How to Hire Employees in India Without an Entity.

Building a team in India no longer requires a local subsidiary. Most international companies make their first India hires through an employer of record (EOR): an Indian company that serves as the legal employer, administers payroll, tax and statutory filings, and leaves day-to-day direction of the work entirely with you.

This guide sets out the options available to a foreign employer, how the EOR model operates in practice, the compliance obligations that apply in 2026, and the point at which establishing your own entity becomes the better investment.

Key points

• An EOR allows a company with no Indian entity to employ full-time staff in India lawfully.
• Hiring decisions, management and compensation reviews remain with your leadership.
• Employment contracts, payroll, tax withholding and statutory contributions are handled by the EOR.
• Onboarding paperwork is completed within days. The candidate’s notice period, typically 30 to 90 days, determines the start date.

Three ways to employ talent in India from overseas

Employer of record. The EOR assumes the legal and administrative responsibilities of employment. Your organization retains full control over the work, priorities and performance.

Independent contractors. Contractor agreements suit project-based engagements. Where a contractor works full time, exclusively for one company and under its direction, Indian authorities may treat the relationship as employment, regardless of how the contract is worded. Contractors also receive no provident fund, gratuity or insurance, which weakens retention.

Own subsidiary. A subsidiary offers complete control, but requires incorporation, a resident director, a local bank account, multiple statutory registrations and ongoing annual compliance.

How the employer of record model works

1. Your team selects the candidate and approves the compensation package and start date.
2. The EOR issues the offer letter and employment contract through its Indian entity, structuring the salary in line with Indian law.
3. From the first month, the EOR runs payroll, withholds income tax (known in India as tax deducted at source, or TDS) and remits provident fund and other statutory contributions.
4. You receive a single consolidated invoice covering salary, statutory costs and the EOR’s service fee.
5. The employee works as part of your team, on your systems, in your meetings and against your objectives.

Is the employer of record model legal in India?

Yes. The EOR is a registered Indian employer, so your hire is a regular employee under Indian law, entitled to the same rights and benefits as any other employee in the country. The arrangement remains compliant provided the EOR maintains its registrations and meets its filing obligations.

As part of due diligence, request three documents from any provider: proof of statutory registrations, a sample employment contract and a sample payslip.

One area requires separate advice. If an India-based employee will negotiate or sign contracts on behalf of your company, consult a tax adviser, as this activity may create a taxable presence in India. Roles in engineering, finance, recruitment and operations rarely raise this concern.

Compliance obligations in 2026

• Appointment letter. Mandatory for every employee, setting out role, compensation and terms of employment.
• Provident fund (PF). The employer contributes 12% of basic wages. The statutory wage ceiling increased from ₹15,000 to ₹25,000 per month on 17 September 2026.
• Employees’ State Insurance (ESI). Applies to employees earning up to ₹21,000 per month, so most professional roles fall outside its scope.
• Gratuity. Payable after five years of service for permanent employees, and after one year for fixed-term employees.
• Income tax withholding. Deducted from salary each month, with periodic returns filed by the employer.

India’s four labour codes came into force on 21 November 2025, with detailed central and state rules still being finalised. Two provisions already affect every new hire. Basic pay and related components must account for at least 50% of total compensation, which raises the base for PF and gratuity. Final settlement for a departing employee must also be completed within two working days.

Hiring timelines to plan for

Notice periods in India are longer than many international employers expect. Maintaining regular contact with the candidate throughout this period significantly reduces the risk of a late counter-offer.

Standard EOR vs managed EOR

A standard EOR is appropriate when you already have recruitment capability and HR expertise in India. A managed EOR is better suited to organizations entering India for the first time, as it provides a single partner accountable for the entire process, from sourcing to payroll.

What to expect from an enterprise-grade EOR partner

• A single point of contact accountable for your India team
• Transparent, itemized invoicing with no unexplained charges
• Employment contracts and salary structures aligned with the labour codes
• Documented onboarding and exit processes
• Handling of employee data in line with India’s Digital Personal Data Protection Act
• Support for transferring employees to your own entity when you are ready

When to establish your own entity

A subsidiary becomes worth evaluating when the India team is large and permanent, and you require a local office, local leadership and your own HR policies. Many organizations begin with an EOR, validate the team’s performance, and later transfer employees to their own entity. Confirm before signing that your EOR supports this transition.

Checklist before extending an offer

• Confirm the role is full time and long term. If so, avoid a contractor arrangement.
• Present compensation as CTC (cost to company), the standard basis on which candidates in India evaluate offers.
• Define benefits beyond the statutory minimum, particularly health insurance.
• Review the EOR’s registrations, a sample contract and a sample payslip.
• Clarify the process for resignations, notice periods and final settlement.
• Align the start date with the candidate’s notice period.

Frequently asked questions

Do I need a company in India to hire employees there? No. An employer of record can employ staff in India through its own Indian entity while they work full time for your business.

Who is the legal employer when hiring through an EOR in India? The EOR is the legal employer and manages the contract, payroll and statutory obligations. Your company directs the work.

Do EOR employees in India receive provident fund and gratuity? Yes. They are regular employees under Indian law and receive provident fund, gratuity and all other applicable benefits.

Should I use an EOR or contractors for a full-time role in India? An EOR. Engaging a full-time worker as a contractor creates misclassification risk and denies the individual statutory benefits.

How quickly can I hire in India through an EOR? The paperwork is completed within a few days. The overall timeline depends on sourcing and the candidate’s notice period of 30 to 90 days.

KTRIAN is a managed employer of record in India, backed by more than 15 years of experience in talent acquisition. We manage the complete hiring lifecycle: sourcing, screening, interview support and onboarding, followed by employment, payroll and compliance. Our teams hire across engineering, finance, recruitment, sales, HR, executive support and more, while you retain the final hiring decision and full direction of the work. Speak with our team about building your India team.