Hiring Challenges in India: What Global Companies Face

What Are the Core Hiring Challenges in India?[toc=Main Hiring Challenges]

India has one of the largest talent pools in the world. But if you've actually tried recruiting here, you know that a big talent pool doesn't automatically mean easy hiring.

From what we've seen working with global companies building teams in India, these are the core hiring challenges that come up again and again:

1. The Skills Gap Is the Biggest Bottleneck

India produces millions of graduates every year, but a large chunk of them aren't job ready. The India Skills Report 2026 (by Wheebox, CII, and AICTE) puts employability at 56.35%. Mercer-Mettl's Graduate Skill Index 2025 is harsher, at just 42.6%.

The core issue is that India's education system still prioritizes theory over practical, hands-on training. Graduates often lack the applied tech skills (AI, cloud, data analytics) and the soft skills (communication, critical thinking, teamwork) that global companies expect. So while you'll see thousands of applicants for any open role, the number of truly qualified candidates is a fraction of that.

2. Finding the Right Talent Is a Battle

According to ManpowerGroup's 2025 Talent Shortage Survey (covering 3,000+ Indian employers), 80% of employers in India struggle to find the skilled talent they need. That's above the global average of 74%. A LinkedIn report from early 2026 echoed this: 74% of recruiters in India say finding qualified candidates has become harder, even though applicants per open role have more than doubled since 2022.

The competition is brutal. You're going up against 1,600+ GCCs already operating in India, the big Indian IT firms, and a wave of well-funded startups. All of them are chasing the same top candidates, especially for niche roles in AI, cybersecurity, and cloud.

3. Long Time to Hire

Notice periods in India are significantly longer than what most Western companies are used to. In the tech industry, 60 to 90 day notice periods are standard for mid-level and senior roles. Even entry-level IT positions often carry 30 to 60 days.

That means even after you've found the right candidate and they've accepted your offer, you could wait 2 to 3 months before they actually start. During that gap, counteroffers, second thoughts, and competing offers are common. If your own recruitment process is slow on top of that (multiple interview rounds, delayed decisions), your total time to hire can easily cross 4 months.

4. High Attrition, Especially in Tech and Entry-Level Roles

India's overall attrition rate stood at 17.1% in 2025 (Aon's Salary Increase & Turnover Survey, covering 1,060+ companies). In the IT sector specifically, attrition has historically averaged around 25%, though it's moderated to around 13-15% for the top IT services firms in FY2025-26 (ICRA Research). E-commerce remains the worst hit, with attrition rates near 28.7%.

For global companies, the real pain point is this: candidates with in-demand skills in AI, data, and cloud are constantly being approached by other recruiters. Even after you hire them, retention is a separate challenge altogether.

5. Compliance and Legal Complexity

India's labor laws are layered, and they vary by state. The moment you hire someone, you're responsible for Provident Fund (EPF), Employee State Insurance (ESI), professional tax, gratuity, and more. India is also rolling out new Labor Codes that will reshape employer obligations around wages, social security, and working conditions.

For a global company without a local entity, managing all of this without errors is difficult. And getting it wrong doesn't just mean penalties. It creates a poor experience for employees who expect these statutory benefits from day one.

6. Weak Employer Branding = Fewer Quality Candidates

This one is often underestimated. Indian professionals, especially experienced ones, gravitate toward companies they recognize. If candidates can't find your company on LinkedIn, Glassdoor, or through their professional network, they're far less likely to trust your offer, regardless of how good the compensation is.

For global startups and mid-size companies entering India for the first time, this is a real-world hiring challenge. Without visible employer branding in the Indian job market, your recruitment pipeline will be thinner and slower from the start.

What Are the Industry-Specific Challenges?[toc=Industry Specific Challenges]

The hiring challenges in India look different depending on the industry you're recruiting for.

Here's what each sector is dealing with right now.

