An employer of record is the fastest compliant way to hire full-time staff in India without opening an Indian company. This guide covers what an EOR does, how it compares to the alternatives, what it costs, the compliance it carries for you, and a checklist you can use against any provider, including us.
On this page
- What is an employer of record in India?
- EOR vs setting up your own entity
- EOR vs PEO vs contractors
- How hiring through an EOR works, step by step
- What it costs
- The compliance an India EOR carries for you
- What your employee gets
- What an EOR does not cover
- How to choose an EOR for India
- The bottom line
What is an employer of record in India?
An employer of record is a locally registered Indian company that legally employs your India hires on your behalf. The EOR is the legal employer on paper. You stay the manager in practice.
That split is the whole model. The EOR holds the employment contract, runs payroll, withholds and deposits taxes, and files every statutory return. You set the role, the salary, the work, and the deadlines. The person reports to you, not to the EOR.
The model exists because employing in India directly is heavy. You cannot legally put someone on payroll without a registered Indian entity and a stack of government registrations. For one to twenty hires, standing that up costs more time and money than the salaries do. An EOR already holds the registrations, so your hire can be on payroll this week instead of next quarter.
India is also a market worth the effort. More than a million engineers graduate every year, English is standard in professional settings, and the working day overlaps with both Europe and the US. The talent is there. The friction is the paperwork, and that is exactly what an EOR removes.
EOR vs setting up your own entity
Both routes give you a compliant, full-time Indian employee. They differ on how long it takes, what it costs, and what you carry afterward.
| Factor | Employer of record | Your own Indian entity |
|---|---|---|
| Time to first hire | 5 to 6 business days | 8 to 16 weeks to incorporate, then register |
| Upfront cost | $0 setup, a refundable one-month-CTC deposit | Roughly $15,000 to $30,000 in legal and accounting fees |
| Recurring compliance | Carried by the EOR | ROC filings, GST, transfer pricing, board resolutions, audits |
| Multi-state hiring | Already registered where you hire | A separate Shops and Establishments registration per state |
| Exit | Offboard any time, $0 exit fee | Wind-down and deregistration can take months |
| Best when | 1 to 20 hires, or testing the market | 20 or more permanent hires, or you need an Indian contracting entity |
Standing up an Indian private limited company is not one step. It is incorporation with the Ministry of Corporate Affairs, a resident director, a registered office, PAN and TAN, GST registration, PF and ESIC registration, a professional tax registration in each state you hire in, and a corporate bank account that often takes longer to open than the company did. After that, the company files annual ROC returns, GST returns, and transfer-pricing documentation on the fees it charges your parent, and it minutes board meetings on the record. For a team of three, that machine runs all year to employ three people. For a team of fifty, the same machine finally earns its keep.
The honest row is the last one. Past roughly twenty permanent India employees, the per-employee EOR fee starts to exceed the cost of running your own entity, and the control you gain can be worth the overhead. An EOR is the right tool for getting there, not always the right tool forever.
EOR vs PEO vs contractors
Three models get confused. They are not interchangeable.
A PEO (professional employer organisation) is co-employment. It shares HR and payroll administration with you, but you still need your own registered Indian entity for it to work. If you have no entity, a PEO does not solve your problem.
Contractors are fine when the person is genuinely independent: they set their own hours, serve multiple clients, and control how the work gets done. The moment someone works full time, exclusively, inside your team, paying them on invoices is worker misclassification, and the exposure sits with you. Run the misclassification risk self-check if you are not sure which side of the line a role falls on.
An EOR is the answer when the person is effectively an employee and you have no Indian entity. It is the only one of the three that gives you a compliant full-time hire with no entity of your own.
The cost of getting this wrong is not abstract. An Indian authority, or the worker, can reclassify a long-running contractor as an employee and pull back-dated PF, ESI, and gratuity, plus interest and penalties, from the company that directed the work. That bill usually dwarfs the EOR fees you avoided. When a role looks and behaves like employment, employing it is the cheaper path, not the expensive one.
How hiring through an EOR works, step by step
1. You pick the candidate
You recruit and interview through your own process. The EOR does not source candidates for you. You hand over the person and the offer terms.
2. The EOR issues a compliant contract
The EOR drafts a state-specific employment agreement under Indian labour law: the role, the CTC breakdown, leave aligned to the state Shops and Establishments Act, probation and notice terms, and IP assignment and confidentiality as standard. This is where a provider that only does India shows: the contract is drafted for the employee’s actual state, not a generic template.
3. Statutory registrations are set up
Before the first payroll, the EOR obtains or assigns the UAN for Provident Fund, ESIC registration where the employee qualifies, and professional tax enrolment in the state of work.
