Why Russian Companies Are Building Teams in India
India has become a practical hiring destination for Russian companies seeking access to a large, English-proficient talent pool in software development, engineering, data services, and back-office operations. Shifting international payment conditions since 2022 have made many Russian businesses re-evaluate where they locate teams, and India offers a stable, neutral jurisdiction with deep technical capacity and a long history of India-Russia commercial cooperation. For most Russian companies the obstacle is not finding talent but employing it lawfully — India employment is heavily regulated, and operating payroll without a local entity is not permitted. An Employer of Record solves this: TMS becomes the legal employer of record in India, while the Russian company directs the employee’s day-to-day work. With operations established in 2006 and more than 20 years of statutory compliance experience, TMS allows Russian businesses to hire in India within weeks rather than spending months on incorporation.
India Employment Law Essentials for Russian Employers
Indian labour law is contract-governed and differs substantially from Russian Labour Code practice. Russian employers should plan for the following statutory obligations, all of which TMS administers as the legal employer:
- Employees’ Provident Fund (EPF): The employer contributes 12% of basic wages to the EPF, matched by a 12% employee contribution — a mandatory retirement-savings obligation with no Russian equivalent in structure.
- Employees’ State Insurance (ESIC): For employees earning within the prescribed wage threshold, employer and employee contribute to ESIC, which funds medical and cash sickness benefits.
- Professional Tax & Gratuity: Professional Tax is a state-level levy deducted where applicable, while the Payment of Gratuity Act 1972 entitles an employee to a lump-sum gratuity after five years of continuous service.
- Maternity Leave: The Maternity Benefit Act 1961, as amended, provides 26 weeks of paid maternity leave for eligible employees — a fully employer-funded entitlement.
- Notice & Non-Competes: Notice periods of 30–90 days are typical depending on seniority, and post-employment non-compete clauses are largely unenforceable under Section 27 of the Indian Contract Act 1872, irrespective of wording customary in Russian contracts.
Tax, DTAA & Remittance
Salary earned by an India-resident employee for work performed in India is taxable in India, and the India-Russia Double Taxation Avoidance Agreement prevents the same income being taxed twice. TMS deducts India TDS monthly under Section 192 of the Income Tax Act and files quarterly Form 24Q returns, so the Russian company has no India withholding role of its own. International banking and payment friction is managed through INR-denominated cost structures: the Russian company funds TMS in agreed terms, and TMS disburses salaries to employees in Indian Rupees as Indian law requires, with all cross-border movement of funds made through FEMA-compliant channels. Russian companies should also be aware of Permanent Establishment exposure — under Section 9 of the Income Tax Act, if India-based staff habitually conclude contracts for the Russian entity, the tax authorities may assert a PE and tax India-attributable profits. Because TMS is the sole legal employer under the EOR structure, this PE risk is contained.
How TMS Manages India EOR for Russian Companies
- Onboarding & Statutory Registration: TMS issues an India-law-compliant employment contract, collects statutory documents (PAN, Aadhaar, bank details), and registers the employee under EPF, ESIC where applicable, and Professional Tax.
- CTC Structuring in INR: TMS designs a cost-to-company structure in Indian Rupees (Basic, HRA, allowances) aligned with the compensation level approved by the Russian company and optimised for India tax efficiency.
- Monthly Payroll & Compliance: TMS processes payroll, deposits EPF and ESIC contributions, deducts and deposits TDS, files quarterly Form 24Q returns, and issues compliant payslips.
- EOR-to-Entity Transition: When the Russian company decides to incorporate an India subsidiary, TMS manages the employment transfer, including EPF UAN portability and gratuity continuity, so the team moves across without disruption.
Frequently Asked Questions
Can a Russian company hire in India without registering an Indian entity?
Yes. Through the TMS Employer of Record model, TMS acts as the legal employer in India and handles all statutory compliance, so the Russian company can build a compliant India team without incorporating a local subsidiary.
How are salaries paid given international payment constraints?
Employees are always paid in Indian Rupees within India. The Russian company funds TMS on agreed terms, and all cross-border remittances are routed through FEMA-compliant banking channels, removing the need for the Russian company to operate India payroll directly.
How quickly can a Russian company start hiring in India?
Once hire details are confirmed, TMS can typically onboard an India employee — including statutory registration and a compliant contract — within two to three weeks.
About the Author
Shruti S.
Shruti S. is a Content Writer at Team Management Services (TMS) with 5+ years of experience in business and HR content. She holds an MBA in Marketing and writes about contract staffing, payroll outsourcing, statutory compliance, HR rules, talent acquisition, apprenticeship schemes (NATS, NAPS), and labour law for Indian businesses.
