Introduction

Hiring employees in a new country can be a complex and time-consuming process for businesses expanding into new global markets. While there are multiple models of hiring international workers, an increasingly popular solution that simplifies this process is partnering with an Employer of Record (EOR). Through an EOR, businesses can hire employees in a foreign country without establishing a legal entity or navigating complex local labor laws on their own.

An Employer of Record(EOR) in India provides global companies with local expertise, compliance assurance, streamlined administrative processes, cost savings, and the ability to swiftly enter the Indian market. By leveraging the services of an EOR, companies can effectively navigate the complexities of hiring and employment in India, ensuring legal compliance, strong payroll system and accelerating their growth trajectory in the country.

In this blog, we will understand the different hiring models in India and throw some light on the benefits of EOR over other models. We will also understand how to choose the right EOR service provider for expansion into India. Finally we will understand how an All-in-One EOR service provider like Wisemonk can help global teams manage their India operations seamlessly.

We have also provided a list of FAQs to answer common queries related to EOR in India.  

Understanding the different hiring models in India

When considering to hire workers in India, there are several options available to you, each with its own set of considerations.

1. Setting up your entity: One approach is to establish a legal entity in the country, which involves setting up a registered company or branch office. This option grants you greater control over your operations, enables you to directly employ workers, and establishes a local presence. However, it can be a time-consuming and complex process, involving legal and administrative procedures, compliance with local regulations, and the need to establish infrastructure.
2. Partner with an EOR in India: In this arrangement, the EOR acts as the legal employer of the workers, handling all employment-related matters such as employment contracts, payroll, benefits, and compliance. This approach allows for a quicker and smoother entry into the Indian market, as the EOR already has an established infrastructure and expertise in local labor regulations. It reduces the administrative burden on your company, freeing up resources to focus on your core business operations.
3. Engage contractors: This provides flexibility and scalability, especially for short-term projects or specialized tasks. Contractors are self-employed individuals or entities who work on a project-by-project basis. While this option offers agility and are cost effective in the short term, it may not be suitable for all roles or long-term staffing needs.

Let us understand how the 3 options differ from each other and impact businesses:

The choice among these hiring methods depends on various factors specific to your organization such as the urgency of filling positions, budget constraints, the number of remote employees you wish to hire, the nature of the work, and your company's long-term goals. As illustrated above, global companies prefer using the services of Employer of Record (EOR), to hire quickly and compliantly in India.

Choosing the best EOR for your business

There are several EOR service providers in the market that can help hire, pay, and manage Indian employees. Before you choose a platform, you should consider the services you will need, and how much you plan to grow your team in India.

Here’s how Wisemonk stacks up against other EOR service providers in India:

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Benefits of Employer of Record (EOR)

Employer of Record (EOR) services in India offer an ideal solution for companies venturing into global markets and seeking to navigate the complexities of international employment. By partnering with an EOR provider like Wisemonk, businesses can effectively manage their workforce in India without the need to establish a local entity. The EOR service provider takes care of compliance with local laws and regulations, ensuring that employment practices adhere to the country's legal framework. EOR services offer a streamlined process for conducting thorough background checks, managing international payroll, and safeguarding global operations. With their expertise in local employment practices and regulations, EOR providers in India enable companies to focus on their core business objectives while minimizing the administrative burdens associated with global expansion.

Wisemonk’s full stack solution of EOR services widely benefits both high-growth global startups and enterprises. Our modular solutions help different teams do their work better.

Value for Finance teams

An EOR (Employer of Record) service provider is essential for assisting finance teams in global companies, especially in handling remote employees based in India. Wisemonk's EOR solution simplifies the process of managing employment contracts, streamlines bulk payroll operations, and ensures accurate maintenance of employee information such as payslips. Additionally, Wisemonk offers competitive foreign currency conversion rates and outstanding support, making them a top choice in the industry.

