Hiring in India From Russia: How an Employer of Record Works

Hiring in India From Russia: How an Employer of Record Works

India has become one of the more practical hiring markets for Russian companies, particularly for engineering, IT support and back-office work. The talent is not the difficulty. The structure is. Registering an Indian subsidiary takes four to six months, brings ongoing director and audit duties, and ties up capital before a single hire has proved anything.

An Employer of Record, or EOR, is a narrower route. A licensed Indian company employs the staff on your behalf. You direct their work. The EOR holds the employment contract, runs payroll and files the statutory returns.

This guide covers what that arrangement does for a Russia-headquartered business, including the question the other guides skip: how you actually pay for it.

Paying for it: the part most guides leave out

For a Russian company, the practical obstacle is rarely Indian labour law. It is settlement.

The rupee and rouble mechanism is established rather than experimental. It runs through Special Rupee Vostro Accounts, which the Reserve Bank of India introduced in July 2022 and consolidated into a single framework by circular on 17 July 2026, superseding five earlier circulars. Russian officials have put the share of bilateral trade settled in national currencies at over 90 percent. Trade was worth close to 60 billion dollars in India’s 2025-26 financial year, after a softer 2025 as sanctions tightened, and the two governments have set a target of 100 billion by 2030. The Reserve Bank of India and the Bank of Russia are separately working towards settlement through central bank digital currencies.

Two things follow for an EOR engagement, and both are worth settling before you sign:

• An EOR invoice is a payment for services, not trade in goods. That distinction used to matter, because the vostro route began as a goods trade mechanism. Under the July 2026 framework it covers all permissible current and capital account transactions under FEMA, service payments included. What still needs confirming is practical: ask your provider which currency and which account they can actually receive into.
• Indian banks run their own compliance checks. An authorised dealer bank in India no longer needs separate Reserve Bank approval to open one of these accounts, but that is not the same as an automatic yes to any given payment. Banks assess counterparties individually and appetite varies. A provider who has done this before will tell you which route has worked; a provider who waves the question away has probably not.

None of this is a reason to avoid hiring in India. It is a reason to agree the payment path in the first conversation rather than the month before the first payroll run.

What the Employer of Record handles

The EOR becomes the legal employer of record for your India staff. In practice:

• Employment contracts drawn under Indian law, with notice, confidentiality and IP assignment that stand up in an Indian forum
• Monthly payroll, including salary structuring and payslips
• Provident Fund, 12 percent employee and 12 percent employer, mandatory at 20 or more employees
• ESIC, 0.75 percent employee and 3.25 percent employer, applicable from 10 employees where gross wages are 21,000 rupees or below
• Professional Tax, levied by state, rates vary
• Gratuity, payable after five years of service in establishments with 10 or more employees
• TDS on salary, deducted and deposited monthly

India’s four Labour Codes took legal effect on 21 November 2025 and the Central Rules were notified on 8 May 2026. Provident Fund, ESI, gratuity and maternity benefit now sit under the Code on Social Security, 2020 rather than in separate Acts. State rules are still arriving unevenly, so the position in Karnataka is not the position in Maharashtra. A competent EOR tracks this state by state rather than applying one national template.

What it does not cover

An EOR does not manage your people. It does not set objectives, run appraisals or decide promotions. It does not give you a legal presence in India for signing customer contracts, holding a bank account or importing goods. If you need any of those, you need an entity.

Permanent establishment

Hiring through an EOR reduces the risk that your Russian entity is treated as having a taxable presence in India, but it does not remove it. Permanent establishment turns on what the India team does, not only on who employs them. Staff who negotiate or conclude contracts on your behalf raise the risk whatever the employment structure. Take Indian tax advice on the specific roles before you hire, not after.

Timelines

Onboarding through an established India EOR usually runs in days once the commercial terms and the candidate are settled. A private limited company takes four to six months through incorporation, registrations and bank account opening before the first salary can legally be paid. Allow additional time on the Russian side for the payment route to be confirmed, since that is more often the delay than the hiring itself.

When an entity is the better answer

An EOR suits a team of roughly two to thirty people, a market test, or a first year of operations. It stops suiting you when:

• Headcount passes the point where per-employee fees exceed running your own compliance function
• You need to sign revenue contracts with Indian customers in your own name
• You are building physical operations, holding inventory or acquiring assets
• Your investors or auditors require a consolidated Indian subsidiary

Many companies run an EOR for the first eighteen months and then move the same people onto their own entity. A good agreement allows that transfer without staff resigning and being rehired.

RIC cooperation and what it actually changes

Trade discussion between Russia, India and China has raised interest in India-facing operations. Keep the effect in proportion. Cooperation at a diplomatic level does not change the Labour Codes, the tax treatment of a permanent establishment, or the compliance checks an Indian bank runs on a payment. The practical case for hiring in India rests on the talent pool, the cost base and the time zone. Plan on the rules as they stand today.

Frequently asked questions

Can a Russian company hire employees in India without an Indian entity?

Yes, through an Employer of Record. The EOR employs the staff under Indian law and you direct their work.

How do we pay the EOR from Russia?

Usually through the rupee and rouble settlement route, using an Indian bank that operates a Special Rupee Vostro Account. Since the Reserve Bank of India’s consolidated framework of July 2026, that route covers service payments as well as goods trade. Confirm the exact path with your bank and the provider before signing.

Does an EOR create a permanent establishment in India?

It reduces the risk compared with hiring directly but does not eliminate it. It depends on what the team does.

How quickly can we start?

Once the agreement is signed and candidates are chosen, onboarding commonly happens within days and payroll runs from the next cycle. Confirm the payment route early, as that is the more common delay.

Can we move the team to our own entity later?

Yes, and it is a common path. Agree the transfer mechanism before you sign, including notice, accrued gratuity and continuity of service.

Hiring in India from Russia: how TMS can help

Team Management Services has run HR outsourcing from India since 2006. For a Russia headquartered business that means one accountable partner instead of four vendors:

• Employer of Record. We become the legal employer for your India staff, so you can hire without setting up an entity.
• Payroll outsourcing. Salaries, Provident Fund, ESIC, Professional Tax and TDS, calculated and filed on time every month.
• Statutory compliance. Registrations and returns under the Labour Codes, tracked state by state rather than on one national template.
• Contract staffing. Scale the India team up or down without changing the structure underneath it.

We will also tell you if the payment route does not work before you commit, rather than after.

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