Employer of Record in India: Costs, Timeline and When to Use One
India is one of the easiest places in the world to find skilled people and one of the slower places to set up a company. That gap is why so many global firms start hiring here through an Employer of Record (EOR) before they commit to a local entity. So what is the real employer of record India cost, and how fast can you hire?
This guide covers what an EOR does in India, what it costs, how long each route takes, and the point at which your own entity becomes the better choice.
Key takeaway: an EOR lets you hire full-time employees in India in weeks instead of months, with PF, ESIC and tax handled, and no Indian company of your own. Set up your own entity once your India team is large and long-term.
What an Employer of Record does in India
An Employer of Record becomes the legal employer of your staff in India. It issues the employment contract, runs payroll, deducts and deposits statutory contributions, and keeps the records that Indian labour law requires. You keep full control of the work itself: you choose the person, set their goals and manage them day to day.
In practice, an EOR in India takes care of:
- Employment contracts written to Indian law, including notice periods, leave and probation terms.
- Monthly payroll in rupees, with payslips and salary transfers.
- Provident Fund (PF): 12% from the employee and 12% from the employer on wages up to the ceiling, which rose to Rs 25,000 a month from 17 September 2026.
- Employees’ State Insurance (ESIC): 0.75% from the employee and 3.25% from the employer, for staff earning up to Rs 21,000 a month gross.
- Professional Tax and Labour Welfare Fund, which vary by state.
- Income tax deducted at source (TDS) on salary, with quarterly returns and annual tax certificates.
- Gratuity, statutory bonus and maternity benefit when they fall due.
- Exits: full and final settlement, relieving letters and experience letters.
India’s four Labour Codes came into force on 21 November 2025, and state rules are still being rolled out unevenly. A good EOR tracks those changes for you, so a new state rule or a revised wage ceiling does not land on your desk.
The three ways to hire in India
Most foreign companies choose between three routes.
| Independent contractor | Employer of Record | Own Indian entity | |
|---|---|---|---|
| Time to first hire | Days | Usually a few weeks or less | 2 to 4 months to register, then payroll setup |
| Upfront cost | None | None | About Rs 12 lakh to set up |
| Monthly cost | Contractor fee only | Salary + statutory costs + EOR fee | Salary + statutory costs + accounting, compliance and office overheads |
| Employee benefits (PF, ESIC, gratuity) | No | Yes | Yes |
| Misclassification risk | High if the person works like an employee | Low | Low |
| Best for | Short, clearly defined projects | First hires, testing the market, teams up to a few dozen | Large, long-term teams |
Contractors look cheap, but Indian authorities look at how the work is actually done, not at the label on the agreement. If a contractor works fixed hours, reports to your managers and uses your systems, they may be treated as an employee. That can mean back-payment of PF and other dues.
Your own entity gives you full control, but you need to register the company, open bank accounts, get registered for PF, ESIC, Professional Tax and Shops and Establishments, appoint directors and auditors, and file annual returns. Plan on 2 to 4 months before your first hire is on payroll.
An EOR sits in between. You get employees on proper Indian contracts with full statutory benefits, without building a legal presence first.
Employer of record India cost: what you actually pay
The total monthly cost of each employee has three parts.
- Gross salary. This is what you agree with the candidate.
- Employer statutory costs. The main ones are employer PF (12% of wages up to Rs 25,000 a month) and, for lower salaries, employer ESIC (3.25%). Add gratuity provision and any state Labour Welfare Fund.
- The EOR service fee. In India this is usually a fixed monthly fee per employee.
EOR fees in India are generally much lower than the global platform prices that many firms see first. Local providers commonly charge in the range of USD 50 to USD 100 per employee per month, with lower rates as the team grows. Global platforms often charge several hundred dollars per employee for the same country.
A simple example. A software engineer on Rs 18 lakh a year (Rs 1.5 lakh a month gross):
- Employer PF: 12% of Rs 25,000 = Rs 3,000 a month
- ESIC: not applicable at this salary
- EOR fee: about USD 65 to 100 a month, depending on team size
So the employer’s cost is roughly the gross salary plus a few thousand rupees in statutory contributions and the EOR fee. Check the exact figure for your own team with an EOR cost calculator.
Ask any provider three questions about price:
- Is the fee fixed per employee, or a percentage of salary?
- Is there a salary limit above which the fee changes?
- Are onboarding, exits and payslip changes included, or billed separately?
How long each route takes
Own entity: about 2 to 4 months to incorporate and register, before payroll can start.
EOR: once you have chosen a candidate, the EOR prepares the contract, collects documents and adds the person to payroll. The main waiting time is usually the candidate’s notice period with their current employer, which in India is often 30 to 90 days. That is true for every route, so start hiring early.
Contractor: fastest on paper, but the risks above make it a poor fit for long-term roles.
When an EOR is the right choice
An EOR makes the most sense when:
- You are testing India with a small team before committing to a legal entity.
- You need to hire now, and your entity is months away.
- You want employment risk away from the parent company. The EOR, not your company, is the legal employer in India.
- Your team is small to mid-sized. For a handful to a few dozen people, the EOR fee usually costs less than running your own entity’s payroll, compliance and accounting.
When your own entity makes more sense
Set up your own company when:
- Your India headcount is large and stable, and the fixed costs of an entity spread across many people.
- You need to sign contracts with Indian customers, invoice in India or hold assets there.
- You plan a full office, a Global Capability Centre or a long-term R&D base.
Many firms do both in sequence: they start with an EOR and move staff to their own entity once it is ready. Ask your EOR how a transfer works before you sign, so the move is smooth when the time comes.
A word on permanent establishment
Using an EOR does not by itself create a taxable presence for your company in India. But if your India staff negotiate and sign contracts on behalf of the parent company, or act as its sales arm, the tax position can change. If your India team will do sales work, take tax advice early.
Choosing an EOR provider in India
Look for:
- Local depth: registrations in the states where your people will work, and knowledge of state rules such as Professional Tax and Labour Welfare Fund.
- Clear pricing: a fixed per-employee fee, with the salary limits and extra charges written down.
- Compliance records: monthly proof that PF, ESIC and TDS were deposited.
- A named contact who answers employee questions, not just a ticket queue.
- An exit plan: a simple path to move staff to your own entity later.
Frequently asked questions
Is an Employer of Record legal in India?
Yes. The EOR is the registered employer and meets all obligations under Indian labour and tax law, including PF, ESIC, Professional Tax and TDS.
How much does an EOR cost in India?
Local providers commonly charge USD 50 to USD 100 per employee per month, on top of salary and statutory contributions. Global platforms usually charge more.
How long does it take to hire through an EOR in India?
Usually days to a few weeks once you have chosen a candidate. Setting up your own entity takes about 2 to 4 months before your first hire.
Can I move employees from an EOR to my own entity later?
Yes. Most EOR arrangements allow a transfer once your entity is registered. Agree the process and any fees at the start.
Does using an EOR create a permanent establishment in India?
Not by itself. The risk rises if your India staff sign contracts or sell on behalf of the parent company, so take tax advice if that is part of the role.
Hiring in India without an entity?
Team Management Services has been a payroll and employment partner in India since 2006. Our EOR fees start from USD 50 per employee per month for teams of 26 or more, for employees earning up to USD 3,000 gross a month. See how our Employer of Record service in India works, or work out your cost with our calculator.