For many international companies, the fastest compliant way to start hiring in India is an Employer of Record (EOR) — a local organisation that becomes the legal employer of your India team while you direct their day-to-day work.
What an EOR does
An EOR issues compliant employment contracts, onboards employees, runs payroll, and coordinates statutory registrations and filings such as Provident Fund (PF), Employees' State Insurance (ESIC), professional tax and TDS on salary. You do not need an Indian legal entity to start.
When EOR fits
- First hires and pilots: test the market or a team before committing to incorporation
- Speed: EOR arrangements can typically be set up in weeks rather than the months incorporation can take
- Uncertain long-term plans: avoid the ongoing compliance burden of a local entity until the case is validated
- Project-based or specialist roles: bring in talent quickly for a defined engagement
What EOR does not do
- It does not give you a local legal entity for contracting, invoicing in rupees, or holding assets
- It is typically more expensive per head than direct employment through your own entity, because the provider's fee is included
- It is not suitable for every activity — some regulated activities require a local entity
Permanent establishment considerations
Having employees in India who work on your behalf can raise permanent establishment (PE) questions under the Income-tax Act and the relevant tax treaty, depending on what those employees do — for example, whether they have authority to conclude contracts or habitually play the principal role in concluding them. Using an EOR does not automatically remove PE risk, because the analysis looks at the activities carried out for your business. Take qualified tax advice on your specific facts before hiring sales or contract-negotiating roles.
Moving from EOR into a subsidiary
Many companies start with one to three EOR hires, validate the commercial model, then incorporate and transfer employees to the new Indian entity. A well-planned transition covers new employment contracts or transfer arrangements, continuity of service and benefits, PF/ESIC and payroll migration, and a clear cut-over date. Inaac Advisors supports both the EOR phase and the move into a subsidiary, so the transition is planned from day one.
EOR or incorporation: a quick test
- Need to hire within weeks and keep commitment low? Start with EOR.
- Need to contract with Indian customers, invoice locally and hold assets? Plan incorporation.
- Unsure? Start with EOR and design the transition in advance.
For a structured side-by-side comparison, see our EOR vs Incorporation guide.
Advisory note: Employment, tax and permanent establishment positions depend on your specific facts and change over time. This article is for general information only. Legal, tax and regulatory conclusions require qualified professional review.
Advisory note: This article is for general information and awareness purposes only. Inaac Advisors provides advisory and execution support — not legal, tax, or regulatory opinions. Legal, tax, immigration and regulatory conclusions require qualified professional review.
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