Employer of Record (EOR) in India: Complete 2026 Guide
Guide to using an EOR in India — costs, new labor code compliance, top providers, and comparison with setting up a local entity.
India is the world's most populous country and a dominant force in IT services, business process outsourcing, and knowledge work. With GDP growth of 7.6% in FY 2025-26 and competitive salaries for highly skilled workers, India is a top destination for international hiring.
However, India's employment landscape is complex. Four new labor codes came into effect in November 2025, replacing 29 legacy labor laws. State-level variations add further complexity. An Employer of Record (EOR) lets you hire in India without navigating this web of regulations yourself.
Why Use an EOR in India?
New labor codes. All four labor codes (Wages, Industrial Relations, Social Security, OSH) came into force on November 21, 2025. These fundamentally restructured employment law. Full central rules are expected by April 1, 2026. An EOR stays current on these changes so you do not have to.
State-level variations. India has 28 states and 8 union territories, each with supplementary employment rules. Minimum wages, shop and establishment acts, and professional tax rates all vary by state. Hiring in Mumbai follows different rules than hiring in Bangalore or Delhi.
Complex payroll structure. Indian salaries are structured with multiple components — basic pay, dearness allowance, HRA, medical allowance, and travel allowance — each with different tax implications. Getting the structure wrong can cost your employees money and expose you to compliance risk.
Statutory contributions. Employers must contribute to the Employees' Provident Fund (EPF), Employee State Insurance (ESI), and professional tax. These contributions have specific wage ceilings and calculation rules.
Permanent establishment risk. Setting up a subsidiary in India can trigger permanent establishment status, creating corporate tax obligations. An EOR can help mitigate this risk for companies with a small presence.
Important
For a full breakdown of Indian labor laws including the new labor codes, minimum wages, payroll taxes, EPF/ESI contributions, and leave policies, see our India Labor Law Compliance Guide.
How EOR Works in India
- You select the candidate. The EOR does not recruit on your behalf.
- The EOR drafts a compliant employment contract structured according to federal and applicable state laws.
- The EOR sets up a compliant salary structure — allocating components (basic, HRA, DA, etc.) to optimize tax efficiency for the employee while remaining compliant.
- The EOR registers the employee with EPF, ESI, and other statutory authorities.
- The EOR runs monthly payroll — calculating deductions, withholding TDS (Tax Deducted at Source), and remitting contributions.
- You manage the employee's daily work — assignments, performance reviews, and team integration.
Key Employment Regulations
| Regulation | Details |
|---|---|
| Minimum wage | Rs. 178/day (national floor); varies significantly by state and skill level |
| Standard hours | 9 hours/day, 48 hours/week (OSH Code 2020) |
| Overtime | 2x regular wages (basic + DA only) |
| Paid leave | 15 days minimum per year |
| Maternity leave | 26 weeks paid (first two children) |
| Paternity leave | 15 days paid |
| Statutory holidays | 17 gazetted holidays (central government) |
| Notice period | 1-3 months (varies by industry; IT industry standard is 3 months) |
| Employer EPF | 12% of basic salary |
| Employer ESI | 3.25% of gross salary (if gross under Rs. 21,000/month) |
EOR Costs in India
Provider Fees
EOR fees for India are typically lower than Western countries, reflecting lower administrative costs. Most providers charge $300 to $500 per employee per month.
| Included | Typically Extra |
|---|---|
| Payroll processing and TDS | Group medical insurance (beyond ESI) |
| EPF and ESI administration | Equity/ESOP administration |
| Employment contract and salary structuring | Background verification |
| Leave and attendance management | Equipment procurement |
| Statutory compliance filings | Visa/immigration support |
| Onboarding and offboarding | Gratuity trust management |
Statutory Employer Costs
Beyond the EOR provider fee, statutory employer costs in India typically add 15-20% on top of gross salary:
| Statutory Cost | Rate |
|---|---|
| EPF (employer share) | 12% of basic salary (8.33% EPS + 3.67% EPF) |
| ESI (employer share) | 3.25% of gross salary (if applicable) |
| Professional Tax | Varies by state (Rs. 200/month max) |
| Gratuity provision | ~4.81% of basic salary (accrued monthly) |
| Labour Welfare Fund | Nominal (varies by state) |
Total Cost Example
For a software developer earning Rs. 15 lakh/year (approximately $18,000 USD):
| Component | Annual Cost |
|---|---|
| Gross salary | Rs. 15,00,000 |
| Statutory employer costs (~17%) | Rs. 2,55,000 |
| EOR provider fee (~$400/mo) | Rs. 4,00,000 |
| Total annual cost |
EOR vs Setting Up a Local Entity
| Factor | EOR | Local Entity (Private Limited) |
|---|---|---|
| Setup cost | $0 (provider fee only) | $15,000-$40,000 (incorporation, legal, compliance setup) |
| Setup time | 5-10 business days | 6-12 weeks (company registration, PAN, TAN, GST, EPF, ESI) |
| Ongoing admin | Handled by EOR | Annual filings, audits, board meetings, ROC compliance |
| Compliance risk | EOR assumes liability | Your responsibility (with 29 laws now consolidated into 4 codes) |
| Flexibility | Easy to scale up or down | Fixed overhead: auditor fees, registered office, company secretary |
| Best for | 1-15 employees | 15+ employees, long-term presence |
Break-even point: A local entity in India typically becomes cost-effective at 10-15+ employees, depending on salary levels and the cities where you hire. However, India's compliance complexity means many companies maintain EOR relationships even with larger teams.
Top EOR Providers for India
| Provider | Owned Entity in India | Starting Price | Strengths |
|---|---|---|---|
| Multiplier | Yes | ~$400/mo | APAC specialist, competitive pricing |
| Deel | Yes | $599/mo | Fast onboarding, broad platform |
| Remote | Yes | $599/mo | All owned entities, strong compliance |
| Papaya Global | Yes | $650/mo | Enterprise payroll, complex structures |
| Oyster HR | Partner | $599/mo | Good employee experience |
India is a priority market for most EOR providers given the volume of hiring. Look for providers with:
- Owned Indian entities (not partner-dependent) for better compliance control
- Experience with the new labor codes that took effect November 2025
- Multi-city expertise if you plan to hire across states
- Salary structuring capabilities to optimize tax efficiency for employees
For a full comparison, see our Best Employer of Record Companies guide.
When to Choose EOR vs Direct Hiring in India
Use an EOR when:
- You have no Indian entity and want to hire quickly
- You are hiring 1-15 employees and want to avoid entity setup complexity
- You want to hire across multiple states without managing state-level compliance yourself
- You need someone to navigate the new labor codes on your behalf
- You want to minimize permanent establishment risk
Hire directly when:
- You already have an Indian subsidiary
- You plan to build a team of 15+ employees
- You want full control over salary structure, benefits, and HR policies
- You need a physical office presence for operational reasons
Pro Tip
India's 3-month notice period for IT employees is among the longest globally. When planning hires, factor this into your timeline — even with an EOR, candidates may not be available for 60-90 days after accepting an offer.
Managing a Team in India?
Track time, monitor productivity, and manage schedules across time zones with HiveDesk. Works with any EOR setup — $5/user/month, all features included.