Outsourcing to India: Expert Guide for Global Companies

Is outsourcing to India still worth it in 2026? Absolutely. India remains the top outsourcing destination, handling over 55% of global services with $283 billion in revenue and a workforce of 5.8 million tech professionals.

Yes, there's political noise. The proposed HIRE Act (S.2976) and tariff rhetoric made headlines, but the bill sits stalled in the Senate Finance Committee with zero co-sponsors, and no official ban exists.

Meanwhile, India's outsourcing industry has quietly evolved. Companies now outsource AI engineering, cloud infrastructure, and data analytics, not just call centers. Budget 2026-27 reinforced India's position with unified IT tax provisions and a cloud services tax holiday until 2047.

This guide covers why US companies choose India, what outsourcing costs by role, how to pick the right model, which services you can outsource, and the real risks that matter in 2026.

What is outsourcing to India?[toc=Outsourcing to India]

Outsourcing to India means hiring Indian companies or professionals to handle your business operations,  from software development and IT services to digital marketing, finance, and back-office support. Instead of building everything in-house, you delegate specific functions to a service provider in India to reduce costs, access skilled talent, and scale faster.

In our experience helping 300+ companies make this move, we've seen outsourcing in India evolve across three distinct categories:

• ITO (IT outsourcing) covers software development, cloud migration, cybersecurity, and technical support. India's information technology sector alone employs over 5.4 million professionals.
• BPO (business process outsourcing) includes customer support, data entry, payroll, and accounting. Indian outsourcing firms handle 56% of the world's BPO work.
• KPO (knowledge process outsourcing) focuses on high-value work like data analytics, financial research, legal services, and artificial intelligence. This is the fastest-growing segment of India's outsourcing industry.

Global businesses, especially US firms, choose India for 40-60% cost savings, a vast talent pool of 1.5 million engineering graduates annually, the time zone advantage for 24/7 operations, and strong government support through programs like Digital India and the IndiaAI Mission.

The outsourcing landscape has shifted. Overseas companies aren't just outsourcing call centers anymore, they're building entire engineering, finance, and data analytics teams in India. That shift is exactly what makes the cost and talent argument worth a closer look.

Why companies outsource to India?[toc=Advantages]

India offers the best combination of cost effectiveness, talent depth, and operational maturity that no other destination matches.

Having guided companies across SaaS, fintech, healthcare, and e-commerce through this decision, we see the same six drivers come up every time.

1. Cost savings Labor costs are 50-70% lower than the US for equivalent roles, the savings apply across developers, support staff, and back-office teams.
2. Large talent pool India produces 1.5 million engineering graduates annually with strong expertise in IT, software, finance, and customer support.
3. English-speaking workforce India has the world's second-largest English-speaking population, and most professionals have years of US company experience.
4. Time zone advantage The 9.5-12.5 hour difference enables 24/7 operations, your US team logs off, your India team starts working.
5. Fast scaling Through an Employer of Record in India, companies can onboard entire teams in weeks instead of months, fully compliant with Indian labor laws.
6. Proven infrastructure India has 25+ years serving global businesses with modern data centers, government tax incentives, DPDP Act 2025 data security, and the $1.2 billion IndiaAI Mission.

Over 1,750+ Global Capability Centers operate in India, including teams from Microsoft, Google, and JP Morgan.

"The Indian technology services sector can utilize the potential of deep technologies like cloud, artificial intelligence, and machine learning to contribute significantly to the global economy."
- Debjani Ghosh, President of NASSCOM (Strategic Review 2025)

And if you want to see how these cost savings translate into business value, check out the complete benefits of outsourcing to India.

These numerous benefits keep India at the top of every outsourcing decision. But how do the cost advantages actually compare against other destinations?

How much does outsourcing to India cost?[toc=Outsourcing to India Costs]

Outsourcing to India costs 50-70% less than US hiring. But the exact number depends on the role, experience level, city, and your engagement model.

Here's what we see across the companies we support with payroll and hiring in India.

Salaries in Tier-1 cities like Bangalore and Hyderabad have been climbing 8-10% annually due to demand for AI and cloud skills. Tier-2 cities like Indore or Coimbatore run 15-20% lower with better retention rates.

What affects your total cost?

Onboarding, project management, knowledge transfer, and quality rework typically add 20-30% to initial estimates. Currency fluctuations can shift your operational expenses 5-10% year over year.

Factor in communication tools, overlap hours for meetings, and occasional travel for team alignment.

Which engagement model fits your budget?

