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- You bypass entity setup and hire in days: EORs eliminate the 3-12 month registration process and $12,000-$18,000 in upfront costs by using their existing legal infrastructure.
- EORs manage India's 69,000 compliance obligations automatically: They handle TDS filings, quarterly tax returns, state labor laws, and changing regulations to prevent penalties.
- All statutory benefits are processed correctly: EORs manage EPF contributions (12% of basic salary), ESI coverage, gratuity payments after 5 years, and mandatory leave entitlements without manual calculations.
- Legal risks transfer from your company to the EOR: The EOR becomes the legal employer and assumes liability for employment contracts, severance disputes, and labor law compliance.
- You pay predictable monthly fees instead of ongoing overhead: EOR fees run $99-$500 per employee versus maintaining local HR staff, legal retainers, accounting teams, and compliance infrastructure for your own entity.
Need help with EOR services in India? Contact us now!
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Hiring in India sounds great until you start researching entity setup timelines, provident fund calculations, and India's 1,500+ labor compliance requirements. The complexity hits fast, and suddenly your 3-month hiring plan turns into a year-long legal project with $20,000+ in upfront costs.
An Employer of Record (EOR) changes that equation completely.
This guide breaks down exactly what you gain by using an EOR in India. You'll see the real benefits (speed, compliance, cost savings), understand the trade-offs with an honest pros and cons comparison, and learn what to look for in an EOR provider. If you're evaluating whether to set up a legal entity or use EOR services to hire Indian employees, you'll have your answer by the end.
What are the benefits of using an employer of record in India?[toc=List of EOR Benefits]
Using an Employer of Record (EOR) in India lets foreign companies quickly hire local talent without establishing a legal entity. This ensures full compliance with India's complex labor laws, handles payroll and taxes (such as TDS and PF), manages statutory benefits (like gratuity, ESI, and maternity leave), and oversees HR administration. Consequently, it reduces costs, mitigates risks, allows for faster market entry, and enables companies to focus on their core business.
Based on our hands-on experience helping global companies hire in India through EOR, here are the key benefits you can expect:
1. You avoid the entire entity setup process
Setting up a legal entity in India means registering with the Ministry of Corporate Affairs, opening bank accounts, and managing complex filings that eat up 3-12 months of your time. The upfront cost alone runs $12,000-$18,000 (around ₹10-15 lakh) in registration and legal fees.
An employer of record eliminates this completely. You're using their existing legal infrastructure, so you can hire employees in days or weeks instead of waiting months to get operational.
2. Compliance becomes manageable
India has over 1,500 labor-related acts and roughly 69,000 compliance obligations spread across state and central levels. You're dealing with the Industrial Employment Act, Shops and Establishments Acts that vary by state, Minimum Wages regulations, and the Maternity Benefit Act. One missed filing or incorrect tax deduction with the Income Tax Department can trigger penalties.
An EOR navigates this entire regulatory landscape for you. They handle Tax Deducted at Source (TDS), file quarterly returns like Form 24Q, issue Form 16 to your employees for their annual tax filings, and monitor changes in local employment laws. Full compliance isn't something you're hoping for, it's guaranteed.
3. Statutory benefits get handled automatically
Indian labor laws require specific mandatory contributions that foreign companies often miscalculate. Your EOR manages:
- Employees Provident Fund (EPF): 12% of basic salary goes toward retirement savings
- Employees State Insurance (ESI): Social health insurance coverage for eligible earners
- Gratuity: Lump-sum payments for employees who complete 5+ years of service
- Leave entitlements: 15-21 days of annual leave plus 26 weeks of maternity leave
This isn't just benefits administration, it's ensuring your Indian employees get exactly what they're legally entitled to while keeping you compliant with statutory benefits requirements.
4. Your intellectual property stays protected
When you hire Indian employees directly without proper contracts, IP ownership can become murky. An EOR uses locally enforceable employment contracts that explicitly assign all intellectual property rights to your company. This is critical if you're building software development teams or hiring skilled professionals who create code, designs, or products. Your IP is safeguarded from day one.
5. Tax filing becomes someone else's problem
Processing Indian payroll means managing income tax deductions, calculating TDS correctly, filing quarterly returns with the Income Tax Department, and issuing tax documents to employees. Get any of this wrong and you're dealing with penalties and compliance risks. Your EOR handles payroll processing, payroll taxes, tax filings, and all the paperwork. Employees receive their Form 16 on time, and you're not scrambling to understand services tax or provident fund contributions.
6. Immigration support is included
If you need to bring foreign nationals to India, they require an Employment Visa with a minimum $25,000 annual salary requirement and registration with the FRRO (Foreigners Regional Registration Office). An EOR can act as the local sponsor, handling visa applications and compliance paperwork. This matters when you're relocating key team members or need international employees on the ground in India.
