TL;DR
- An Employer of Record India becomes the legal employer for your team on paper. You control the work. They own the compliance, payroll, and statutory filings.
- An EOR lets you hire employees in India without setting up an entity. You do not need local registration, an Indian bank account, or a compliance team built from scratch.
- The EOR issues the Indian employment contract, enrolls the employee in EPF and ESI, runs payroll in INR, deducts TDS, and handles every statutory filing. You get one invoice in USD.
- EOR onboarding typically takes 2 to 3 weeks from offer acceptance to Day One. With Husys, the compliance and onboarding side takes 8 working hours.
- The cost of EOR in India typically runs $99 to $600 per employee per month, depending on the provider and services included. Husys charges a flat $99 per employee per month with no percentage of salary fees and no surprise charges.
- An EOR is not an outsourcing arrangement. Your employee reports to you, works on your product, and operates on your schedule. The EOR just sits as the legal employer on the contract.
- The EOR model makes sense for most US companies with up to 25 to 30 employees in India. Beyond that, the fixed cost of a wholly owned subsidiary starts to look more efficient.
- Using an EOR eliminates contractor misclassification risk. The worker is a properly classified employee with full statutory benefits from day one, not a contractor that Indian tax authorities can reclassify later
With Husys, you can:
- Hire employees in India in as little as 8 hours
• Avoid 4–6 months of entity setup
• Stay fully compliant across all 28 states
• Pay a flat $99 per employee with no hidden fees
Now let’s get to the topic,
India just overtook Japan to become the world’s fourth-largest economy.
- The IMF projects 6.2% GDP growth in FY2026-27, the fastest of any major economy on the planet.
- And sitting inside that economy is a developer workforce of 4.5 million people, English-speaking, technically strong Indian nationals.
However, for any US-based company, getting that first hire right is harder than it looks.
India has 28 states and 8 union territories, each with its own labour rules, tax slabs, and holiday notifications.
Think of it as every US state having its own version of 401k matching rules, public healthcare mandates, and FMLA timelines, all running independently.
On top of that, 29 central labour laws are being consolidated into four new codes, with every state moving at its own pace.
The difference isn’t that Husys runs payroll.
It’s that your first India hire becomes fully compliant and operational in hours, not months, without forcing you to navigate India’s entity setup, banking, or labour law complexity yourself.
India at a Glance (2026)
- Population: ~1.43 billion people (current estimate)
- Working-age population (15–64): ~68 % of total
- Currency: Indian Rupee (INR)
- Capital: New Delhi
- Working language for your team: English. No language barrier for US companies hiring in tech, finance, or ops.
- GDP: ~$3.9 trillion nominal (fastest-growing major economy, projected ~6.2 % growth in FY2026-27)
- Talent hubs: Bengaluru, Hyderabad, Pune, Mumbai, Delhi-NCR, Chennai (strongest demand for tech, digital, and GCC talent)
- Skills trend: Employability rising (56 %+ job-readiness) with improved AI and digital skills focus
- AI focus: India has announced a national push to skill 10 million people in artificial intelligence and emerging technologies over the coming years.
- Tax holiday for cloud services: Under the 2026–27 Union Budget framework, India has proposed a long-term tax holiday through March 31, 2047, for eligible foreign companies delivering global cloud or AI services from India-based data centers.
If you just made your first hire in India, or you’re about to, this guide is for you. This blog will tell you what the timeline actually looks like, what compliance tripped up companies before you, and where Husys fits into all of it.
You will get the most out of this if you are
- Hiring your first one to five employees in India, and are unsure where to start
- Running engineering, product, or finance operations and considering India for your next hire
- Trying to understand what EOR actually costs versus setting up your own entity
- The person in your company who will be held accountable if the compliance goes sideways
What Is an Employer of Record India?
Think of an employer of record in India as your legal presence in India before you actually have one. Husys becomes the employer on paper.
We issue the Indian employment contract, run payroll in INR, handle taxes and statutory contributions like EPF and ESI, and stay on top of every compliance filing.
You decide who to hire, what they work on, and how much they earn. The paperwork and the liability sit with us.
Now imagine this.
- Say you’re a SaaS founder in Austin who just closed a Seed round and wants to hire employees in India without an entity, specifically a senior backend engineer in Bengaluru.
- You don’t want to spend six months and $15,000 setting up an Indian subsidiary for one hire.
- With Husys, you pick your candidate, agree on salary, and we handle everything else.
What Does an EOR Actually Do
You Control | Husys Owns |
Who you hire | Employment contract |
What they work on | EPF and ESI enrollment |
Day-to-day direction | TDS deductions |
Performance management | Payroll in INR |
Salary level | Statutory filings |
Work schedule | Compliance deadlines |
The engineer signs a locally compliant Indian contract, payroll runs in INR, and you get a single monthly invoice, and your CTO manages them like any other team member.
Not sure if EOR is the right move for your first India hire?
Most US founders spend weeks researching India hiring before talking to anyone. You can skip most of that in one conversation with us.
Why US Companies Choose an Employer of Record to Hire in India
When US founders think about hiring in India, the conversation usually starts with access to talent.
It changes quickly once you realise employment here runs on a different structure than what you are used to in the US.
- Hire in days, not months:
- Setting up a Private Limited Company in India takes 4 to 6 months and costs $8,000 to $15,000 before a single employee is paid.
- An EOR is the legal employer in India, so you skip entity setup and start hiring in days.
- Stay compliant without building a compliance team:
- India’s labour laws vary across all 28 states.
- What applies in Karnataka, India’s IT capital, differs from Maharashtra, India’s financial capital.
