Employer of record in India: the complete hiring guide (2026)
- Jun 1
- 12 min read
Table of contents
TL;DR
India at a glance
What is an employer of record in India?
EOR vs PEO, outsourcing, and contractors in India
Most in-demand remote roles in India (2026)
How hiring through an EOR in India works: 5 steps
What Indian payroll and taxes actually involve
Statutory employee benefits in India
What it costs to use an EOR in India
How Gegidze Helps
Final Thoughts
Frequently Asked Questions (FAQs)
TL;DR
An employer of record (EOR) in India lets you hire legally without registering a local entity, the EOR becomes the employer on paper, you manage the team's work.
Indian payroll is layered: TDS, Provident Fund (12% employer contribution), ESI, gratuity, state-level professional tax, and mandatory statutory benefits all apply and must be filed correctly.
Contracts in India must comply with the relevant state's Shops & Establishments Act, not a single national template.
The most in-demand remote roles are software engineers, DevOps, data engineers, QA, mobile developers, finance professionals, and customer success teams.
Flat-fee EOR pricing (€199/month) is almost always better than percentage-based models for teams that grow, give raises, or hire senior talent.
Misclassifying a contractor as a freelancer in India carries real back-tax and penalty exposure. An EOR eliminates the grey zone.
Team Up onboards employees in India in under 7 days with one flat monthly invoice covering all payroll, tax, and compliance obligations.
India has one of the largest talent pools in the world. Software engineers, finance professionals, DevOps specialists, customer success leads, the depth is real, and the cost competitiveness against Western European or North American markets is substantial. Global companies have known this for years.
The compliance environment, however, is genuinely complex. Payroll taxes in India are not a single national calculation. The Income Tax Act, the Employees' Provident Fund (EPF), the Employees' State Insurance (ESI), the Payment of Gratuity Act, and each state's Shops & Establishments Act create a layered set of obligations that vary by location, salary band, and tenure. A contractor relationship that looks clean can be reclassified by Indian authorities as employment, retroactively, with penalties.
An employer of record in India solves this entirely. This guide covers what the model looks like in practice, what it costs, how Indian payroll actually works, and what the most competitive roles pay in 2026.
India at a glance
Metric | Detail |
Population | 1.43 billion |
Currency | Indian Rupee (INR) |
Capital | New Delhi |
Primary business languages | English and Hindi |
GDP | USD 3.73 trillion (nominal) |
Major hiring hubs | Bangalore, Hyderabad, Mumbai, Pune, Chennai, Delhi-NCR |
Key sectors for remote hiring | Software, fintech, data, customer success, finance |
What is an employer of record in India?
An employer of record (EOR) in India is the legal employer of your local hires on paper. Your company defines the role, selects the candidate, and directs the work. The EOR issues the compliant employment contract, registers the employee with Indian tax and labour authorities, runs payroll in INR, files all mandatory returns, and administers statutory benefits.
The practical division of responsibility: you manage what gets built and how the team operates. The EOR manages every obligation underneath, from Provident Fund contributions to Form 16 issuance.
No entity registration in India. No local bank account. No state-specific Shops & Establishments Act registration. The EOR already has all of this in place.
The employer of record model is not a workaround. It is a legally recognised employment structure in which the EOR is the registered employer and the client company directs the work under a commercial services agreement. Indian authorities recognise this structure. The compliance obligation sits with the EOR, not with your company. |
EOR vs PEO, outsourcing, and contractors in India
EOR vs PEO in India
A Professional Employer Organization (PEO) in India is a co-employment model. You remain the legal employer. The PEO runs HR administration on your behalf. To use a PEO in India, you must already have a registered Indian entity, the PEO cannot operate without it. An EOR requires no entity at all. The EOR is the full legal employer. This is the distinction that matters for market entry.
EOR vs outsourcing in India
Outsourcing in India means handing a project to a vendor who assigns their own staff to the work. The IP stays with the vendor unless explicitly contracted otherwise. The people are their employees, not yours. An EOR model gives you the talent as your team, they sit in your communication tools, commit to your codebase, attend your planning meetings. The EOR keeps the structure legal. You keep the output.
EOR vs contractors in India
Contractors appear straightforward until Indian tax authorities conclude that a person working full-time, under your supervision, for a single client, is actually an employee. That reclassification triggers back taxes, penalties, and potential disputes. An EOR eliminates the ambiguity. Employment is correctly classified from day one. There are no retroactive liabilities and no grey zone around intellectual property ownership.
