Hiring in India works differently depending on whether you use an Employer of Record (EOR) or a Professional Employer Organization (PEO). The key difference is straightforward: an EOR becomes the legal employer on your behalf in India, while a PEO only supports HR functions and requires you to already operate your own Indian legal entity.
From our experience helping 500+ global companies build teams in India, this distinction matters because it fully changes your compliance burden, setup requirements, and speed to hire. An EOR handles everything end-to-end, employment contracts, payroll, taxes, benefits, social security, and statutory filings, allowing you to hire in India without spending months setting up a subsidiary. A PEO cannot legally employ workers for you, it operates in a co-employment model where your company remains the legal employer, meaning you still shoulder compliance risk, entity setup, and regulatory obligations.
This is why companies testing the Indian market, starting with small teams, or hiring their first employees almost always choose EOR, while mature companies with a registered Indian entity sometimes prefer a PEO for administrative support.
EOR vs. PEO in India: Key Differences[toc=EOR vs. PEO]
From our experience helping global companies hire in India, the core difference comes down to who becomes the legal employer and whether you need a local entity before hiring.
Legal Structure
- Employer of Record (EOR): The EOR is the legal employer on paper and manages all compliance, payroll, taxes, and statutory requirements on your behalf.
- Professional Employer Organization (PEO): The client company remains the legal employer and enters a co-employment arrangement with the PEO, sharing employer responsibilities.
Requirement for a Local Entity
- EOR: You can hire in India without creating an entity because the EOR uses its own legal infrastructure.
- PEO: You must set up your own Indian subsidiary before you can engage a PEO, because PEOs work only with registered local entities.
Liability & Compliance Responsibility
- EOR: The EOR assumes full legal liability for compliance with Indian labor laws, payroll filings, taxes, PF/ESI contributions, contracts, and audits.
- PEO: Liability is shared, but the client still holds ultimate responsibility for compliance failures and legal exposure.
Speed to Onboard
- EOR: You can hire in a matter of days because the EOR already has a legal entity, compliant contracts, and payroll systems in place.
- PEO: Hiring is slower because onboarding can only begin after your Indian entity is incorporated, which typically takes months.
Best Use Case
- EOR: Best for companies entering India for the first time, testing the market, or hiring a distributed team quickly with minimal effort.
- PEO: Best for companies that already have an India entity and want to outsource HR functions like payroll, benefits, and compliance for existing staff.
Geographic Scope
- EOR: Designed for global hiring across multiple countries and ideal for companies building international teams.
- PEO: Traditionally structured as a domestic co-employment model, where the client already has a legal entity in the country. In many regions, especially outside North America, the term “global PEO” is mostly a marketing label, and the service offered is functionally an EOR rather than a true co-employment arrangement.
Read more: PEO vs. EOR Guide: Key Differences for Global Hiring
Wisemonk: India’s Specialist EOR for Global Teams[toc=How Wisemonk Helps]
Wisemonk is an India-focused Employer of Record that helps global companies hire, pay, and manage employees in India without setting up a local entity. We offer compliant employment contracts, accurate payroll, benefits administration, and deep local HR support so companies can scale confidently. Our clients value our responsiveness, compliance rigor, and high-quality talent experience.
Need help with your global expansion in India? Contact our team to learn how we can support your global operations.