1. GCCs (Global Capability Centers): Over 1,600 GCCs are already operational in India, and the number keeps growing. The pressure is on finding talent for high-impact roles in AI, cloud, and data while staying within cost structures. A 42% skill gap exists for AI and data roles in BFSI GCCs alone (Taggd's India Decoding Jobs 2026), and it's widening.
2. IT and Tech: The industry has shifted from mass hiring to selective, skills-based recruitment. Skill gaps in AI, data engineering, and cybersecurity widened from 18% to 25% between 2023 and 2025 (Adecco India). Demand for mid-to-senior talent is growing 20-25%, but fresher intake remains flat. Every company is chasing the same small pool of specialized candidates, making hiring cycles longer and more expensive.
3. BFSI (Banking, Financial Services, Insurance): Hiring is growing at 8.7% in FY 2025-26 (Taggd), but attrition is the real killer. Private bank frontline roles see 30-40% annual attrition. Finding professionals who combine finance domain knowledge with tech skills (digital lending, fraud detection, API integration) is extremely difficult.
4. Healthcare and Pharma: Severe shortage of doctors, nurses, and paramedics, especially outside metro cities. For global companies building healthtech or pharma teams, niche roles in regulatory affairs, clinical research, and diagnostics have very small talent pools.
5. Manufacturing and EV: Strong hiring intent (25% increase per industry data), but the workforce for modern, tech-enabled manufacturing is still developing. Battery engineers, VLSI specialists, and automation operators are in high demand but scarce. Shop-floor level turnover remains high due to location constraints and working conditions.
6. E-commerce and Startups: E-commerce leads India's attrition charts at 28.7% (Aon). Startups struggle with employer branding since most Indian candidates don't recognize smaller global companies. Compensation benchmarking is unpredictable, with candidates often comparing offers against what GCCs and large IT firms pay.

What to Look for When Hiring Employees in India?[toc=Key Considerations]

You've seen the challenges. Now here's what you actually need to get right when hiring in India.

Think of this as your checklist for avoiding the most common (and expensive) mistakes:

• Choose the Right Hiring Model: Decide between setting up a local entity, hiring contractors, or using an Employer of Record (EOR). Each carries different cost, speed, and compliance implications. Contractor misclassification is a serious legal risk in India, as courts tend to side with employees.
• Understand Total Cost, Not Just Salary: Indian compensation goes beyond base pay. Factor in EPF (12% employer contribution), ESI, gratuity, professional tax, and bonuses. Always benchmark on CTC (Cost to Company), not just take-home salary.
• Screen for Skills, Not Degrees: With only 56.35% of graduates considered employable (India Skills Report 2026, Wheebox/CII/AICTE), rely on practical skill assessments, live tests, and structured interviews instead of resumes alone.
• Account for Notice Periods: 60 to 90 day notice periods are standard in Indian tech. Build this into your hiring timeline or plan for notice period buyouts to avoid 3-4 month delays.
• Get Compliance Right from Day One: EPF, ESI, TDS, professional tax, and gratuity obligations are mandatory and vary by state. India's new Labor Codes will add further requirements. Errors here lead to penalties and poor employee experience.
• Invest in Employer Branding Early: Indian candidates research companies before applying. A strong presence on LinkedIn, Glassdoor, and Naukri significantly improves your pipeline quality and speed of hiring.
• Plan for Retention, Not Just Recruitment: With overall attrition at 17.1% (Aon, 2025) and higher in tech and e-commerce, your hiring strategy must include competitive compensation, clear growth paths, and structured onboarding to keep talent long-term.

Get Started With Wisemonk EOR[toc=Choose Wisemonk EOR]

Hiring in India doesn't have to be this complicated. Wisemonk handles the hard parts so you can focus on building your team.

What you get from Wisemonk EOR:

• Onboarding in 24-48 hours: Skip the months-long entity setup. Start hiring immediately.
• Full compliance, zero guesswork: EPF, ESI, TDS, gratuity, professional tax, new Labor Codes. All handled.
• Transparent pricing at $99/month per employee: No hidden fees. No surprises. A fraction of what global EOR platforms charge.
• End-to-end support: Payroll, benefits administration, background verification, contractor-to-employee conversion, and more.

We already support 300+ global companies, manage $20M+ in payroll, and employ 2,000+ professionals across India.

Whether you're hiring your first engineer in Bengaluru or scaling a 50-person team, Wisemonk makes it fast, compliant, and simple.

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