Most in-demand remote roles in India (2026)
India's hiring market has depth across a wide range of technical and operational functions. These are the roles most commonly filled through employer of record arrangements by international companies in 2026.
Role | Key Skills | Junior (INR/month) | Mid-Level (INR/month) | Senior (INR/month) |
Software Developer (FE/BE/Full-Stack) | React, Node.js, Python, Java | 60,000–90,000 | 120,000–160,000 | 200,000–280,000 |
DevOps & Cloud Engineer | AWS, Azure, Kubernetes, Terraform | , | 150,000–200,000 | 250,000–350,000 |
Data Engineer / Analyst | Python, SQL, Spark, Airflow | , | 120,000–170,000 | 200,000–300,000 |
QA & Test Automation | Selenium, Cypress, Playwright | 70,000–100,000 | 120,000–150,000 | 180,000–250,000 |
Mobile Developer | Flutter, React Native, Swift, Kotlin | , | 120,000–160,000 | 200,000–280,000 |
Finance & Compliance | Payroll, bookkeeping, tax filings | , | 80,000–120,000 | 150,000–220,000 |
Customer Support / Success | CRM, multilingual support | 40,000–60,000 | 70,000–100,000 | 120,000–160,000 |
For context: these salaries are denominated in INR. At current exchange rates, a senior software engineer in Bangalore costs approximately €2,200–€3,100 per month in gross salary, significantly below comparable roles in Western European markets. Companies accessing this my remote developers guide can build engineering teams in India at a fraction of the cost of equivalent teams in the UK, Netherlands, or Germany.
How hiring through an EOR in India works: 5 steps
Step 1: Make the offer
You scope the role, run the interviews, and select the candidate. Once you agree on salary and start date, the EOR takes over the process. You do not need to touch any Indian bureaucracy at this stage.
Step 2: Issue the employment contract
The EOR drafts a locally compliant employment contract covering probation period, notice period, Provident Fund and ESI enrolment, gratuity entitlement, paid leave per state law, and intellectual property assignment clauses. The contract is enforceable under Indian labour law. Your company's IP is protected from day one.
Step 3: Run payroll and file taxes
Once the employee starts, the EOR processes monthly payroll in INR, deducts TDS (Tax Deducted at Source) at the correct progressive rate, makes employer-side Provident Fund contributions (12% of basic wages), files ESI contributions where applicable, and tracks gratuity accrual. Form 24Q quarterly returns and annual Form 16 issuance are handled as standard. You receive one invoice in EUR or USD.
Step 4: Administer statutory benefits
The EOR enrols the employee with the Employees' Provident Fund Organisation (EPFO) and the Employees' State Insurance Corporation (ESIC) where applicable. Mandatory benefits, paid annual leave, sick leave, maternity leave, national and state public holidays, are built into the employment contract and tracked through payroll. Optional competitive benefits such as private health insurance can be added.
Step 5: Maintain compliance and manage exits
The EOR handles monthly and quarterly filings on an ongoing basis. When employment ends, the EOR manages the full exit process: correct notice period, gratuity payment if service exceeds five years, PF balance settlement, final payslip, relieving letter, and experience certificate. Mishandling any of these steps in India creates exposure to disputes before the Labour Commissioner. The EOR absorbs this risk entirely.
Termination in India is highly regulated. The Industrial Disputes Act applies to certain employee categories. Notice periods typically run 30–90 days. Gratuity is mandatory after five years of continuous service. An EOR that does not have genuine Indian legal expertise will surface these issues at the worst possible moment, during an exit. Confirm your provider's termination track record before signing.
What Indian payroll and taxes actually involve
Indian payroll is not a single calculation. It involves multiple statutory components, multiple government bodies, and state-level variation. Here is what the full picture looks like.