- As your employer of record in India, Husys already knows which rules apply to your hire before the offer goes out.
- Significant cost advantage over US hiring:
- A mid-level engineer in Bengaluru costs $18,000 to $35,000 annually.
- The same profile in San Francisco runs $150,000 to $180,000.
- That is a 70 to 80% difference for comparable skills.
- Never miss a statutory deadline:
- EPF, TDS, ESI, and Professional Tax all run on separate filing cycles with penalties for missing them.
- As an EOR, we own every deadline, so your payroll stays clean every month.
- Hire employees, not contractors:
- Paying contractors through wire transfers creates misclassification exposure that Indian tax authorities can pursue 3 to 7 years back.
- We put your worker on a proper employment contract with full statutory benefits from day one.
- Get the salary structure right before the offer goes out:
- A wrong CTC split creates EPF and gratuity liabilities that are expensive to fix after the fact.
- We structure compensation correctly upfront so there are no compliance gaps later.
Husys holds its own Indian entity. Your employees are employed directly by Husys in India, with no third-party shell company or sub-contracted employer in the chain.
When something needs to get resolved, whether that is a statutory notice, a payroll correction, or a compliance update, Husys makes the call and owns the outcome.
Unlike other EOR providers, there is no intermediary to chase.
Note: This matters most when you are asking “who is actually liable if something goes wrong.”
The answer is the entity on the employment contract, and that entity is Husys.
EOR vs. Entity Setup vs. Contractors: Which One Makes Sense for a US Company?
When US founders first call us, they usually fall into one of three camps.
- They went the contractor route because it felt fast and lightweight.
- They spent months trying to set up an entity and are still waiting.
- Or they found us early and got their first hire running in hours.
Here’s how those three paths actually compare.
| Factor | Contractor | Entity Setup | Employer of Record |
|---|---|---|---|
| Time to First Hire | 1 to 3 days | 4 to 6 months | 8 hours* |
| Upfront Cost | Low | $8,000 to $15,000+ in legal and registration fees | Minimal, usually the first month's fees |
| Ongoing Cost | Contractor fee only | Full back-office, HR, and compliance team | $99 per employee per month* |
| Legal Employer on Record | Your US company carries the risk | Your Indian subsidiary | The EOR entity in India |
| Misclassification Risk | High. Indian tax authorities actively reclassify long-term contractors as employees | None | None |
| Statutory Benefits (EPF, ESI, Gratuity) | Not covered, creating backdated liability risk | Covered but requires internal compliance team | Covered and managed by the EOR |
| Payroll Compliance | Your responsibility, often missed by US teams | Your subsidiary's responsibility | Fully handled, including TDS, EPF, and ESI deadlines |
| State-Level Labour Law Coverage | Rarely addressed | Requires local legal expertise per state | Built into the EOR's existing infrastructure |
| Offer Letter and CTC Structure | US-style contract, often non-compliant | Compliant with right local HR counsel | Structured to Indian standards by default |
| Equity and IP Assignment | Difficult to enforce | Possible with documentation | Supported with compliant agreements |
| Scalability | Works for 1–2 people before risk increases | Designed for scale but slow and expensive | Scales from 1 to 50 hires without structural changes |
| Best Suited For | Short-term independent project work | 30+ employees with long-term commitment | Companies at any stage wanting compliant full-time hires |
| Exit Flexibility | Easy exit but misclassification disputes may linger | Dissolution is lengthy and expensive | Straightforward wind-down with managed notice |
| Employee Experience | No benefits, weaker talent signal | Full employment with strong benefits | Full benefits and proper offer structure |
= When you choose Husys as your India EOR
The contractor path is where most US companies start. The entity path is where some end up. The EOR is what makes sense for the majority of companies in between, and it’s where Husys sits.
What Can You Actually Build in India Through an EOR?
Most US founders come to us with one of two things in mind.
- Either they want to hire two or three engineers to extend their product team, or
- they’re thinking bigger and want to know how far an India hiring strategy can actually go.
The answer is further than most people expect.
India’s talent market covers everything from core R&D and AI infrastructure to fintech, cybersecurity, and enterprise GTM.
An EOR like Husys lets you hire across all of these functions without setting up an entity, which means you can test a new function, prove the model, and scale it before you’ve committed to permanent infrastructure.
Here’s a breakdown of the most common ways US companies are using EOR to build in India right now, along with the roles that typically go with each.
