Yes. Using an Employer of Record (EOR) in India is generally more cost-effective than establishing a local entity, especially during the early stages of expansion. An EOR eliminates the high initial expenses, long setup timelines, and ongoing compliance work that come with incorporation. This makes it ideal for market entry, pilot hiring, or quickly building a smaller team before committing to a long-term presence.
Employer of Record (EOR)
An Employer of Record is a licensed Indian employer that hires workers on your behalf, manages payroll, taxes, and compliance, and allows you to operate in India without opening a legal entity.
Pros:
- Lower upfront costs: You avoid incorporation fees, legal drafting, director requirements, audits, and statutory setup costs.
- Faster hiring: An EOR can onboard employees in a matter of days, compared to months for an entity.
- Reduced compliance burden: Payroll, tax deposits, statutory contributions, and filings are handled entirely by the EOR.
- Operational flexibility: You can scale your team up or down without being tied to a fixed legal structure.
- Ideal for early growth: Perfect for market entry, pilot teams, or building your first India pod.
Cons:
- Higher long-term per-employee costs: Monthly EOR service fees may exceed the cost of self-managing payroll once headcount reaches a large scale.
Less administrative control: HR policies and employment documentation follow the EOR’s compliant framework rather than your own.
Local Entity (Subsidiary)
A local entity is a fully registered Indian company owned by your headquarters, allowing you to employ directly but requiring full legal, tax, and HR compliance.
Pros:
- Greater long-term control: You manage employment terms, HR policies, payroll systems, and operations independently.
- Potential long-term savings: As teams grow large (typically 30–40+ employees), the fixed cost model may become more economical.
- Strategic depth: Provides the structure needed for R&D centers, large teams, or revenue-generating operations.
Cons:
- High upfront setup costs: Incorporation, legal drafting, director appointments, statutory registrations, bank setup, and compliance systems require significant investment.
- Longer timelines: Entity setup takes three to six months or more; you cannot legally hire full-time employees until everything is active.
- Heavy compliance load: Ongoing audits, tax filings, labor inspections, and HR documentation require dedicated resources.
- Slower scalability: Adjusting team size or shutting down operations is far more complex compared to an EOR.
Read more: Employer of Record vs Own Entity: What to Choose in 2025
Key Considerations
From our experience as a leading Employer of Record in India and helping US companies decide between an EOR and a local entity in India, these are the factors that consistently influence the final decision:
- Scalability: An EOR makes it easy to adjust team size quickly. For large headcounts, however, monthly EOR fees may eventually surpass the fixed costs of maintaining an entity.
- Administrative Burden: An EOR eliminates the need for in-house HR, accounting, tax, and compliance functions. A local entity requires continuous internal management and external advisors.
- Hybrid Path: Many companies start with an EOR to launch quickly, test the India market, hire early engineers or GTM roles, and then transition to an entity once scale and long-term commitment are clear.
How Wisemonk Helps?
Wisemonk is an India-specialist Employer of Record that helps global companies hire, pay, and manage employees without setting up a subsidiary. We provide compliant employment, payroll, taxes, benefits, and HR support with full transparency and fast onboarding. Need help with your global expansion in India? Contact our team to learn how we can support your global operations.
“I highly recommend them. Wisemonk helped us tap into the vibrant and top-notch Indian talent market and hire our first couple of founding engineers in record time.”
– Krishna Ramachandran, Co-founder at Onform