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Value for HR teams

EOR service providers ensure a smooth and efficient process for hiring niche and premium talent in India, making it seamless for talent acquisition managers to source and onboard top talent quickly. Companies like Wisemonk, with their extensive expertise in the Indian talent market, assist global HR teams in fast and hassle-free hiring. In addition to their hiring capabilities, Wisemonk offers various options, including dedicated HRBP support, employee gifting and organizing employee engagement activities, providing comprehensive solutions for enhancing employee satisfaction and engagement.

Understanding the India talent market

For global companies, selecting the right EOR partner marks a significant step towards success. Beyond that, companies stand to reap significant benefits by gaining a comprehensive understanding of the local talent market. This knowledge allows them to tap into the full potential of the workforce and make strategic decisions to optimize their hiring and talent acquisition efforts. Here are some valuable insights on the Indian workforce and its culture:

1. Diversity and youthful demographic: India has a predominantly young workforce. A large percentage of the 1.4 Bn population falls under the age of 35, resulting in a dynamic and energetic workforce. This demographic also contributes to a strong focus on technology adoption and innovation, while bringing a wide range of perspectives and experiences to the workplace.
2. Skills and Education: India has a large pool of skilled professionals, especially in sectors such as information technology, engineering, finance, and healthcare. Indian universities and educational institutions produce a significant number of graduates each year, providing a steady supply of skilled talent into the global workforce.
3. English proficiency: English is widely spoken and understood in India, particularly in urban areas and among the educated population. This language proficiency gives Indian professionals an advantage when working in global business environments and enables effective communication with international counterparts.
4. Work ethic and adaptability: Indian professionals are often known for their strong work ethic and adaptability. They are willing to put in long hours and go the extra mile to achieve their goals. Be prepared for meetings to begin and end late and for interruptions to occur. Additionally, Indians tend to be flexible and adaptable in various work scenarios, which can be beneficial in fast-paced and evolving industries.
5. Hierarchical structure: Established workplaces in India generally have a hierarchical structure, with clear lines of authority and respect for seniority. Decision-making often follows a top-down approach. However, new-age companies (startups in particular)  are following a more flat structure and giving more autonomy to its employees in terms of decision making.
6. Emphasis on family and community: Indians place significant importance on family and value relationships greatly; engaging in small talk and discussing family with colleagues is encouraged.The support and influence of family members often play a role in an individual's career choices and decisions. Additionally, companies in India often prioritize employee welfare programs and initiatives to foster a sense of community within the workplace.
7. Gender dynamics: Gender diversity and gender equality are evolving concepts in the Indian workforce. While progress has been made, gender disparities still exist, particularly in leadership roles and certain industries. Efforts are being made to promote equal opportunities and bridge the gender gap.
8. Work-life balance: Achieving work-life balance can be a challenge in India, especially in sectors that demand long working hours. However, there is an increasing recognition of the importance of work-life balance, and organizations are implementing policies to support employee well-being.
9. Continuous learning and upskilling: Indian professionals, much like international employees, value continuous learning and upskilling to stay relevant in a competitive job market. Many employees actively pursue professional development opportunities, certifications, and further education to enhance their skills and career prospects.

An interesting trend to observe is that in the early stages of their professional careers, employees often exhibit a tendency to change jobs frequently. This trend is attributed to factors like burnout and the desire for enhanced career growth. As a result, organizations adopt various strategies to retain their employees, including annual performance appraisals, Employee Stock Ownership Plans (ESOPs), and job title changes. Moreover, companies are placing increased emphasis on mental health, actively acknowledging its significance, and supporting employees in coping with burnout by allocating additional time for self-care.

About Wisemonk

At Wisemonk, we help global companies streamline their remote hiring processes in India. We understand the complexities of managing talent operations in India, ranging from employee sourcing and onboarding, managing contracts, compliant payroll management and many more. As a young company, we are built on the individual experience of working with multiple Sequoia and YC-backed startups like Mesh.ai, Shipsy.io and many others.

If you have any inquiries regarding building your remote team in India, we would be delighted to assist you and provide answers.

Frequently asked questions about hiring through an EOR in India

How much does an EOR cost in India?