Employer-side contributions in India
Contribution | Rate | Notes |
Provident Fund (PF) | 12% of basic wages | Mandatory for employees earning under INR 15,000 basic; widely applied above |
Employee State Insurance (ESI) | 3.25% of gross wages | Applies where gross salary is INR 21,000/month or below |
Gratuity provision | 4.8% of basic wages | Payable after 5 years of continuous service |
Performance bonus | 8.33%–20% of annual wages | Applicable for employees earning INR 21,000/month or below |
Professional Tax | State-specific, up to INR 2,500/year | Varies by state: Maharashtra, Karnataka, West Bengal differ |
Employee-side deductions in India
Deduction | Rate | Notes |
Provident Fund (PF) | 12% of basic wages | Matched by employer contribution |
Employee State Insurance (ESI) | 0.75% of gross wages | Where salary is INR 21,000/month or below |
Income Tax (TDS) | Progressive 0%–30% | New regime: 0% to INR 3L, 5% to INR 6L, 10% to INR 9L, 15% to INR 12L, 20% to INR 15L, 30% above |
What the EOR files on your behalf
The EOR registers employees with the Income Tax Department, EPFO, and ESIC. Monthly TDS, PF, and ESI deposits are made on the correct statutory dates. Quarterly returns (Form 24Q) and annual Form 16 issuance are handled as standard. None of this requires your company to be registered in India. The EOR's entity carries the accounting and financial services infrastructure for all of it.
Statutory employee benefits in India
Mandatory benefits
Provident Fund: 12% employer contribution, 12% employee contribution, mandatory for employees earning under INR 15,000 basic pay; widely applied across all salary levels.
Employee State Insurance: Employer contributes 3.25%, employee contributes 0.75%, applies where gross monthly salary is INR 21,000 or below.
Gratuity: Payable after five years of continuous service, 15 days' wages per year of service.
Maternity leave: 26 weeks for the first two children under the Maternity Benefit Act, paid.
Annual leave: Earned/Privilege leave of 15–20 days per year, casual leave of 6–12 days, sick leave of 12 days in most states.
National public holidays: Independence Day, Republic Day, Gandhi Jayanti, mandatory. State holidays vary by location.
Performance bonus: Mandatory for employees earning INR 21,000/month or below, minimum annual payout is INR 21,000.
The Shops and Establishments Act: why state-level compliance matters
Every Indian state has its own Shops and Establishments Act, which governs working hours, leave entitlements, overtime rules, and employment documentation for commercial enterprises. The Maharashtra Shops and Establishments Act differs from the Karnataka Act, which differs from the Tamil Nadu Act. An EOR registers under the correct state act for each employee's location and maintains compliance accordingly.
For companies also managing individual entrepreneur structures or Georgian LLCs alongside their Indian operations, the contrast is instructive: Georgia's unified national tax system is significantly simpler to navigate than India's state-level patchwork.
What it costs to use an EOR in India
Team Up charges €199 per remote employee per month for full employer of record coverage in India. That covers compliant employment contracts, monthly payroll in INR, TDS deductions, PF and ESI contributions, gratuity tracking, Form 16 issuance, statutory benefit administration, and offboarding. No setup fee. No minimum headcount.
Why flat-fee pricing matters
Many global EOR providers charge 10–15% of gross salary. On a mid-level engineer earning INR 180,000 per month (approximately €1,950), that means an EOR fee of €195–€293 per month, on top of employer-side contributions. Every pay rise your employee receives increases the EOR fee permanently. A flat-fee model does not change when talent is promoted. One rate, regardless of seniority.
Cost Component | Mid-Level Software Engineer Example |
Gross salary | INR 180,000/month (~€1,950) |
Employer PF contribution (12% of basic) | ~€140 |
ESI (if applicable) | Not applicable above INR 21,000 |
Gratuity provision (4.8% of basic) | ~€55 |
Team Up EOR fee | €199 |
Total monthly employer cost | ~€2,344 |
For context: a comparable mid-level software engineer in the UK or Netherlands costs €4,000–€6,000 per month in total employer cost. The India talent market, accessed compliantly through an EOR, delivers comparable output at a fraction of that figure.
How Gegidze Helps
Gegidze works with international founders structuring efficient, compliant business operations across multiple jurisdictions. For companies building Indian teams alongside a Georgian entity or tax structure, Gegidze provides:
Georgia as an operational hub for Indian payroll management, advising on how to open a company in Georgia as a cost-effective entity for managing invoicing, contractor payments, and payroll flows from India.
Tax structure for founders managing Indian teams, explaining how Georgia's business tax system interacts with the cost of Indian employment, and how retained profits can be structured efficiently.
Individual entrepreneur registration, supporting founders who want individual entrepreneur in Georgia status as a personal income structure alongside their Indian-based EOR operation.
Georgia tax residency for remote-first founders, explaining Georgia tax residency requirements for founders who manage Indian teams from Georgia and want to establish fiscal domicile here.