EOR services charge a flat monthly fee per employee, typically a percentage of gross salary. Staffing agencies mark up base rates by 20-40%. Managed services providers use project-based pricing or monthly retainers.

The model you choose affects your total cost as much as the salaries themselves.

For a detailed breakdown of what you'll actually pay, read our guide on the cost of outsourcing to India.

Calculate your exact savings with our Employee Cost Calculator or EOR vs Entity Calculator.

Now let's look at what specific outsourcing services you can move to India.

What services can you outsource to India?[toc=Services Outsourced to India]

India's outsourcing industry has evolved far beyond call centers. Companies across various industries now outsource everything from back office support to complex AI development.

Here's what US companies outsource most frequently.

1. Software development

Indian developers build mobile apps, SaaS products, enterprise platforms, and custom software at 60-70% lower cost than US teams. In 2026, this extends to AI and machine learning development, cloud architecture, and robotic process automation. Read our software development outsourcing guide.

2. IT services and technical support

Cloud migration, cybersecurity, infrastructure management, help desk, and 24/7 troubleshooting, India's 5.4 million IT professionals handle the complete technology stack. Your US team sleeps while Indian teams resolve tickets and keep systems running. Explore top IT outsourcing companies in India.

3. Customer support and call centers

24/7 multilingual support teams deliver faster response times and understand American customer expectations. From technical troubleshooting to sales support, Indian call centers handle high-volume operations with strong customer satisfaction scores.

4. Finance, accounting, and payroll

Monthly close, accounts payable/receivable, tax preparation, financial reporting with US GAAP and IFRS expertise, plus automated payroll processing with statutory compliance (PF, ESI, TDS). Companies save 50-60% on accounting outsourcing while maintaining accuracy.

5. Digital marketing and SEO

Content strategy, paid advertising, search optimization, and social media management that drives measurable growth. Indian teams deliver ROI-focused marketing outsourcing and specialized SEO services for western clients.

6. HR operations and recruitment

End-to-end talent acquisition, onboarding, performance management, and employee relations for distributed teams. Scale faster with HR outsourcing or specialized recruitment process outsourcing.

7. Data analytics and research

Business intelligence, predictive analytics, and market research using tools like Tableau and Power BI. Companies hire business analysts and market research experts to turn data into innovative solutions and actionable insights.

8. Data entry and content creation

High-volume digitization, CRM updates, and database management with 99%+ accuracy rates. English-fluent professionals also deliver blog posts, whitepapers, case studies, and technical documentation,  SEO-optimized content services at scale.

The scope of outsourcing services keeps expanding. Industry leaders are now outsourcing strategic business consulting, cloud architecture, and full-stack data analytics to India, high-value work that drives technological expertise and innovation, not just cost savings.

The services are clear. But how does India compare to the Philippines, Eastern Europe, and Latin America on cost, talent, and delivery?

How does India compare to other outsourcing destinations?[toc=India vs. Other Outsourcing Destinations]

India leads the global services outsourcing market, but it's not the only option. We regularly help companies evaluate India against the Philippines, Eastern Europe, and Latin America based on their specific business needs.

When India is the right outsourcing partner:

• Large-scale teams (50+ employees) across software development and IT services.
• Cost-critical projects needing 60-70% savings without sacrificing quality.
• 24/7 productivity needs where the time zone difference is an advantage, not a barrier.
• AI, machine learning, data analytics, or cloud infrastructure work.

The competitive landscape is clear, India offers the deepest cost advantages and the largest talent pool for technical and back-office work. Most successful companies use a hybrid strategy, India for core technical operations, regional hubs for customer-facing roles.

Now that you know what India offers and how it compares, let's look at the different outsourcing models available to you.

What are your options for outsourcing to India?[toc=Outsourcing to India Options]

You have two primary paths when outsourcing to India: build your own in-house team or partner with a service provider. The right choice depends on how much control you need, your budget, and whether you're testing the market or scaling long-term.

Here's a clear breakdown of your options:

Outsourcing models for India showing four paths: legal entity setup, Employer of Record, staff augmentation, and managed services for global companies expanding business operations

Option 1: Build Your Own Team in India

This means the people work directly for you. They're your employees, follow your processes, and integrate into your company culture.

• Set up a legal entity (captive center): You incorporate a subsidiary in India for 100% control over operations, branding, and hiring, requires significant capital and 3-6 months setup.
• Hire through an Employer of Record (EOR): This is the fast version. You don't have to set up an entity; an EOR handles payroll, taxes, and compliance while you manage the day-to-day work, onboard employees in 48 hours instead of 6 months.

For a detailed breakdown of when to use each approach, read our guide on Employer of Record vs Own Entity in 2026.