EOR typically work on one of the following structures:

• Fixed monthly fee per employee
• Percentage of payroll processed every month

While most companies prefer charging a fixed monthly fee, the charges can vary from $249 to $900 per month per employee. There can be additional charges related to value added services such as recruitment. Companies should access all the services being offered under EOR services before making their decision. Wisemonk's all-in-one EOR service, available at $249 per month per employee, is definitely a cost effective solution for companies looking at international expansion into India without setting up their own legal entity.

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What is the difference between an EOR and PEO?

In an EOR arrangement, the EOR becomes the legal employer of the employees, taking on the responsibility for payroll, benefits, and compliance with local employment laws. The client company retains day-to-day control over the employees' work, tasks, and management. In contrast, a Professional Employer Organization (PEO) establishes a co-employment relationship with the client company, sharing employer responsibilities. The PEO and the client company both have legal obligations and responsibilities for the employees. EOR services are often used by companies expanding into foreign markets, allowing them to hire employees without establishing a legal entity. EORs specialize in managing employment and compliance matters in specific countries. PEOs, on the other hand, are commonly used within a company's home country. PEOs help manage HR functions and compliance for local employees, typically in the same jurisdiction as the client company.

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What are some of the common employment practices undertaken by an EOR in India?

Some of the common employment practices undertaken by an EOR in India are Provident Fund, Income Taxes, providing guidance and managing leaves and bonus policies for global companies. For more details on the same, you can check out our detailed India Hiring Guide E-Book here.

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Is EOR for full-time employees or contractors when hiring in India?

An Employer of Record (EOR) can be used for both full-time employees and contractors, depending on the specific requirements of the client company. The primary role of an EOR is to act as the legal employer, taking care of employment-related responsibilities on behalf of the client company. Hiring contractors through EOR definitely helps in avoiding compliance risks such as misclassification of contractors.

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How does an EOR service simplify payroll processing?

Employer of Record (EOR) services play a pivotal role in simplifying global payroll management for businesses operating across borders. By leveraging the expertise of EOR providers, companies can ensure compliance with complex employment laws and tax regulations. The EOR takes charge of payroll processing, accurately calculating and distributing salaries while handling various components, including payroll taxes. Furthermore, certain EOR services such as Wisemonk also offer comprehensive benefits packages, such as health insurance, ensuring employees receive appropriate coverage as per local requirements. One of the significant advantages of EOR is its ability to navigate the nuances of tax laws and mitigate potential risks such as misclassification of workers, especially when employing independent contractors. By choosing to outsource payroll, companies can streamline operations, reduce administrative burdens, and ensure efficient and accurate management of global payroll, allowing them to focus on their core business objectives.

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How does an EOR help with managing contractors?

Employer of Record (EOR) services offer valuable support in managing contractors in India, particularly for businesses operating in the international market. With their deep understanding of local legal regulations, EOR providers ensure compliance with employment responsibilities and employment regulations, mitigating the risks associated with engaging contractors. EOR services handle the complexities of co-employment, acting as the official employer while clients maintain day-to-day supervision and control over the contractors' work. By assuming the role of the employer, EOR providers also take on the responsibility of managing workers compensation, providing a layer of protection for both the contractor and the client. With their expertise in contract staffing, Wisemonk offers a seamless solution for companies seeking to engage contractors in India.

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What are the hassles associated with opening a new entity in India?

Opening an entity in India for global companies can be accompanied by numerous hassles. Hiring workers becomes a significant challenge in the absence of local knowledge and an HR team. The entity establishment itself entails navigating complex legal procedures, bureaucratic requirements, and documentation. Managing payroll compliance in accordance with local laws adds another layer of complexity. Additionally, establishing a foreign entity often requires a deep understanding of the local business landscape and regulatory environment, demanding significant time, resources, and expertise. Global companies often opt to enlist the services of professional firms (E.g.,EORs) to address these challenges, recognizing the need for expert assistance from professionals well-versed in local knowledge and expertise.