Multi-currency banking, helping companies open a multi-currency bank account in Georgia to manage INR salary disbursements, USD invoicing, and EUR operating costs from a single account.
Annual compliance and reporting, managing Georgia's tax deadlines for Georgian entities used as operational hubs alongside Indian EOR arrangements.
Final Thoughts
India is a high-value hiring market. The talent depth is real. The cost advantage is substantial. The compliance environment is genuinely complex, but that complexity is entirely manageable with the right employer of record in place.
The companies that get India wrong are almost always the ones that try to use contractors long-term, or that underestimate how many separate obligations, TDS, PF, ESI, state-level Shops Act, gratuity, notice periods, sit beneath a single employment relationship. The ones that get it right hire through a compliant EOR from day one, get their first team members productive within a week, and scale from there.
For founders who also want to understand how Georgia fits alongside an India hiring operation, as a company base, a personal tax structure, or a regional operational hub, book a free consultation with Gegidze.
Frequently Asked Questions (FAQs)
Do I need to register a company in India to hire employees there?
No. An employer of record in India removes that requirement. The EOR's existing Indian legal entity employs your hires. Your company has no registration, no local bank account, and no direct filing obligation with Indian authorities. You agree the role, salary, and start date. The EOR manages everything else. This is the primary reason the EOR model has grown substantially in India, it gives global companies access to one of the world's largest talent markets without the 3–6 month timeline and significant cost of entity setup.
What is TDS in Indian payroll and how is it handled?
TDS stands for Tax Deducted at Source. Every employer in India is required to withhold income tax from employee salaries at the time of payment and remit it to the Income Tax Department. The rate is calculated on the employee's projected annual income under the progressive tax regime, ranging from 0% for income below INR 300,000 to 30% for income above INR 1,500,000. The EOR calculates the correct TDS amount for each employee each month, deducts it from the payslip, and files quarterly Form 24Q returns. At year-end, the EOR issues Form 16, the official TDS certificate employees need for their personal tax filings.
What is the Provident Fund and does it apply to all employees in India?
The Employees' Provident Fund (EPF) is India's mandatory retirement savings scheme, governed by the Employees' Provident Fund and Miscellaneous Provisions Act 1952. Both the employer and employee contribute 12% of the employee's basic wages each month. The legal mandate applies to employees earning below INR 15,000 in basic wages, but the scheme is widely applied across all salary levels by most employers. The EOR handles all EPF registration with the EPFO, monthly contributions, and reconciliation. This is one of the most commonly miscalculated items when companies try to run Indian payroll without local expertise.
What are ghost employees and how does an EOR prevent them?
Ghost employee fraud occurs when payroll records include fictitious employees whose salaries are diverted to a fraudulent beneficiary. It is more common in large, decentralised payroll operations where oversight is limited. An EOR eliminates the ghost employee fraud risk for your Indian team because every hire goes through a documented onboarding process with verified identity, tax ID, and EPFO registration. Payslips are generated against registered employees only, and all statutory filings are traceable.
What is the talent management strategy for building a team in India?
A practical talent management strategy for India involves three stages: market entry (EOR for first hires, fast and compliant), team building (compensation benchmarking, benefit structuring to stay competitive with local employers and multinationals), and retention (PF contributions, private health insurance, learning budgets, and a clear career path). The EOR handles the compliance layer. Your company handles the culture and management layer. The two are distinct and should stay that way.
Can I convert an Indian contractor to a full employee through an EOR?
Yes. This is one of the most common EOR use cases in India. A company that has been working with an Indian freelancer or contractor, and wants to formalise the relationship properly before the contractor misclassification risk materialises, transitions the person to full employment through the EOR. The EOR issues a new compliant employment contract, handles statutory registrations, and begins running payroll correctly from the transition date. The contractor relationship ends. The employment relationship begins. The compliance risk goes away.
How does an EOR in India handle the Shops and Establishments Act?
The Shops and Establishments Act is state-level legislation in India, meaning the rules differ in Maharashtra, Karnataka, Tamil Nadu, Delhi, and every other state. An EOR with genuine Indian operations maintains registrations under the relevant act in each state where it employs people. For your hire in Bangalore, the Karnataka Shops and Establishments Act applies. For a hire in Mumbai, it is the Maharashtra Act. The EOR navigates this patchwork on your behalf without you needing to understand which act applies where.
