Hiring through an Employer of Record (EOR) in India is dramatically faster, simpler, and lower-risk, while setting up a subsidiary gives you full long-term control but requires heavy time, cost, and compliance investment.
An EOR acts as the legal employer and handles everything from contracts and payroll to statutory compliance. A subsidiary requires full incorporation, registrations, ongoing audits, legal oversight, and HR infrastructure. The right choice depends on whether you’re testing the market or building a long-term presence.
Below is a clear, practical comparison drawn from India-specific regulatory requirements and commonly observed expansion patterns.
EOR vs. Subsidiary/Local Entity in India[toc=EOR vs. Entity in India]
A quick way to understand the tradeoffs is to look at speed, cost, compliance load, and long-term control.
Employer of Record (EOR)
Based on how global companies typically enter India, the EOR model consistently offers the fastest and safest route for early hiring.
Pros
- Hire in days, not months. An EOR already has an Indian entity, so you can start onboarding almost immediately.
- Minimal upfront cost. You avoid incorporation expenses, legal drafting, audits, and mandatory registrations.
- Reduced compliance risk. The EOR absorbs responsibility for payroll, taxes, PF/ESI, contracts, and HR compliance.
- Predictable costs. You pay a monthly per-employee fee with no long-term operational commitments.
- Great for pilots and small teams. Perfect for early market testing, short-term projects, and hiring <20 employees.
Cons
- Less control over HR architecture. You operate within the EOR’s employment framework.
- Can cost more at scale. For 30–40+ employees over many years, entity setup becomes cheaper.
- Dependency on the provider. You rely on the EOR for payroll timelines, documentation, and employee processes.
Subsidiary / Local Entity
For companies with permanent India plans, a legal entity opens full operational control, but comes with heavier obligations.
Pros
- Full control of employment terms and culture. You customize contracts, policies, and benefits.
- Economical for large teams. Once established, per-employee costs drop significantly.
- Strategic long-term presence. Essential for revenue-generating operations or building R&D/product hubs.
- Potential tax planning benefits. A local entity allows more flexibility in structuring operations.
Cons
- Slow and complex to set up. Incorporation, MCA filings, PAN/TAN, bank setup, GST, PF, ESI, Shops Act each layer adds weeks.
- High upfront and ongoing costs. Legal fees, audits, payroll systems, HR teams, and compliance oversight.
- Full compliance liability. Any PF/ESI/TDS error, labor dispute, or missed filing is your responsibility.
- Difficult to exit. Winding up an entity can take 12–24 months.
Read more: Employer of Record vs Own Entity: What to Choose in 2025
When should you choose each option?[toc=When to Choose]
Choose an EOR if:
- You want to hire quickly without bureaucracy.
- You’re entering India for the first time.
Your team size is small (<20). - You want to avoid compliance risk while you test the market.
Choose a subsidiary if:
- You’re building long-term India operations.
- You plan to hire 30–40+ employees.
- You need complete autonomy over contracts, benefits, and branding.
- You intend to generate revenue or build an R&D center in India.
Wisemonk: Your Trusted partner for Global expansion[toc=How Wisemonk Helps]
Wisemonk is an India-specialist Employer of Record helping global companies hire, pay, and manage employees in India without setting up a local entity. We combine deep local compliance expertise with fast onboarding, transparent pricing, and end-to-end HR and payroll support.
With Wisemonk, companies get:
- Fast, compliant hiring in just a few days
- Fully managed payroll, PF/ESI, taxes, and statutory compliance
- India-specific HR policies and contract frameworks
- Equipment procurement for remote teams
- A reliable partner for future transitions from EOR to entity setup when you’re ready
Whether you’re testing the waters or scaling, Wisemonk gives you a compliant, low-risk, high-efficiency way to build in India.
Need help with your global expansion in India? Contact our team to learn how we can support your global operations.