India continues to be an important destination for companies looking to access skilled professionals across technology, engineering, finance, operations, customer support and other business functions.
But hiring someone in India is different from simply recruiting a candidate and paying a salary. Employers need to consider employment contracts, payroll, statutory benefits, tax deductions, leave requirements, data protection and other employment obligations.
For companies that do not have an Indian subsidiary or registered employing entity, this can create a practical challenge:
How can you hire employees in India without setting up a local entity?
An Employer of Record (EOR) can provide a structured way to employ workers in India while the EOR handles the local employment administration and compliance responsibilities.
This guide explains how the model works, what companies need to consider, and how an EOR can support hiring in India in 2026.
Why Do Companies Hire Employees in India?
Companies choose India for many different reasons, including access to a large professional workforce and the ability to build specialized teams.
Common hiring requirements include:
- Software developers
- IT and cloud professionals
- Data and AI specialists
- Engineers
- Finance and accounting professionals
- Customer support teams
- Sales and business development professionals
- Digital marketing specialists
- Operations teams
- Remote and distributed employees
A company may want to test the Indian market with one employee first or build a larger team over time.
The challenge is that establishing a local business structure solely for a small initial team may introduce additional administrative requirements.
This is where an EOR model can become relevant.
What Makes Hiring Employees in India Complex?
Hiring locally involves more than finding a candidate and issuing an offer letter.
Depending on the employee, location, salary structure and applicable requirements, an employer may need to manage:
- Employment documentation
- Payroll processing
- Income-tax withholding
- Social-security-related obligations
- Statutory benefits
- Leave and holiday requirements
- Professional tax where applicable
- Employment records
- Local registrations and filings
- Employee onboarding
- Termination and final settlement
- Workplace policies
- Personal-data handling
India’s employment framework has also undergone a significant regulatory transition. The Government of India states that the four Labour Codes came into effect on 21 November 2025, replacing 29 central labour laws with four consolidated codes.
State-level requirements can also matter because labour is a concurrent subject and implementation involves both central and state authorities.
For a company entering India for the first time, understanding which requirements apply to its workforce can therefore take considerable effort.
Can You Hire in India Without Creating a Local Company?
Yes, depending on the employment structure.
One commonly used approach is to work with an Employer of Record (EOR).
An EOR is a local organization that becomes the formal employer of the employee for employment and payroll purposes while the client company manages the employee’s day-to-day work.
The arrangement generally separates:
Legal employment administration
from
Operational management of the employee.
The EOR can manage areas such as employment contracts, payroll, statutory deductions and employee administration, while the client remains responsible for assigning work, managing performance and directing the employee’s role.
The exact legal structure and responsibilities should always be reviewed for the specific hiring situation.
How Does an EOR Work in India?
The process can be relatively straightforward.
1. Identify the role
Your company determines:
- Job title
- Responsibilities
- Location
- Salary
- Benefits
- Working arrangement
- Proposed joining date
2. Recruit the employee
You can source and interview candidates through your normal recruitment process.
The EOR does not necessarily need to conduct the recruitment itself. Your company can select the candidate based on your hiring requirements.
3. Share employee details with the EOR
Once the candidate is selected, the EOR collects the information required for employment onboarding and payroll.
4. Employment documentation
The EOR prepares the applicable employment documentation and ensures that the employment arrangement reflects the relevant requirements.
5. Employee onboarding
The employee completes the required onboarding process and becomes employed through the EOR’s local structure.
6. Monthly payroll
The EOR manages the agreed payroll process, including applicable deductions and employer obligations.
7. Ongoing compliance
The EOR supports the ongoing employment administration throughout the employee’s tenure.
8. Employee exit
When employment ends, the EOR can coordinate the applicable notice, final settlement, documentation and other exit processes.
What Does the EOR Handle?
A typical India EOR arrangement may include several employment administration functions.
Employment Contracts
The EOR prepares employment documentation based on the agreed compensation, role and employment terms.
Payroll
The EOR processes employee payroll and handles applicable statutory deductions.
Statutory Compliance
The EOR helps manage applicable employment-related obligations based on the employee’s circumstances and location.
Employee Benefits
Applicable statutory and contractual benefits can be incorporated into the employment structure.
Onboarding
The EOR coordinates the administrative steps required to bring the employee onto payroll.
Payroll Reporting
Companies can receive payroll information and documentation required for internal accounting and administration.
Employee Exit
The EOR can coordinate the administrative side of resignation, termination and final settlement.
What Is the Difference Between EOR and Direct Hiring?
The biggest difference is who acts as the local employer.
With a traditional direct-hiring model, the company generally needs an appropriate local employment structure and must manage its associated registrations, payroll and compliance responsibilities.
With an EOR arrangement, the EOR acts as the local employing entity while the client company retains operational control over the employee’s work.
| Direct Hiring | EOR Model |
|---|---|
| Company establishes local structure | EOR provides local employment structure |
| Company manages employment administration | EOR manages agreed employment administration |
| Company handles local payroll processes | EOR manages payroll |
| Company manages applicable registrations | EOR supports applicable registrations/compliance |
| Suitable for established operations | Useful for entering/testing the market |
| Greater internal administration | Outsourced employment administration |
The appropriate model depends on the company’s long-term plans, workforce size, business structure and legal requirements.
