What Is an Employer of Record in India?
An Employer of Record in India is a company that legally employs workers on your behalf. The workers do the actual work for your business — they follow your instructions, work on your products, and report to your managers. But on paper, they are employees of the EOR company, which handles all the legal, contractual, and compliance obligations of being an employer in India.
This matters because employing someone in India without an Indian legal entity is not straightforward. You cannot simply wire someone's salary and call them an employee. Indian employment law requires proper contracts, provident fund registration, TDS deductions, and a host of other obligations that only make sense if you have a legal presence in the country.
EOR solves this by putting the employment relationship in the hands of a company that already has that legal presence — and that already knows how to handle India's compliance requirements correctly.
How EOR Works in India — Step by Step
Step 1. You identify who you want to hire. Either you find them yourself or you work with the EOR company's recruitment team. Either way, you decide who you want on your team.
Step 2. The EOR issues the employment contract. The employment contract is between the worker and the EOR company — not your company. The contract reflects the role, the compensation, the working hours, and all the terms you have agreed on. Indian employment law protections apply from day one.
Step 3. The EOR registers the employee for statutory benefits. PF, ESI where applicable, professional tax, and any other state-specific obligations are set up for the employee. This typically happens within the first week of employment.
Step 4. Monthly payroll runs. The EOR processes payroll every month — calculating gross salary, deducting PF employee contribution, TDS, professional tax, and any other applicable deductions. The net salary is paid to the employee. The employer contributions are also calculated and deposited with the relevant government authorities.
Step 5. Statutory filings. PF ECR filings, TDS quarterly returns, ESI filings, and any other recurring statutory obligations are handled by the EOR. You receive monthly reports showing what was processed and what was filed.
Step 6. You pay the EOR monthly. Your invoice from the EOR includes the employee's gross salary, employer statutory contributions (PF, ESI where applicable), and the EOR's service fee. One payment, one invoice, full compliance.
What Does EOR Cost in India?
EOR pricing in India typically works in one of two ways — a flat monthly fee per employee, or a percentage of the employee's cost-to-company (CTC).
XMS charges a flat monthly fee starting at ₹8,000 per employee per month for standard EOR. This covers the employment relationship, payroll processing, PF, ESI where applicable, TDS, and all statutory filings. There are no setup fees and no lock-in contracts.
Global platforms like Deel or Remote charge $599 to $699 per employee per month for India EOR — equivalent to roughly ₹50,000 to ₹58,000 per month. That is five to seven times more than a local Indian EOR for the same statutory compliance. The difference does not go to better compliance — it goes to the platform's global infrastructure, which you do not need if you are only hiring in India.
See our detailed EOR cost breakdown for a line-by-line comparison.
What Compliance Does EOR Cover in India?
Provident Fund (PF) — Mandatory for employees earning below ₹15,000 basic salary per month, and commonly provided to higher earners as a benefit. Employee contributes 12% of basic salary, employer contributes 12%. Monthly ECR filing with EPFO required.
Employee State Insurance (ESI) — Applicable for employees earning below ₹21,000 gross per month. Provides medical, disability, and maternity benefits. Employee contributes 0.75%, employer contributes 3.25% of gross salary.
Tax Deducted at Source (TDS) — Section 192 of the Income Tax Act requires the employer to deduct income tax from salary at source each month. The EOR calculates each employee's tax liability based on their investment declarations, deducts the appropriate amount monthly, deposits it with the government, files quarterly Form 24Q, and issues Form 16 annually.
Professional Tax — State-level tax applicable in Karnataka, Maharashtra, and several other states. Small deduction from salary, deposited with the state government monthly.
Gratuity — Employees who complete five years of service are entitled to gratuity under the Payment of Gratuity Act. The EOR tracks tenure and advises on provisioning.
EOR vs Setting Up Your Own Entity in India
Setting up a Private Limited Company in India takes four to six months, costs ₹2 to 5 lakh in professional fees, and requires ongoing compliance — annual ROC filings, audit, board meetings, and maintaining minimum share capital. Running a PLC also requires a local director, a registered office address, and a statutory auditor.
EOR removes all of this overhead. You get compliant employment in India from week one, with no capital commitment and no ongoing corporate compliance obligations on your side.
The point at which transitioning to your own entity makes financial sense is typically when your India headcount exceeds fifteen to twenty people and the EOR fees start to exceed the cost of running your own payroll function. Most clients make this transition at eighteen to thirty-six months. We help plan and execute that transition — see our EOR vs entity comparison for the full analysis.
Who Uses EOR in India?
The typical EOR client in India is an international company — usually from the US, UK, Singapore, or Australia — that wants to hire one to twenty-five people in India without setting up their own entity. The most common use cases are technology companies building engineering teams, professional services firms hiring analysts or consultants, and companies doing market entry before committing to a full India presence.
XMS also provides EOR for GCC setups — MNCs building Global Capability Centres in India use our EOR to employ the founding team before their India subsidiary is established. See our GCC recruitment page for more on this.
How to Choose an EOR in India
The most important question to ask any EOR provider is how they handle PF, ESI, and TDS compliance — not whether they handle it, but how. Ask for their PF establishment registration number. Ask how they handle employees who cross the ₹15,000 basic salary threshold mid-year. Ask what happens if a TDS return is filed late. The answers will tell you whether you are dealing with a genuine compliance operation or a platform that outsources the work and hopes nothing goes wrong.
Speed of onboarding, quality of monthly reporting, and responsiveness when something unusual happens — these are the practical differentiators between EOR providers in India. XMS onboards employees within five to seven working days of all documents being complete.
Need help with EOR or hiring in India?
XMS handles EOR, recruitment, and payroll for companies across India. Tell us what you need and we will come back within one business day.