| Use Case | What You're Actually Trying to Do | Why India Makes Sense | Roles You’d Hire Through EOR |
|---|---|---|---|
| Indic LLM Training | Fine-tune AI models across India's 22 official languages | 1.4B consumers transact in regional languages. Unlocks markets Western AI cannot serve effectively | NLP Engineer, Computational Linguist, ML Data Specialist |
| Follow-the-Sun DevOps | Run 24/7 delivery and incident response without burning out US teams | 9.5–12.5 hour time gap enables true coverage while US sleeps | DevOps Engineer, SRE, Platform Engineer |
| GCC Transition | Start with EOR and evolve into a Global Capability Center | Enter fast, validate model, convert to entity when headcount justifies | Engineering Manager, HR Lead India, Finance Controller |
| India Stack Integration | Integrate UPI, Aadhaar, ONDC into your product | World’s most advanced digital public infrastructure ecosystem | Backend Engineer, Payments Specialist, API Developer |
| SaaS License & Asset Management | Centralize licenses & hardware across distributed teams | Prevents spend leakage and security exposure at scale | IT Asset Manager, SaaS Ops Analyst, Procurement Specialist |
| Compliance Engineering | Build infrastructure compliant with DPDP Act & GDPR | Penalties up to ₹250 crore. Architecture-first compliance saves cost | Data Privacy Engineer, Security Architect, Compliance Analyst |
| Core R&D Hub | Build primary product engineering team | Senior architects cost a fraction of Silicon Valley equivalents | Principal Engineer, Staff Engineer, Solutions Architect |
| 24/7 L2 & L3 Support | Provide global high-level troubleshooting coverage | Improves CSAT and prevents US team burnout | L2 Support Engineer, L3 Specialist, Customer Success Engineer |
| AI Data Labeling | High-quality annotation for domain-specific AI models | Strong expertise across finance, healthcare, legal domains | Annotation Specialist, QA Reviewer, Domain Expert |
| QA & Test Automation | Run automated testing & reliability engineering | Overnight regression cycles enable confident morning releases | QA Automation Engineer, SDET, Test Lead |
| Fintech Sandboxing | Test payments & lending in live economy | India processes the world’s highest real-time payments volume | Fintech Engineer, Regulatory Analyst, Product Manager |
| M&A Talent Continuity | Stabilize acquired India team during transition | EOR bridges compliance gaps post-acquisition | Acquired Engineering Team, HR Integration Specialist, Finance Lead |
| Cybersecurity Operations | Run 24/7 SOC threat detection | Global coverage across full 24-hour window | SOC Analyst, Threat Intelligence Analyst, IR Engineer |
| India GTM | Adapt product & sales for Indian enterprise buyers | Local teams close deals US teams often miss | Enterprise AE, CSM, SDR |
| Web3 & Blockchain Dev | Build decentralized protocols | One of the world’s largest blockchain developer pools | Blockchain Developer, Smart Contract Engineer, Web3 PM |
Client Testimonial
“Husys helped us hire our first three engineers in India in under two weeks, without forcing us to set up an entity or navigate local compliance ourselves. The onboarding was fast, and everything was handled correctly from day one.” — CTO, Series B SaaS company, Seattle, USA
How to Hire Employees Through EOR in India
Most US founders assume that India employer of record services involve weeks of back and forth. In practice, once you’ve picked your candidate, the sequence from paperwork to first payroll wraps up in two to three weeks.
That said, here’s how to hire employees through employer of record services in India:
- Finalize the role and location:
- Define the job title, responsibilities, compensation range, and start date. Confirm the employee’s city because payroll registrations and state-level rules vary across India.
- Once the role and location are clear, the EOR structures the employment correctly.
- Select the candidate internally:
- Run interviews as you normally would. Assess skills and culture fit. The hiring decision is yours.
- The EOR steps in only after you confirm the hire.
- Trigger onboarding through the EOR:
- After you confirm the candidate, the EOR begins background verification and prepares the employment agreement under Indian law.
- The contract reflects CTC structure, statutory benefits, notice period terms, and state-specific leave policy.
- Complete statutory registrations before payroll:
- The EOR enrolls the employee under EPF and ESI where applicable, sets up TDS deductions, and activates Professional Tax registration in the relevant state before the first payroll cycle.
- Confirm payroll readiness before Day One:
- Ensure the contract is signed, registrations are active, and payroll is configured.
- At this stage, the employee is legally employed through the EOR and ready to begin work.
With Husys, the compliance and onboarding side takes 8 working hours. Husys runs an in-house legal and compliance team that handles contract drafting, EPF enrollment, ESI registration, and TDS setup internally.
How Long Does It Take to Hire an Employee in India?
US founders are used to moving fast. Post on LinkedIn, run three rounds, send an offer, done in two to three weeks. India hiring moves at the same pace.
What slows things down is the employment infrastructure behind the offer, and that’s entirely dependent on which path you take.
Through an EOR
Using an employer of record in India is the fastest path. Once you have selected a candidate, here is what the timeline typically looks like.
Stage | Timeline |
Sharing role details and compensation with the EOR | Day 1 |
Offer letter drafted and sent to the candidate(this usually happens within 8 hours, on the basis of document submission) | Day 2 to 3 |
Background verification | 5 to 7 business days |
Contract signed and statutory registrations initiated | Day 8 to 10 |
EPF and ESI enrollment confirmed | Day 10 to 14 |
Payroll setup and first day | Day 14 to 21 |
- Most US companies using an employer of record in India get their first employee to Day One within two to three weeks from the moment a candidate accepts the offer.
- Some EOR providers with existing state-level registrations can compress this further.
- Husys maintains active registrations across all 28 Indian states and union territories.
- When you hire in Bengaluru and then add someone in Hyderabad two months later, the state-level registrations are already in place.
- Your second hire in a new city does not restart the compliance clock, which matters as your India team scales across multiple locations.
Through a Contractor Arrangement
- Faster on paper, Day One can happen in 48 hours if you are just sending a contract and wiring money.
- The risk is what accumulates underneath. Indian tax authorities have a three to seven-year lookback window on misclassified contractor relationships.
- The speed at the start often turns into a much longer and more expensive problem later.
Through an Indian Subsidiary
- This is where US founders lose months they did not plan to lose.
- Setting up a Private Limited Company in India involves the following sequence, and these stages do not always run in parallel.
Stage | Estimated Time |
Director Identification Number (DIN) for all directors | 1 to 2 weeks |
Digital Signature Certificates | 1 week |
Name reservation via the RUN application | 1 to 2 weeks |
Certificate of Incorporation from MCA | 2 to 4 weeks |
PAN and TAN registration | 2 to 3 weeks |
GST registration | 2 to 4 weeks |
Professional Tax registration (state-specific) | 1 to 3 weeks |
Shops and Establishments Act registration | 1 to 2 weeks |
Bank account opening for the entity | 2 to 4 weeks |
EPF and ESI registration | 2 to 3 weeks |
Total realistic timeline | 4 to 6 months |
And that is if nothing gets sent back for correction, which it often does on the first submission.
