Why Australian Companies Come to India
The motivations are consistent — engineering talent at a fraction of Australian costs, a large English-speaking workforce, overlapping morning hours with the AEST time zone, and access to deep pools of technology, finance, and operations professionals. The salary differential between an experienced backend engineer in Bangalore and the equivalent in Sydney or Melbourne is still significant enough to drive material cost advantages even accounting for EOR fees and management overhead.
Australian companies that have built India teams typically start with two to five engineers or analysts, prove the model over six to twelve months, and then scale to ten to thirty people before considering a formal India entity setup.
The Time Zone Advantage Is Real
Australia and India have a time zone overlap that works better than most Australian companies expect. AEST is 4.5 hours ahead of IST in summer and 5.5 hours in winter. This means an India team that works standard Indian business hours — 9am to 6pm IST — overlaps with Australian Eastern mornings, which is when most product and engineering standup calls happen anyway. The overlap is enough for daily coordination without requiring the India team to work unusual hours.
How EOR Works for Australian Companies
The process is the same as for any international company using India EOR. You identify who you want to hire — either through XMS recruitment or your own sourcing. XMS issues the employment contract under Indian law, registers the employee for PF and ESI, processes monthly payroll with TDS deductions, and handles all statutory filings.
You pay XMS monthly in USD or AUD — whichever you prefer — and receive a monthly invoice showing the employee's gross salary, employer statutory contributions, and XMS service fee. No Indian entity required. No Indian bank account required. No Indian CA required.
What Australian Companies Need to Know About India Employment
Notice periods are longer in India. Standard notice periods for mid-level employees in India are sixty to ninety days, not two weeks. When you are hiring someone who currently works elsewhere, factor this into your start date planning. When an employee wants to leave your company, you are also required to honour the notice period specified in the contract.
PF contributions are mandatory for many employees. Employees earning below ₹15,000 basic salary per month must be enrolled in the Employees' Provident Fund. The employer contributes 12% of basic salary. For Australian companies comparing total employment costs, the employer PF contribution (and ESI where applicable) needs to be factored in alongside the monthly salary.
Termination in India requires proper process. India's employment laws protect employees from arbitrary termination. The employment contract specifies the notice period and grounds for termination. Termination for performance or conduct reasons requires proper documentation. XMS guides clients through this process when needed.
Employment contracts must be in writing. Verbal employment agreements are not enforceable in India for the purposes of statutory compliance. XMS issues proper written employment contracts for all EOR employees covering role, compensation, notice period, and confidentiality obligations.
Cost of Hiring in India via EOR — Australian Company Perspective
A mid-level backend engineer with five years of experience in Bangalore costs approximately ₹25L to ₹35L CTC per year — roughly AUD 45,000 to AUD 62,000 at current exchange rates. Add XMS EOR fees of ₹8,000 per month (AUD 150) and the total cost is still well under AUD 65,000 per year.
An equivalent engineer in Sydney would cost AUD 130,000 to AUD 160,000 including superannuation and other on-costs. The saving is significant even after factoring in management overhead and the initial ramp-up period.
Data engineers, ML engineers, and senior product managers command higher salaries — but the differential versus Australian market rates remains large. See our India developer salary guide for detailed current benchmarks.
When to Transition from EOR to Your Own India Entity
The typical trigger for an Australian company to consider setting up their own India entity is when the team reaches fifteen to twenty people and the cumulative EOR fees start to exceed the cost of running their own India payroll function. Setting up a Private Limited Company in India, hiring a local HR or finance manager to handle compliance, and running internal payroll typically becomes cost-effective at this scale.
XMS helps with this transition — we can continue as payroll outsourcing partner after you set up your own entity, manage the employee transfer process, and advise on the corporate compliance structure that makes most sense for your situation. Read our EOR vs entity comparison for a detailed analysis.
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.