How to hire employees in India without setting up a company

You have found the person you want in India. Then you discover what it takes to employ them: an Indian company, a resident director, a registered office, tax registrations, Provident Fund enrolment and a payroll process that follows Indian labour law.

That is months of work and ongoing filings for 1 hire. An employer of record is the way around it.

What an employer of record does

An employer of record, or EOR, is a company that legally employs someone on your behalf. The EOR holds the employment contract, runs payroll, makes the statutory contributions and carries the compliance obligations. You direct the person’s daily work, set their priorities and review their performance, exactly as you would with your own staff.

You do not need an Indian entity, a local director or a registered office. You receive one service invoice.

Is an employer of record legal in India?

Yes. Using an EOR is an established route for foreign companies to employ people in India, and it is lawful as long as the EOR is a genuine employer that meets its statutory obligations: proper employment contracts, payroll tax, Provident Fund, gratuity and the rest of the labour-law requirements.

That is the part to check before you sign with anyone. Ask who the legal employer is, what registrations they hold in India, and how statutory contributions are remitted.

What the EOR handles

• an employment contract that complies with Indian labour law
• monthly payroll and income tax withholding
• Provident Fund, gratuity and other statutory entitlements
• paid leave, public holidays and medical insurance
• intellectual property assignment and confidentiality terms in the contract
• onboarding, equipment and system access
• termination handled under Indian law, including notice, final settlement and relieving documents

What it costs

Bumsa prices EOR as a multiple of the employee’s actual wage rather than a flat monthly fee. The multiple is typically 1.75 times the wage and falls as salary levels rise.

That structure exists for a reason. You set the salary, with our benchmarking advice, so you decide what your employee earns and you can give raises and bonuses. A flat all-in rate hides the wage, and a hidden wage is how good people quietly get underpaid and leave. The multiple applies to bonuses and raises at the same rate, so the arrangement stays predictable.

How long it takes

Where you already have the candidate, onboarding typically takes about 2 to 3 weeks from acceptance. That covers documentation, background checks, statutory registrations, benefits enrolment and equipment.

If you still need to find the person, our recruitment team sources candidates in India and you interview and choose. Nobody is placed on your account without your approval.

Where your employee works

You choose. Your employee can work from Bumsa’s own office in Chennai, from home anywhere in India, or a hybrid of the two. The office gives you supervision, reliable connectivity and a controlled workspace. Remote widens the talent pool when the skills you need are in another city.

EOR, contractor or your own entity

Contractor or employee?

Paying a full-time worker as a contractor looks simpler and creates real exposure. If the person works set hours, uses your systems and reports to your manager, the arrangement has the character of employment whatever the paperwork says. Contractors also have no obligation to stay, and no statutory benefits tying them to the role.

For a long-term, full-time hire, employment through an EOR is both the safer and the stickier option.

Who is responsible for what

Common mistakes

Treating the EOR as a body shop. The person is your team member. If you never include them in your meetings or tell them what changed this quarter, they will behave like a contractor and leave like one.

Underpaying because you can. The saving against a local hire is already substantial at a fair Indian salary. Squeezing the wage buys a small extra margin and costs you the person after 8 months.

Skipping the contract detail. IP assignment, confidentiality and notice periods sit in the employment contract. Read those clauses before the first hire rather than after a problem.

Moving to your own entity later

An EOR is not a permanent commitment. Many companies use it to hire their first few people in India, prove the model, then set up an Indian entity once headcount makes the administration worthwhile, usually somewhere past 25 people. At that point the employees transfer across. Starting with an EOR does not lock you out of that path.

What an EOR is not

An EOR is not a staffing agency. A staffing agency supplies its own people temporarily and charges a margin on their time. An EOR employs the person you chose, for as long as you want them, and that person works only for you.

It is also not the same as BPO. With BPO, Bumsa runs a process for you with our own team. With EOR, the team member is effectively yours, and we are the legal employer behind them.

This article is general information, not legal or tax advice. Confirm your own position with your accountant or counsel.

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