What Adds Time Even With an EOR
A few factors can extend the EOR timeline regardless of how efficient your provider is.
- Notice periods in India are long compared to US norms.
- Most mid to senior-level professionals are on a 30 to 90-day notice period with their current employer.
- Some companies, particularly large Indian IT firms and MNCs, enforce the full 90 days.
Note:
- Background verification for certain roles, particularly those involving financial data or senior leadership, can take longer if the candidate has worked at companies that are slow to respond to verification requests.
- State-specific registrations also add a few days if your EOR does not already have an active presence in that state.
What Is the Real Cost of EOR in India?
| Cost Category | Contractor | Indian Subsidiary | EOR |
|---|---|---|---|
| Setup Cost | None | $8,000 to $15,000 one-time legal & registration fees | Minimal, usually first month fees only |
| Monthly Fee Structure | Contractor rate only, no overhead | Fixed infrastructure costs regardless of headcount | $99 per employee per month |
| Local HR & Payroll Manager | Not required | $12,000 to $20,000 per year | Included in EOR fee |
| Statutory Compliance & CA Retainer | Not applicable | $4,000 to $8,000 per year | Included in EOR fee |
| EPF & ESI Contributions | Not covered, creates backdated liability | 12% EPF + 3.25% ESI on gross salary | 12% EPF + 3.25% ESI, managed & filed by EOR |
| Gratuity Provisioning | Not covered | 4.81% of basic salary after 5 years | Managed by EOR |
| Annual MCA Filings & Audit | Not applicable | $2,000 to $5,000 per year | Not applicable |
| Registered Office Address | Not applicable | $1,500 to $3,000 per year | Not applicable |
| Misclassification Penalty Risk | High. Backdated liability 3 to 7 years | None | None |
| TDS Default Interest | 1.5% per month if missed, liability on US company | Subsidiary liable, manageable locally | Managed and filed by EOR |
| Estimated Total Annual Cost (5 Engineers) | Lower upfront, significant legal exposure | $19,500 to $36,000 fixed overhead before salaries | $5,940 EOR fees, no fixed overhead |
The cost of EOR in India stays efficient up to around 25 to 30 employees.
Beyond that, the fixed cost of your own Indian subsidiary starts to look more reasonable on paper. But that math only works if someone on your team has the bandwidth to own India payroll compliance, statutory filings, and local HR.
Read More: Minimum Wages in India (2026): A Guide for US Companies hiring in India
What You Avoid Paying With an EOR
This part rarely makes it into cost comparisons, but it is often the most significant number on the table.
- A single EPF non-compliance penalty in India can run between ₹5,000 ($55) and ₹15,000 ($165) per default, with criminal liability for repeat offenses under Section 14 of the EPF Act.
- TDS defaults attract interest at 1.5% per month from the date the deduction was due.
- A misclassified contractor relationship that gets reclassified by Indian tax authorities can result in backdated employer contributions, interest, and penalties going back three to seven years.
These are exactly the situations our India employer of record services are built to prevent.
When you look at the full risk picture, the cost of EOR in India at $99 a month is the most straightforward line item in your India hiring budget.
What US Companies Get Wrong About India Payroll Compliance
If you run payroll in the US, you are used to federal withholding, state tax, Social Security, and a predictable year-end cycle. Most payroll tools handle the heavy lifting, and the IRS gives you grace periods when things slip.
India payroll compliance operates on a different framework, and US-based assumptions often lead to avoidable mistakes.
Here are the differences that matter most.
In the US | In India |
Employment is often at-will | Notice periods are written into the contract and are enforceable |
Social Security and Medicare apply uniformly | EPF and ESI depend on wage thresholds and structure |
Salary is a single gross figure | Salary components affect statutory calculations |
Payroll taxes follow quarterly schedules | TDS must be deposited monthly |
State payroll differences are manageable through systems | Each state has separate compliance obligations |
Contractor classification follows IRS control tests | Courts examine the actual working relationship |
Payroll vendors process salary | Legal liability remains with the employer |
Now, what does that mean in practice?
- Notice periods: If your contract says 60 days, you either let the employee serve it, or you pay 60 days’ salary. You cannot terminate immediately without financial consequences.
- EPF and ESI: Contributions are mandatory where applicable. Salary structure determines liability. You cannot redesign pay simply to avoid statutory contributions.
- Salary components: Provident Fund and gratuity are calculated on basic pay. If basic pay is set artificially low, authorities can reassess dues based on broader wage definitions.
- Monthly TDS deposits: Tax deducted at source must be deposited by the 7th of the following month. Late deposits show up in employee tax records and can trigger notices.
- State-level compliance: Professional Tax, Labour Welfare Fund, and local registrations differ by state. Hiring in two cities means tracking two compliance sets.
- Contractor classification: If the person works fixed hours under your supervision and depends economically on you, authorities may treat them as an employee regardless of the contract label.
- Principal employer liability: Even with a payroll vendor, your company remains legally responsible for compliance. A vendor processes payroll. It does not absorb statutory liability.
EOR in India for US companies solves this very specific problem. Husys conducts structured quarterly compliance reviews across all client accounts.
Gaps are identified, documented, and remediated on a defined schedule, ensuring statutory obligations are continuously aligned rather than reviewed once a year.
Note : Instead of adapting US systems to Indian law, you operate within a compliant framework from the start.
What are the Mandatory Employee Taxes and Statutory Benefits in India?
