legal entity in India, as it operates on a co employment model. An EOR is for companies that do not have a local entity. The EOR becomes the sole legal employer, which is the compliant solution for foreign companies hiring in India.

6. Does the EOR help with finding candidates in India?

While the core function of an EOR is employment and compliance, some modern platforms have integrated solutions. For example, Bolto combines its employer of record services India with an AI powered recruiting platform to help you both find and hire top engineering talent through a single provider.

7. What happens if I need to terminate an employee?

The EOR will manage the entire termination and offboarding process in full compliance with Indian law. This includes handling the notice period, calculating any required severance or gratuity, processing the final payment, and issuing all necessary legal documents to protect you from potential disputes.

8. How does an EOR protect my company’s intellectual property?

The EOR ensures that every employee signs a legally sound employment contract with strong intellectual property assignment and confidentiality clauses. This contractually guarantees that all work product and IP created by the employee belongs to your company.