Option 2: Outsource Work to a Service Provider

Here you're not hiring employees, you're contracting for specific deliverables or services. The provider handles execution and management.

• Staff augmentation: Staffing firms provide temporary talent for specific projects, you direct the work, they stay on the provider's payroll.
• Managed services (outsourcing company): Outsourcing companies take over entire functions like customer support or software development, you define outcomes, they handle execution.

Most companies start with one model and evolve as they scale. The model you choose determines your compliance risk, hiring speed, and long-term costs.

Wisemonk offers flexibility across all these models, from EOR hiring to full outsourcing, enabling global businesses to operate in India without compliance complexities.

Choosing the right model is half the battle. Executing it properly is where we'll focus next.

How do you outsource to India step by step?[toc=Steps to Outsource to India]

The companies that thrive treat outsourcing work to India as a strategic business decision, not just a cost-cutting exercise.

From what we've seen across industries, these six steps separate successful outsourcing partnerships from costly failures.

Step 1: Define your scope and business goals

Identify which business functions you want to move, software development, technical support, back office support, or customer service. Most industry leaders retain core business activities in-house while outsourcing non-core processes to India.

Step 2: Choose the right outsourcing model

For maximum control over your outsourced team, choose an EOR or staff augmentation. For hands-off execution, go with managed services where outsourcing partners handle delivery. Your risk tolerance and management bandwidth should drive this decision.

Step 3: Vet and select a trusted partner

Don't chase the lowest price. Look for operational efficiency, a proven track record with US clients, and compliance with India's DPDP Act 2025 for data protection. Verify enterprise-grade infrastructure and quality control processes before signing.

Step 4: Set up communication channels

Set aside 2-3 hours of overlap time (US mornings / India evenings) for live syncs. Use Slack, Jira, or Microsoft Teams, Indian professionals excel when communication is constant and video calls replace text.

Step 5: Start small and scale gradually

Launch with a pilot project, one developer or a small support team, before migrating entire business operations. Create detailed SOPs and feedback loops to align your Indian teams with your company culture.

Step 6: Treat them as your own team

The most successful businesses outsourcing to India view offshore talent as colleagues, not vendors. Show clear career paths, celebrate local holidays like Diwali, and include them in company events. This reduces attrition and retains top skilled talent.

For a deeper walkthrough, read our guide on how to outsource work to India from the USA.

With the right approach, the outsourcing journey becomes a long-term competitive advantage. But no destination is risk-free, here's what to watch for.

What are the risks of outsourcing to India?[toc=Risks]

Every outsourcing destination has risks. In 2026, the real challenges aren't language barriers or time zone differences, they're legal, financial, and operational.

Here's what we see go wrong most often across the companies we support, and how to avoid it.

• Data protection liability is real. India's DPDP Act (rules notified November 2025, full enforcement by May 2027) holds you liable for vendor data breaches, penalties reach up to ₹250 crore (~$30 million). Require ISO 27001 or SOC 2 certification and include data processing agreements in every contract.
• Permanent Establishment risk can trigger double taxation. If your Indian team makes business decisions (not just executes tasks), tax authorities may classify you as having a taxable presence in India. Use an EOR or vendor contract that clearly limits decision-making authority.
• Joint employment liability catches companies off guard. Directly controlling vendor staff, assigning work, setting hours, can make you a "joint employer" liable for PF, ESI, and gratuity under Indian labor law. An EOR structure eliminates this by acting as the legal employer.
• IP ownership defaults to the creator. Under Indian copyright law, vendors own the code unless your contract includes explicit "work for hire" or IP assignment clauses. Get this in writing before any work begins.
• Attrition has stabilized but still matters. India's IT attrition sits around 13–17% annually, down from 23% peaks in 2022. Companies offering benefits 15–20% above statutory minimums see 23% lower turnover, treat your outsourced team as colleagues, not vendors.
• Hidden costs add 20–30% to initial estimates. Onboarding, knowledge transfer, project management, and quality rework aren't included in base salaries. Build a total cost model before you commit.

Every one of these risks is manageable with the right structure. For more detail, read our guide on outsourcing to India problems and solutions.

India's outsourcing industry keeps growing despite these challenges, largely because the government actively backs it.

How does the Indian government support outsourcing?[toc=Government Support]

India's outsourcing industry doesn't grow by accident. The Indian government actively backs it through tax policy, data protection frameworks, and workforce investment. Budget 2026-27 made this even more aggressive.