When you run payroll in India in 2026, you’re handling income tax, social security, state-level deductions, and statutory exit payments simultaneously.
Each one has its own law, portal, due date, and penalty for getting it wrong.
If you are used to US payroll, think of this as handling federal tax, Social Security, state unemployment insurance, and severance obligations simultaneously, but with separate authorities and filing systems.
Here’s what’s mandatory under current law:
| Component | Who Pays | Typical Rate | Applicability |
|---|---|---|---|
| Income Tax (TDS) | Employee (deducted by employer) | Slab-based rates + 4% cess | Salaried employees above exemption limit |
| EPF (Provident Fund) | Employer & Employee | 12% of basic + DA each | Establishments with 20+ employees |
| Employees’ Pension Scheme | Employer (from EPF portion) | 8.33% capped at ₹15,000 wages | EPF-covered employees |
| ESI | Employer & Employee | 3.25% employer, 0.75% employee | Employees earning up to ₹21,000/month |
| Professional Tax | Employee (deducted by employer) | Up to ₹2,500 per year | States that levy it |
| Gratuity | Employer | 15 days' wages per year of service | After 5 years of continuous service |
| Statutory Bonus | Employer | Minimum 8.33% of annual wages | Eligible employees under wage threshold |
| Labour Welfare Fund | Employer & Employee | Fixed nominal amount | Applicable states only |
The G4S Security Services case in India illustrates exactly how this plays out. The company split employee wages into multiple allowances to reduce their EPF contribution base.
The EPFO found the company had not paid full PF dues to more than 10,000 employees and directed it to deposit ₹133 crore in arrears.
Husys files each of these through the relevant government portals on their separate cycles:
- EPF by the 15th,
- TDS by the 7th,
- ESI on its own schedule, and
- Professional Tax by each applicable state’s deadline.
- These are separate authorities, separate portals, and separate filing calendars.
Husys’s in-house compliance team owns each one across every active client, every month.
How Do Leave and Holiday Policies Work in India?
In the US, PTO is a benefit you design. In India, minimum leave entitlements are set by law and vary by state. Even if your global policy offers unlimited PTO, every Indian employee is entitled to these floors by statute.
| Leave Type | Who It Applies To | How Many Days | What Happens If Unused |
|---|---|---|---|
| Earned Leave | All employees after completing minimum service (240 working days in most states) | 12 to 18 days per year | Can be carried forward up to a statutory cap. Paid out in cash at separation. |
| Sick Leave | All employees | 6 to 12 days per year | Generally lapses. A medical certificate may be required for longer absences. |
| Casual Leave | All employees | 6 to 12 days per year | Cannot be carried forward. Lapses at year's end if unused. |
| Maternity Leave | Women employees covered under the Maternity Benefit Act | 26 weeks for first two children, 12 weeks thereafter | Fully paid by employer unless employee qualifies for ESI benefits. |
| National Holidays | All employees | 3 national holidays plus state-declared festival holidays | Working on a national holiday requires compensatory leave or additional pay. |
One thing US employers consistently miss is the earned leave payout at exit.
Unlike PTO in the US, which many companies simply forfeit, unused earned leave in India is a cash liability that gets cleared during full and final settlement.
Husys builds this into every employment contract from the start, so there are no surprises at separation.
How Does Employee Termination Work in India?
If you are used to US employment law, termination in India will feel structured and procedural.
In most US states, employment is at will. In India, termination is driven by contract terms, employee classification, tenure, and statutory rules. Notice periods are enforceable. Compensation formulas are defined by law.
If termination is handled incorrectly, it can lead to formal labour disputes that take months to resolve.
- You cannot let someone go in two weeks:
- Notice periods in India are 30 to 90 days and written into the contract.
- If you need someone out faster, you pay out the remaining notice period in cash. There is no workaround.
- Firing for misconduct has a process:
- You cannot send a termination email and move on. Indian law requires a domestic enquiry before dismissal for misconduct.
- Skip that step, and the employee can challenge the termination in court, regardless of what they actually did.
- Laying someone off costs money:
- Employees classified as workmen under the Industrial Disputes Act are entitled to retrenchment compensation, calculated at 15 days of average pay per completed year of service.
- For larger teams, you may also need government approval before the layoff happens.
- Every separation has a checklist:
- Before you close out an employee, you owe them unpaid salary, earned leave encashment, applicable bonus, expense reimbursements, and gratuity if they have crossed five years.
- Miss any of these, and it comes back as a legal claim.
- Gratuity is not optional after five years:
- Any employee who completes five continuous years of service is entitled to gratuity by law.
- Layoffs and Closures:
- For larger establishments covered under Chapter V B of the Industrial Disputes Act, layoffs, retrenchments, or closures may require prior government approval depending on headcount thresholds and state amendments.
Who Owns the IP When You Hire in India Through an EOR?
If you hire directly in the US, IP ownership is usually handled through invention assignment clauses in the employment agreement. Once signed, ownership flows to the company.
When you hire through Husys, the structure requires one extra step because we’re the legal employer on record. IP must be explicitly assigned from the employee to us, and then from us to your company.
At Husys, we build this into every employment contract, so the chain is clean and enforceable from day one.
Here is how it typically works.
- IP assignment built into the employment contract:
- The employment agreement signed with the Indian employee includes clear assignment language stating that all intellectual property created in the course of employment belongs to your company.
- This covers code, product designs, documentation, inventions, and related works.
- Two-step assignment structure:
- In most EOR models, the employee assigns IP to the EOR as the legal employer.
- The EOR then assigns those rights to your company under the Master Services Agreement.
- The documents are structured so the transfer is automatic and continuous.
