Why UK Companies Hire in India
The India talent market offers UK companies something that is genuinely hard to find elsewhere — a large pool of English-speaking professionals with strong technical and analytical skills at a cost that is 60 to 70% lower than equivalent UK talent. For UK companies in FinTech, professional services, technology, and media, this combination is compelling.
The time zone overlap between UK and India is also workable. IST is 4.5 hours ahead of GMT in winter and 3.5 hours ahead during BST in summer. A UK team starting at 9am has a solid three to four hour overlap with India working hours each morning — enough for daily standups and real-time collaboration without requiring the India team to work unusual hours.
India also has deep talent in functions that UK companies increasingly want to offshore — financial analysis, software engineering, data science, customer operations, and content production. The depth of the talent pool in these areas, particularly in Bangalore, Hyderabad, and Pune, is substantial.
Setting Up an Indian Subsidiary — Why Most UK Companies Don't Start There
Incorporating a Private Limited Company in India takes four to six months. The process involves filing incorporation documents with the Ministry of Corporate Affairs, obtaining a company PAN and TAN, opening a corporate bank account, registering for GST if applicable, and completing Provident Fund and ESI registration. You need at least two directors, one of whom must be an Indian resident.
Beyond incorporation, running an Indian subsidiary carries ongoing compliance obligations — annual ROC filings, statutory audit, income tax returns, PF and ESI monthly filings, professional tax, and additional FEMA reporting requirements for cross-border transactions with the UK parent. The annual recurring cost of compliance, excluding headcount, typically runs ₹4 to 8 lakh per year for a small subsidiary.
For UK companies hiring their first two to five people in India, this overhead is disproportionate. EOR removes it entirely — you pay a flat monthly fee per employee and XMS manages all compliance.
How EOR Works for UK Companies
The structure is simple. You identify the person you want to hire — through XMS recruitment or your own sourcing. XMS issues the employment contract under Indian law, registers the employee for Provident Fund and ESI where applicable, sets up monthly payroll with TDS deductions, and handles all statutory filings. The employee is legally employed by XMS in India.
You pay XMS monthly — invoiced in GBP or USD, whichever you prefer — and the invoice covers the employee's gross salary, employer statutory contributions, and the XMS service fee. The employee receives their salary in Indian rupees. You manage their day-to-day work, performance, and business direction completely.
What UK Finance and HR Teams Need to Know
Indian payroll is processed in INR. The functional currency of your India operation is Indian rupees. Your UK finance team will need to account for currency translation and the forex rate movement when reporting India costs in GBP. XMS invoices you in your preferred currency and provides monthly reports in both INR and your reporting currency.
Benefits expectations differ from the UK. Indian employees do not expect the same statutory benefits as UK employees — there is no equivalent of sick pay or statutory annual leave legislation that matches UK standards. However, Indian employment law does mandate Provident Fund, ESI for eligible employees, earned leave, and gratuity after five years. XMS manages all of these as part of the standard EOR service.
Employment contracts must follow Indian law. UK-style employment contracts do not apply to India employees. XMS issues employment contracts that are compliant with Indian labour law — covering notice period, compensation structure, leave entitlement, and termination conditions. These cannot simply be translated versions of your UK contracts.
Exit timelines are longer. Notice periods in India are typically sixty to ninety days for experienced professionals. When an employee resigns, you are contractually obligated to honour the notice period or pay in lieu. This is different from the one-month standard that most UK employers are used to.
UK to India — Cost Comparison
A mid-level software engineer in London earns £65,000 to £90,000 per year plus employer National Insurance contributions of approximately 13.8% on earnings above £9,100. Total employer cost: £75,000 to £105,000 per year, or roughly £6,250 to £8,750 per month.
The equivalent in Bangalore costs ₹28L to ₹38L CTC annually — approximately £26,000 to £35,000 at current exchange rates. Add XMS EOR fees of ₹8,000 per month (approximately £75) and total monthly cost is approximately £2,250 to £3,000. That is a saving of 65 to 70% on equivalent engineering talent.
For senior profiles — staff engineers, finance managers, data scientists — the India cost runs higher: ₹40L to ₹60L annually, or £3,100 to £4,700 per month via EOR. UK equivalent would be £8,000 to £12,000 per month all-in.
Transitioning from EOR to Your Own India Entity
Most UK companies use EOR for twelve to thirty-six months before considering their own India subsidiary. The decision point is typically at fifteen to twenty employees, when the cumulative EOR fees start approaching the cost of incorporating and running your own entity. XMS advises honestly on this — if your team size justifies the switch, we will tell you and help you plan it.
The transition from EOR to your own entity needs to be managed carefully to avoid gaps in PF coverage and ensure employment continuity for your team. See our detailed guide on transferring employees from EOR to your own India entity.
Ready to hire in India without setting up a company?
XMS handles EOR, recruitment and payroll for international companies. Talk to us today — same day response.