4. Payroll runs, and keeps running
Each month the EOR calculates gross to net, deposits the employer PF and ESI contributions, files the PF return, deducts and deposits TDS, and transfers net salary to the employee’s Indian bank account. The deductions on the payslip, PF employee share, professional tax, and TDS, are the employee’s; the employer PF and ESI sit on top of the CTC. Quarterly, it files the TDS return. Annually, it issues Form 16. Your employee gets a self-serve portal for every payslip and document a bank or embassy will ask for.
You see one invoice: the salary converted to your currency, the per-employee fee for that CTC band, and the flat 0.4% transaction fee, each on its own line. From a signed offer, a new hire reaches first-payslip-ready in about 5 to 6 business days.
5. Offboarding, when it comes
When an employee leaves, the EOR runs the full and final settlement: earned leave encashment, pro-rata statutory bonus, notice period dues, gratuity if eligible, and the PF transfer or withdrawal. It issues the relieving and experience letters. There is no offboarding fee, and the one-month-CTC deposit is returned.
What it costs
Omnivoo publishes its pricing, so there is no sales call needed to see it.
- Starting at $99 per employee per month, set by the monthly CTC band, with 10% off on a 6-month commitment and 20% off on a 12-month commitment.
- $0 setup fee and no offboarding fee.
- A flat 0.4% transaction fee on the monthly invoice, with salary converted at the live market rate and zero FX margin from us, shown on every invoice.
- A refundable one-month-CTC deposit per employee, held in a locked reserve and returned at offboarding, so a delayed cross-border transfer never leaves a salary unpaid.
The four CTC bands run $99, $149, $199, and $299 per employee per month at the standard rate, each 10% lower on a 6-month commitment and 20% lower on a 12-month commitment. The pricing page has the full breakdown.
For context, the global EOR platforms list around $599 per employee per month for India. On a hire at ₹1,00,000 CTC, that is more than a third of the salary spent on the fee. The side-by-side is on the pricing page.
What the per-employee fee covers:
- The state-specific employment contract and any later amendments
- Monthly payroll, gross to net, with payslips
- EPF, ESI, professional tax, and Labour Welfare Fund registration and filing
- TDS computation, quarterly returns, and the annual Form 16
- Gratuity provisioning and the employee self-serve portal
- Onboarding, document verification, and the full and final settlement at exit
What sits outside the fee: recruitment, background checks beyond the standard, equipment, health cover above ESI, and visa support. These are quoted separately when you need them, never bundled into the headline number.
A worked example. A ₹20 LPA hire, about ₹1,67,000 a month, sits in the ₹1,50,000 to ₹2,50,000 band at $149 per employee per month. Add the flat 0.4% transaction fee on the invoice total, and nothing else. No setup, no platform-seat charge, no FX margin.
Enter a monthly salary in the calculator below to see the exact invoice: salary conversion, the per-employee fee for that CTC band, and the 0.4% transaction fee, each on its own line.
The compliance an India EOR carries for you
This is the work the EOR takes off your desk. Each item has a page where you can read the detail.
Provident Fund (EPF). A retirement contribution split between employer and employee, administered through the EPFO. The employer contributes 12% of basic salary each month, matched by the employee, deposited against the worker’s PF account and filed through the monthly Electronic Challan cum Return. Part of the employer share flows to the pension scheme rather than the fund.
Employee State Insurance (ESI). Medical and cash benefits for employees earning up to ₹21,000 gross a month. Where it applies, the EOR registers the employee and remits ESI, with the employer contributing 3.25% of gross wages and the employee 0.75%.
Tax Deducted at Source (TDS). Monthly salary withholding under Section 192, quarterly returns on Form 24Q, and the annual Form 16 issued by 15 June. The EOR computes and files all of it. See the TDS page for how the computation works under the old and new regimes.
Professional tax. A small state-level tax that varies by state and salary, capped at ₹2,500 a year. The EOR holds the professional tax registration in the employee’s state of work and deducts it each month.
Gratuity. A lump sum payable after five years of continuous service, under the Payment of Gratuity Act 1972. The gratuity owed grows every year, so it is provisioned from day one, not found at exit. The gratuity law in India guide covers eligibility, the four-years-240-days rule, and the formula.
State-specific rules. India has 28 states and 8 union territories, and leave entitlements, Shops and Establishments registration, and the Labour Welfare Fund differ in each. Professional tax in Maharashtra is not the rate in Karnataka. A provider registered where your employee actually lives handles these natively; a generic template does not. This is the single biggest gap between a real India EOR and a reseller, and the reason to ask for the exact list of states a provider holds registrations in.
The new labour codes. India is consolidating 29 labour laws into four codes covering wages, social security, industrial relations, and occupational safety. The definition of wages changes, which moves PF and gratuity calculations, and the EOR absorbs the transition on your behalf. The India labour codes guide tracks what is changing and when it takes effect.