- Contractors vs employees distinction:
- This is also another reason why proper employment classification matters.
- Contractors in India can retain IP ownership by default.
- Employees can’t, if the assignment clause is drafted correctly.
- Compliance with the Indian Copyright Act and other IP statutes:
- Contracts should specify that the assignment applies worldwide and for the full term of protection.
- If not drafted properly, Indian law can impose default limitations.
- Moral rights waivers are also addressed where legally permissible.
- Confidentiality and restrictive covenants:
- One thing US founders often don’t expect is that post-termination non-competes are generally unenforceable in India.
- You can’t stop a former engineer from joining a competitor the way you might in a US contract.
- This makes confidentiality clauses and IP assignment language even more important.
What Are the Visa and Work Permit Rules for Foreign Employees in India?
Most of the time, your India team will be Indian nationals, and visas won’t be a factor. But if you want to send a US leader to India to set up operations or stabilize a new team, here’s how the rules work.
- Business Visa for short-term visits:
- A Business Visa is suitable for meetings, negotiations, training sessions, or exploratory setup discussions.
- It does not permit hands-on operational work in India.
- The individual cannot be on the Indian payroll under a Business Visa.
- Employment Visa for working in India:
- If the foreign national will work in India, manage teams, execute operations, or receive a salary in India, an Employment Visa is required.
- This requires a formal employment contract with an Indian entity or an EOR acting as the legal employer.
- Minimum salary threshold:
- India requires a minimum annual salary threshold for foreign nationals applying for an Employment Visa, generally around USD 25,000 per year, subject to limited exemptions for specific roles.
- This ensures Employment Visas are issued for skilled and senior positions.
- FRRO registration after arrival:
- If the visa validity exceeds 180 days, the foreign employee must register with the Foreigners Regional Registration Office within 14 days of arrival.
- Residential address and employment documentation are required.
- PAN and income tax compliance:
- A foreign employee working in India must obtain a Permanent Account Number for tax purposes.
- If their physical presence crosses Indian tax residency thresholds, Indian income tax obligations may apply based on duration of stay and treaty relief provisions.
- Dependent visas:
- Spouses and dependents can enter India on Entry visas.
- These visas allow residence but do not permit employment unless converted to an Employment Visa.
Note: If your US leader is only visiting for strategic meetings, a Business Visa may be sufficient. If they are running operations in India, even for a few months, an Employment Visa, payroll setup, and tax review are usually required.
What Is Permanent Establishment Risk and Why Should US Companies Care?
If you only operate in the US, your tax exposure is simple. You are taxed where you are incorporated. In India, you can create a taxable presence without incorporating anything. It is called Permanent Establishment. Once triggered, India has the right to tax the profits your Indian operations generate.
There are three ways it gets triggered.
Fixed Place PE
- When it applies: Your company has a physical location in India used continuously for business operations, an office, a branch, or any stable setup.
- How it is measured: Whether the location is at your company’s disposal and whether core business activity is conducted from it.
- Implication: India treats that location as a taxable business presence and can assess corporate tax on profits generated there.
Dependent Agent PE
- When it applies: Someone in India is habitually concluding contracts on behalf of your US company, or playing the lead role in deals that get approved without material changes.
- How it is measured: Pattern of conduct and actual authority, not job title.
- Implication: The person’s activity is treated as your company doing business in India, regardless of where your entity is incorporated.
Three Ways PE Gets Triggered
Fixed Place PE: You have a physical location in India used continuously for business
Dependent Agent PE: Someone in India is signing or finalising contracts on your company’s behalf
Service PE: Your employees provide services in India beyond the treaty threshold within a 12-month period
What Husys monitors: invoice activity, employee deliverables, contract authority levels
Service PE
- When it applies: Your employees or personnel are providing services in India continuously beyond a specified duration within a twelve-month period under the US-India tax treaty.
- How it is measured: Duration of services and continuity of presence in India.
- Implication: Sustained service delivery in India can constitute a taxable presence even without a physical office.
What happens if PE is triggered
- You must obtain a PAN in India
- File Indian corporate tax returns
- Pay tax on profits attributable to Indian operations
- Defend the method you used to allocate revenue and expenses to India
Hiring employees in India does not automatically create PE. The risk increases when Indian employees are signing contracts, generating revenue, or running operations out of a fixed office.
Husys monitors PE risk at the transaction level through its proprietary HRIS platform.
Each invoice is tracked against the employee’s actual deliverables to identify patterns that could indicate revenue-generating activity in India.
What Does Hiring Through an EOR Look Like for In-Demand Roles in India?
Here’s what it actually costs to hire three of the most common roles US companies bring to India through Husys, with real salary ranges, EOR fees, and a comparison to what the same hire would run you in the US.
| Aspect | Software Engineer | Finance Lead | Sales / GTM Manager |
|---|---|---|---|
| Location | Bengaluru | Mumbai | Delhi NCR |
| Experience | 4 to 6 years | 6 to 10 years | 5 to 8 years |
| India CTC (INR) | ₹15 to 25 lakhs | ₹12 to 20 lakhs | ₹10 to 18 lakhs base + variable |
| India Cost (USD / Year) | $18,000 to $30,000 | $14,400 to $24,000 | $12,000 to $21,600 base |
| US Equivalent Cost | $120,000 to $180,000 | $90,000 to $130,000 | $90,000 to $140,000 |
| Husys EOR Fee | $99 / month | $99 / month | $99 / month |
| Estimated Monthly Employer Cost (Salary + EOR) | $1,600 to $1,800 | $1,300 to $2,100 | $1,650 to $1,850 |
| Savings vs US Hiring | 70 to 85% | 70 to 80% | 70 to 80% |
The savings are real. But the more useful way to think about it is what your existing US hiring budget actually buys you in India.
| Your US Budget | What You Get in the US | What You Get in India via Husys |
|---|---|---|
| $180,000 | 1 mid-level engineer in Austin | 5 mid-level engineers in Bengaluru |
| $130,000 | 1 finance lead in New York | 4 finance leads in Mumbai |
| $140,000 | 1 sales manager in New York | 5 sales managers in Delhi NCR |
The savings on a single US hire fund your entire India team for the first year. You make the hire, we handle the compliance, and your team starts contributing in weeks.