7. You save significant upfront costs
Beyond the $12,000-$18,000 for entity registration, maintaining a local entity means ongoing legal retainers, accounting fees, HR staff, and compliance overhead. An EOR charges a fixed monthly fee per employee (typically $99-$500), and that's it. When you factor in competitive labor costs for talent in the Indian market, your total cost savings compared to hiring in the US or Europe remain substantial even after EOR fees.
8. Talent access happens immediately
India has a massive pool of skilled professionals in software development, customer support, finance, and other fields. Without a local entity, you can't legally hire them. An EOR removes that barrier. You're tapping into top talent without waiting months for entity approval or being limited by legal requirements.
9. Scaling is actually flexible
Need to hire five developers for a six-month project? Want to test the Indian market with a small team before committing to a subsidiary? An EOR supports this. You can scale your workforce up or down based on business priorities without the administrative burden of managing a legal entity. This works perfectly for project-based hiring or pilot programs where you're not ready for permanent market entry.
10. Legal risks transfer to the EOR
When you're the employer of record, you're liable for employment contracts, severance pay disputes, notice periods, working hours violations, and health insurance issues. The EOR becomes the legal employer, assuming this responsibility.
They draft compliant contracts, handle employee data properly, ensure competitive benefits packages that drive employee satisfaction, and manage any labor law disputes. Foreign companies using an EOR avoid the legal exposure that comes with direct employment in India.
EORs work best when you're testing the Indian market, need fast market entry, or want to avoid compliance risks. They're less ideal for large, permanent operations where your own legal entity becomes more cost-effective.
Why Choose Wisemonk as Your Employer of Record in India?[toc=Why Choose Wisemonk EOR]
Hiring in India shouldn't mean spending months figuring out compliance or worrying about payroll mistakes. Wisemonk handles the complexity so you can focus on building your team.
Here's what you get from Wisemonk EOR:
- Hire Indian employees in days using our existing legal infrastructure while competitors wait months for entity approvals.
- Full compliance guaranteed with Indian labor laws, tax regulations, provident fund, Employees State Insurance, and all statutory benefits.
- Payroll processing handled end-to-end including income tax deductions, tax filings, and benefits administration with zero errors.
- Transparent fixed monthly pricing with no hidden costs or compliance overhead surprises.
- Proven track record managing $20M+ in payroll for 2,000+ employees across 300+ global companies from the US, UK, Europe, and Australia.
- Local compliance expertise covering employment contracts, notice periods, severance pay, and Indian employment regulations.
Ready to tap into India's skilled professionals without the administrative burden? Let Wisemonk handle your Indian payroll, compliance monitoring, and legal risks while you focus on business priorities.
Get started with Wisemonk today and hire in India quickly with full compliance.
Frequently asked questions
How much does an employer of record cost in India?
Most EOR services charge a fixed monthly fee between $99-$500 per employee. This covers payroll processing, compliance monitoring, statutory benefits, and tax filings. The cost is predictable and eliminates the $12,000-$18,000 upfront expense of setting up your own legal entity.
How long does it take to hire an employee through an EOR in India?
You can onboard Indian employees in 1-2 business days once you've selected a candidate. The EOR uses their existing legal infrastructure to create compliant contracts and set up payroll, so you skip the 3-12 month wait for entity registration.
Can I transfer employees from an EOR to my own entity later?
Yes, but it requires terminating the employee with the EOR and rehiring them under your local entity. This triggers notice periods (typically 30-90 days) and may involve severance pay, so plan the transition carefully to avoid disrupting your team.
Who legally owns the employee relationship with an EOR?
The EOR is the legal employer on all employment contracts and government filings. You manage the employee's day-to-day work, performance, and projects, while the EOR handles compliance risks, payroll taxes, and labor law obligations.
What happens if I need to terminate an employee hired through an EOR?
You notify the EOR, and they handle the termination according to Indian labor laws. This includes managing notice periods, calculating severance pay if applicable, and ensuring final settlements for provident fund and gratuity comply with local employment laws.
Does an EOR in India handle contractors or only full-time employees?
Most EOR companies focus on full-time employees because they become the legal employer. For contractors, you typically need a different service that manages independent contractor agreements while ensuring compliance with Indian employment regulations to avoid misclassification risks.
What information do I need to provide to hire someone through an EOR?
You'll need the candidate's personal details (name, address, PAN card), salary breakdown, job title, and start date. The EOR drafts the employment contracts, handles tax deductions setup with the Income Tax Department, and registers them for statutory benefits like health insurance and provident fund.
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