Beyond the statutory core, the pieces of pay that trip up foreign employers also sit with the EOR: notice period rules, severance pay, leave travel allowance, and the full and final settlement at exit.
What your employee gets
The model is not only about taking risk off your books. For the person in India, being an employee instead of an invoice is the difference that keeps them.
They get monthly payslips, PF building toward a retirement corpus, a Form 16 every year, and an employment letter a bank or landlord believes. Those documents decide home loans, visas, and credit limits. Freelancers in India lose all of that, and good people leave over it. An EOR gives you the retention lever without an entity of your own. See how it works for employees for the employee-side view.
There is a second-order effect worth naming. When a contractor you already work with asks to be made an employee, converting them through an EOR is cheaper than replacing them, and it closes the misclassification gap at the same time. Same person, same work, now on a compliant contract.
What an EOR does not cover
An EOR solves employment. It does not solve everything, and a provider that pretends otherwise is one to be careful with.
It does not remove permanent establishment risk on its own. Taking the employment off your books handles the payroll footprint, but permanent establishment turns on what the person does in India, not whose payroll they sit on. An India-based salesperson who negotiates and closes deals can create dependent-agent exposure on an EOR’s payroll just as easily as on your own, with no office and no day threshold required. For engineering, product, design, and support roles this is rarely an issue. For revenue-closing roles, take cross-border tax advice. The detail is in permanent establishment risk when you hire through an EOR.
It does not replace your own entity forever. Past roughly twenty permanent India employees, the per-employee fee can exceed the cost of running your own company, and you may need an Indian entity anyway to sign local client contracts or hold a regulated licence. A good EOR helps you plan that migration rather than locking you in.
It does not recruit, procure equipment, or sponsor most work visas. Those are separate services, quoted when you need them.
How to choose an EOR for India
The providers all claim compliance, speed, and coverage. The way to tell them apart is to ask the questions whose answers are awkward for a thin reseller. Use this list against any provider, including Omnivoo.
- Is the pricing published, or quote-only? Published pricing means you can compare without a sales call. Quote-only usually means the price moves with how much they think you will pay.
- Who owns the local entity? Ask whether they employ through their own India entity or a third-party sub-EOR. A direct entity means one team to reach and cleaner liability. (Omnivoo employs through our own India entity, founded and run by the same people as Omnivoo, not a third-party partner.)
- Is the FX handling disclosed? You should see the exact rate applied on every invoice. Ask for the rate and the margin in writing.
- Are the deposit and exit terms in writing? A refundable deposit is normal; a hidden one is not. Confirm the exit fee (ours is $0) and the deposit return timeline.
- Are a DPA and IP assignment standard? Your data processing agreement and IP assignment should be in the paperwork from the start, not negotiated later.
- India-only depth, or 150-country breadth? A global platform spreads its compliance team across a hundred countries. An India specialist puts all of it into one. For India hiring, depth usually beats breadth, and it shows at the state level.
- Who answers when something breaks? Real India payroll questions are specific: gratuity on an early exit, an ESI claim, a PF transfer across employers, a Form 16 correction. Ask whether you reach a named India payroll person or a ticket queue. The depth of the answer tells you the depth of the team behind it.
- Can you see a sample payslip and a sample contract? A clean payslip shows basic, HRA, allowances, the PF and professional tax deductions, TDS, and net pay, with nothing bundled or hidden. If a provider cannot show you one, that is the answer.
Which states does the provider hold registrations in? That one question catches most of the thin coverage. If your employee is in Hyderabad and the provider is only registered in Bangalore, the employment is technically non-compliant from day one.
The bottom line
An India EOR removes the one thing that stops most foreign companies from hiring Indian talent: the legal and compliance weight of employing someone there. You get a compliant employment relationship, payroll run on time, and every statutory benefit handled, without the months and the tens of thousands of dollars that your own entity would take to stand up.
The provider is the whole game. India’s rules are detailed, unforgiving, and different at each state line. Pick one that employs through its own India entity, publishes its price, shows the exchange rate on every invoice, and can name the states it is registered in. That is the difference between a payroll that simply works and one you find out about in an audit two years later.
Hire in India, from anywhere
Omnivoo employs full-time staff in India for companies based around the world. The country guides cover the time zones, billing currency, and data-protection questions specific to where you are:
- Hire in India from the US
- Hire in India from the UK
- Hire in India from Germany
- Hire in India from France
- Hire in India from the Netherlands
- Hire in India from Singapore
- Hire in India from Australia
- Hire in India from Canada
- Hire in India from the UAE
- Hire in India from Ireland
- Hire in India from Switzerland
Ready to see the numbers for a specific hire? Try the calculator above, read the full walkthrough in how it works for employers, or talk to our team.