Changes in India's Labor Law Should US Companies Know About in 2026?
India consolidated 29 labour laws into four codes, and in 2026, states are still rolling out implementation rules under each of them.
This means the India payroll compliance landscape is genuinely shifting in real time.
Here’s what’s changed or is changing now, and what it means for your India operations. As your employer of record in India, Husys tracks each of these updates so you don’t have to.
- Wage Definition, 50% Rule, and Overtime:
- Basic salary must be at least 50% of total remuneration for statutory calculations under the Wage Code.
- This increases the PF and gratuity contribution base for many salary structures.
- Also, overtime applies beyond 8 hours a day or 48 hours a week and must be paid at double the wage rate.
- Gratuity Changes:
- The gratuity ceiling has been revised upward, increasing maximum payout exposure.
- Fixed-term employees may qualify for gratuity after completing 1 year.
- Employers must provision higher exit liabilities for long-tenure and contract roles.
- Salary Timelines and F&F Settlement:
- Under the new wage framework, monthly salaries must be paid by the 7th of the following month.
- Full and final settlement is expected within 2 working days of an employee’s last working day.
- Delays can trigger penalties and employee disputes.
- ESIC Threshold Monitoring:
- The ESI wage ceiling is periodically revised by notification.
- If an employee’s gross wages fall within the threshold, both employer and employee contributions become mandatory.
- Coverage changes apply immediately once notified.
- Worker Classification and Social Security:
- Fixed-term, gig, and contract worker definitions are being enforced more strictly.
- If a worker meets employee criteria, PF and ESI obligations apply regardless of label.
- Misclassification can lead to retrospective contribution demands.
- Inspection and Digital Compliance Regime:
- Labour inspections are now system-triggered based on return filings and data analytics.
- EPF, ESI, TDS, and professional tax portals reject filings with PAN, UAN, or wage mismatches.
- Non-compliance is flagged automatically, not manually.
- State-Level Leave and Remote Work Updates:
- Shops and Establishments rules vary by state for leave accrual, carry-forward limits, and public holidays.
- Some states have issued formal guidance on remote work obligations.
- HR policy must align with the state where the employee is located.
These changes affect payroll, HR policy, and compliance.
This is exactly the kind of moving target that makes India compliance hard to manage from a US office.
Husys has an in-house legal and compliance team with over 250+ years of collective work experience, that tracks notifications from the Ministry of Labour, state labour departments, and social security authorities as they are issued.
When a state publishes a revised holiday list, updates its Professional Tax slab, or changes its Shops and Establishments Act filing requirement, the Husys compliance team interprets the change and updates the relevant payroll and HR processes before the effective date.
EOR in India vs Setting Up Your Own Entity: A Full Cost and Risk Comparison
If you’re still weighing global EOR India solutions against building your own Indian entity, here’s the full comparison.
| Factor | Employer of Record | Own Indian Entity |
|---|---|---|
| Legal Employer | EOR entity in India | Your Indian Private Limited Company |
| Setup Timeline | A few days to a couple of weeks | 2 to 6 weeks for incorporation, plus bank and tax registrations |
| Upfront Cost | No incorporation cost | Government fees and professional fees for incorporation |
| Monthly Cost Model | Per employee fee, typically 99 to 600 USD per month | Fixed compliance cost plus payroll provider and advisory fees |
| Payroll Compliance | Handled by EOR | Your responsibility through payroll and legal vendors |
| EPF, ESI, TDS Filings | Filed by EOR | Filed by your company |
| Corporate Tax Filing | No Indian corporate filing for you if structured properly | Mandatory corporate tax return and statutory audit |
| Permanent Establishment Risk | Structured to reduce risk if contract authority remains outside India | You have a clear taxable presence in India |
| Employment Liability | Lies with the EOR | Lies with your entity |
| Termination Compliance | Managed through the EOR framework | Direct exposure under Indian labour laws |
| Ability to Invoice Indian Clients | Limited unless structured separately | Full ability to contract and invoice locally |
| Exit Process | Terminate service agreement | Formal company strike off or liquidation required |
| Cost Efficiency at Small Headcount | Often more efficient for under 10 employees | Higher fixed costs at low headcount |
| Cost Efficiency at Scale | Per employee fee increases with headcount | Per employee cost reduces as the team scales |
For most US companies, the threshold at which running your own Indian subsidiary becomes cost-efficient is around 25 to 30 employees with long-term operational commitments.
Below that, the fixed overhead of incorporation, a local compliance team, a CA retainer, and annual MCA filings runs $19,500 to $36,000 per year before a single salary is paid.
Husys at $99 per employee per month covers all of that for a fraction of the cost, with an in-house team that already has the infrastructure in place.
Client Testimonial
We weren't ready to commit to a permanent Indian entity, but we needed to move fast on hiring. Husys let us scale from two to twelve engineers in under six months, fully compliant, with the option to reassess structure later. That flexibility was worth everything." — Head of Operations, Growth-stage Tech company, Amsterdam, Netherlands Client name withheld due to NDA.