• Unified IT tax framework. All IT services, software development, BPO, KPO, and contract R&D, now fall under one "Information Technology Services" category with a 15.5% safe harbor margin. The threshold jumped from ₹300 crore to ₹2,000 crore with automated 5-year approvals, reducing transfer pricing disputes for outsourcing companies.

• Cloud services tax holiday until 2047. Foreign companies using Indian data centers for global cloud services receive a full tax exemption through 2047. This followed major commitments from Microsoft ($17.5 billion), AWS ($7 billion), and Google ($15 billion) in India's cloud and AI infrastructure.

• DPDP Act creates a clear data protection framework. The Digital Personal Data Protection Act (passed 2023, rules notified November 2025) establishes consent-based privacy standards comparable to GDPR. Full compliance obligations phase in by May 2027, giving businesses a structured transition window.

• $1.2 billion IndiaAI Mission plus ₹1,000 crore for semiconductors. Combined with Skill India and NASSCOM programs producing engineering graduates annually, the government is investing in the specialized skills that global companies actually need.

For more on compliance requirements, read our guide on legal considerations when outsourcing to India.

Government support explains why India offers the strongest outsourcing infrastructure globally. But the industry itself is changing fast.

What is the future of outsourcing to India?[toc=Future Trends]

India's outsourcing market hit $350 billion in 2025 and is projected to surpass $925 billion by 2030, growing at 14.3% annually. The nature of the work is shifting just as fast as the numbers.

• From cost center to innovation hub. Companies now outsource AI development, machine learning, cloud architecture, and strategic consulting to India, not just data entry and call centers. The competitive landscape has moved from "cheaper labor" to "better capabilities."
• Automation is reshaping which roles get outsourced. Up to 30% of traditional low-value tasks will be automated by 2030. This pushes the outsourcing industry toward specialized expertise in data analytics, fintech operations, and digital transformation.
• GCCs are replacing third-party vendors. Over 1,750+ companies now run their own Global Capability Centers in India, including Microsoft, Google, and JP Morgan. The shift toward direct control reflects how strategic India operations have become.
  Read our complete guide to GCCs in India.
• India's vast pool of AI and cloud talent is the real moat. While other outsourcing destinations compete on price, India offers a combination of scale, English proficiency, and deep technical expertise that's hard to replicate. The talent pipeline keeps growing, and so does global demand for it.

The companies winning in India aren't just reducing costs. They're building long-term technical capabilities that become a competitive advantage.

To know more about GCCs in India, refer to this detailed guide on "Global Capability Center (GCC) in India: A Complete Guide"

Understanding where the industry is headed helps. But executing your India strategy requires the right partner.

Get Started with Wisemonk EOR for India Outsourcing[toc=Why Choose Wisemonk]

Wisemonk simplifies outsourcing to India by offering end-to-end solutions that help global businesses hire, pay, and manage top talent in India without the complexity of setting up a local entity. Our Employer of Record (EOR) services guarantee seamless operations while keeping you compliant with Indian labor regulations, so you can focus on growth, not paperwork.

Here's how we simplify the outsourcing process:

• Scalable and flexible models: We offer EOR for direct hiring, staff augmentation for temporary needs, and managed services for entire functions, choose what fits your business stage.
• Simplified payroll: Our automated system handles statutory deductions (PF, ESI, TDS, Professional Tax), benefits administration, and ensures timely payments every cycle.
• Dedicated HR support: We manage employee onboarding, performance management, benefits, and day-to-day HR tasks so your team can focus on business strategy.
• Full compliance management: We ensure compliance with Indian labor laws, tax regulations, and statutory benefits, reducing your legal risks and PE exposure from day one.
• Custom solutions: We've helped 300+ companies scale in India. We tailor our approach to your unique needs, whether you're hiring one person or building a 200-person team.

Wisemonk Client review/feedback:

“I've been working with Wisemonk as an EOR employee for past two years. The onboarding call was really good and they even helped my team onboarding as well. They helped me with the macbook, iphone devices procurement. Their interface is good and I can manage my team in a single interface”

- Felix S.
Senior Software Development Engineer
Read the full review on G2 →

“Wisemonk was instrumental in identifying and assisting in the recruitment of three successful senior executives. The team took a hands-on approach to solving the client's needs, and Wisemonk iterated multiple approaches to problem-solving based on the client's needs and directional shifts.”

- Hariher B
Co-Founder, BuyEazzy
Read the full review on Clutch →

Beyond outsourcing, we also assist with background verification, equipment procurement, company registration, and GCC setup in India to ensure your operations are efficient, compliant, and growth-ready.

Ready to start your outsourcing journey with confidence? Reach out to us now!