Benefits of Using an EOR to Hire in India
Faster Market Entry
Companies can begin building an Indian team without first spending months establishing an internal employment infrastructure.
Reduced Administrative Work
Payroll, employment documentation and routine workforce administration can be handled by the EOR.
Local Employment Support
A local EOR understands the practical requirements involved in employing workers in India.
Flexible Team Building
Companies can start with a small number of employees and expand the team as business requirements develop.
Centralized Payroll Administration
International companies can work with one employment partner while managing employees across different markets.
Easier Market Testing
An EOR can be useful when a company wants to evaluate its Indian hiring strategy before establishing a larger local operation.
Who Should Consider an India EOR?
An EOR may be relevant for:
- International companies entering India
- Startups hiring their first Indian employee
- SaaS companies building engineering teams
- Technology companies expanding into India
- Companies hiring remote employees
- Businesses testing the Indian market
- Companies that need specialized Indian talent
- Organizations that do not yet have an Indian employing entity
It can also be useful when the company wants to begin hiring while evaluating whether a permanent Indian business structure makes sense for its long-term plans.
Can You Hire Just One Employee in India?
Yes, an EOR arrangement can be considered even when the initial requirement is only one employee.
For example, a US-based technology company may identify an experienced Indian software engineer but have no Indian subsidiary.
Instead of immediately establishing a full local operation, the company could explore an EOR arrangement for that employee.
The same model can potentially be scaled as the company hires additional employees.
How Long Does It Take to Hire Through an EOR?
The timeline depends on factors such as:
- Candidate availability
- Completion of employee documentation
- Employment terms
- Background verification
- Payroll setup
- Required registrations
- Internal approval processes
- Employee joining date
A well-organized onboarding process can reduce unnecessary delays, but companies should avoid promising a fixed timeline before reviewing the specific employee and location.
India Employment Compliance in 2026
Employment compliance should be treated as an ongoing responsibility rather than a one-time registration exercise.
India’s four Labour Codes became effective on 21 November 2025, and the Ministry of Labour & Employment has highlighted that both central and state-level rules are relevant to implementation.
Companies also need to consider applicable requirements around areas such as:
- Wages and salary structure
- Working conditions
- Social security
- Leave and holidays
- Employee records
- Termination and final settlement
- State-specific requirements
- Professional tax where applicable
- Personal-data protection
Professional tax, for example, is administered under state-level frameworks rather than through one uniform nationwide system. Current government portals show employer registration and payroll deduction requirements in states where professional tax applies.
Data protection is another consideration for employers handling employee information. The Ministry of Electronics and Information Technology notified the Digital Personal Data Protection Rules, 2025, with implementation provisions applying according to the notified timeline.
Because requirements can depend on the employee’s location, compensation and employment circumstances, companies should obtain appropriate professional advice for their specific situation.
Why Choose Akross for Hiring in India?
Building an Indian team should not require your company to become an expert in every part of Indian employment administration.
Akross helps international companies employ talent in India through an Employer of Record model.
With Akross, companies can get support across the employee lifecycle, including:
- Employee onboarding
- Employment documentation
- Payroll administration
- Statutory compliance support
- Employee benefits administration
- Ongoing HR coordination
- Employee exits and final settlements
Whether you are hiring one employee or building a larger India-based team, Akross can help simplify the employment administration behind your expansion.
Ready to Hire Employees in India Without Setting Up a Local Entity?
Build your India team with local employment, payroll, compliance, and HR support through an Employer of Record.
Hire in India Without Setting Up a Local Entity
Expanding into India does not necessarily mean you need to establish a complete local operation before hiring your first employee.
An EOR can provide a practical employment structure for companies that want to access Indian talent while outsourcing key employment administration and payroll responsibilities.
The right approach depends on your business model, number of employees, location and long-term plans.
If your company is considering hiring in India, reviewing the employment structure before making the first offer can help avoid unnecessary administrative complications later.
Frequently Asked Questions
Can a foreign company hire employees in India without an Indian company?
A foreign company may use an Employer of Record arrangement to employ workers in India without directly establishing its own local employing entity. The specific structure should be reviewed for the company's circumstances.
What is an Employer of Record in India?
An Employer of Record is a local organization that employs workers on behalf of a client company and manages agreed employment, payroll and compliance administration.
Can I hire only one employee through an EOR?
Yes. Companies can explore EOR services for a single employee as well as larger teams.
Does an EOR handle payroll in India?
An EOR typically manages payroll processing and applicable statutory deductions as part of its employment administration services.
Who manages the employee's daily work?
The client company generally manages the employee's day-to-day responsibilities, projects, performance and business activities, while the EOR handles the agreed employment administration.
Can an EOR help with employee onboarding?
Yes. EOR providers can support employment documentation, onboarding requirements and payroll setup.
Can I use an EOR before opening an Indian subsidiary?
An EOR can be considered as an employment solution while a company evaluates its long-term Indian business structure. Companies should obtain appropriate legal and tax advice for their specific circumstances.
Can an EOR handle employee exits?
Yes. EOR providers can generally coordinate employment termination processes, notice requirements, final payroll and related documentation.
Ready to Build Your India Team?
Whether you're hiring your first employee or expanding your workforce, Akross can help you manage employment, payroll, compliance, and HR administration in India.