Why Husys for US Companies Hiring in India
Most providers added India employer of record services as an extension of their global offering. We built our entire business around it.
Husys has been running India payroll since 2001. We are ISO 9001 and ISO 27001 accredited, operate our own Indian entity, and maintain an in-house legal and compliance team across all 28 states.
We operate our own entity in India
- Some providers promoting global EOR India solutions don’t actually employ your workers directly.
- They route the relationship through a third-party entity you’ve never heard of and will never speak to.
- You think you’re working with one India EOR company, but your engineers are technically employed by someone else entirely.
At Husys, we hold our own Indian entity. We are the employer on record in India. That means when something needs to get resolved, there’s no middleman. We make the call, we handle the filing, and we own the outcome.
26% of our clients are Saas companies based in the US
US companies have specific expectations around speed, transparency, and communication style. We built our operations around that.
- Your employees work on your schedule.
- Payroll runs align with your fiscal calendar.
- Contracts are drafted in plain English with US founders in mind, not translated legal jargon.
- When you email us at 9 am Pacific, you get a response the same day, not three days later after it bounces through time zones.
Pricing is transparent and predictable
- The cost of EOR in India with Husys is $99 per employee per month.
- No percentage of salary.
- No surprise markups on benefits.
- No hidden FX fees.
- You know exactly what you’re paying before the first hire starts.
What working with Husys actually looks like
- You send us a candidate’s name and their offer details.
- We run background verification, draft the employment contract, and handle all the EPF and ESI enrollment.
- Your new hire gets onboarded in 8 working hours if they are immediately available, or 30-60 days if they are serving notice.
Every month, payroll runs on the schedule you set.
Statutory filings happen automatically.
If an employee has a question about their payslip or their PF balance, they reach out to our India team directly and get an answer the same day.
Our proprietary HRIS platform gives you a single view of your entire India headcount, including salary details, leave balances, and upcoming statutory deadlines. If you ever need to pull a report for your finance team or your auditors, it takes two clicks.
Clients stay with Husys for over four years on average, and most move to their own entity as they scale beyond 50 employees. That longevity reflects trust earned through consistent compliance execution and steady operational support.
Frequently Asked Questions (FAQ's)
➡️ How do I hire employees in India without an entity?
- Use an employer of record in India.
- Your US company does not need to register locally, open an Indian bank account, or build a compliance team.
- You select the candidate, and Husys will issue the employment contract, handle statutory enrollment under Indian law, and run payroll every month.
➡️ What is the cost of EOR in India per employee?
- Husys prices at a flat $99 per employee per month.
- The fee covers payroll processing, EPF and ESI filings, TDS management, and employment contract administration.
- For US finance teams building a headcount budget, this means a predictable, fixed line item per employee that does not fluctuate with salary increases, bonus cycles, or currency movements.
➡️ How long does it take to get someone onboarded in India?
- If your candidate is immediately available, Husys completes onboarding within 8 working hours.
- If they are serving a notice period, which is standard for mid to senior roles in India, the realistic start date is 30 to 60 days out.
- Husys has active registrations across all 28 states, so the compliance preparation happens in parallel with the notice period.
➡️ Can a US company pay Indian employees directly?
- Technically, you can wire money to an individual in India.
- What you can’t do is call that person an employee without creating tax, compliance, and permanent establishment exposure for your US company.
- Indian tax authorities have a lookback window of three to seven years on misclassified arrangements. EOR in India for US companies puts the relationship in the correct legal form from day one.
➡️ Do labor laws differ by state in India?
- Yes, meaningfully.
- Leave entitlements, professional tax rates, labour welfare fund contributions, and public holiday lists all vary by state.
- Hiring in Karnataka and Maharashtra at the same time means two separate compliance calendars.
- Husys manages state-level filings across all 28 states, so you don’t have to track any of it yourself.
➡️ Who owns the IP when my Indian team builds something?
- Ownership depends entirely on how the employment contract is drafted.
- Husys builds explicit IP assignment language into every employment agreement.
- The assignment covers code, product designs, documentation, and inventions created during employment, and flows directly to your US entity.
➡️ Is there a minimum salary requirement for hiring in India?
- For Indian nationals, there’s no general minimum beyond state-level statutory minimums tied to the role category.
- For foreign nationals applying for an Employment Visa to work in India, a minimum annual salary threshold of around USD 25,000 applies under immigration rules.
➡️ How does an employer of record in India handle employees across multiple cities?
Each state has its own registrations, filings, and compliance calendar.
Husys maintains active registrations across all major Indian states, so when you hire in Bengaluru and Hyderabad in the same month, there’s no delay waiting for new registrations to come through.
➡️ What is permanent establishment risk, and how do I avoid it?
- PE risk means India can tax your US company’s profits if your Indian operations look like a local business presence rather than just a support function.
- The biggest triggers are employees who sign contracts on behalf of your company or who are treated as running India-facing revenue operations.
- Husys structures the engagement to reduce this exposure.
➡️ When does it make more sense to set up an entity than use an employer of record in India?
Once you’re consistently above 25 to 30 employees in India with long-term operational commitments, the fixed cost of running your own subsidiary starts to make more sense than a per-employee India employer of record services fee.
If you’re still building toward that scale, or want to test the market before committing to permanent infrastructure, global EOR India solutions like Husys give you a faster and lower-risk path.
➡️ Do I need a local Indian bank account to run payroll
Yes, if you operate your own entity.
An EOR model removes that requirement because payroll is processed through the EOR’s registered Indian entity. Husys handles local banking and statutory payments on your behalf.
