Introduction
As the world approaches towards the more distributed culture of work, businesses are highly relying on India or the Employer of record India. Nowadays, managing a team outside the country and accessing the global talent pool is a lot easier with EOR. Greater connectivity and digitalization through Employer of Record have enabled businesses to manage teams and hire employees from different nations. Over 65% of India’s population is below the age of 35, making it one of the world’s youngest workforce.
India produces approximately 1.5 million engineering graduates and 2.5 million STEM graduates annually. India has become an excellent option among companies seeking skilled talent for administrative duties such as HR, digital marketing, IT, and others.
In such instances, companies need to establish a legal entity in India to directly hire on their payroll from their country. There are some more options to hire employees in India such as outsourcing and independent contractors but Employer of Record is the safest and seamless one.
To manage team in India, even if established, it requires an immense understanding of the complex Indian legal system and employment laws. A minor mistake can regarding compliance can cause fines and legal actions from the IT Department, Ministry of Labor and Employment Laws, Employee’s PF Organizations, RBI, State government, and some more regulatory bodies.
The cost of non-compliance is great, and we don’t want our clients to face it. If you want to expand your business in India and hire full-time employees without establishing an entity, EOR services can help you.
In this blog, we have prepared a guide that suggests everything from the benefits of EOR to mitigating Indian laws and regulations through the Employer of Record India.
What is an Employer of Record in India?
A textbook definition of Employer of Record (EOR) is a strategic partner that serves as the legal employer of your employees. An EOR assumes all employment duties and liabilities on your behalf, managing payroll, benefits, taxes, and compliance.
EOR services are helping companies expand their businesses and hire the best talents in India. However, many businesses have experienced immense growth and India is becoming one of the prime choices for many countries for EOR services. Further, let’s understand the key features of EOR in India.
Key Features of EOR services in India
Let’s understand the main features of Employer of Record Services in India.
- EOR acts as the legal employer of your workforce in India. It manages legal, compliance, and regulatory obligations
- Manages payroll in compliance with Indian Tax regulations. Handles tax withholding such as TDS (Tax Deducted at Source), Provident Fund (PF), and Employee State Insurance (ESI) contributions
- Offers comprehensive HR support, and local expertise
- EOR in India offers statutory and non-statutory benefits that include gratuity, health insurance, and retirement contributions. Moreover, it offers bonuses, meal allowances, and flexible work options that will attract and retain top talent
- Employer of record in India is one of the most cost-effective solutions that saves the cost of physical presence and compliance.
Who Should Use Employer of Record in India?
One-liner – Businesses seeking hassle-free global talent acquisition and seamless employee management should look for EOR services in India. Now this textbook definition or one-liner is not enough for you, we understand you will have some more questions. So, let’s look thoroughly at who benefits the most from Employer of Record India services.
Startups and Small Businesses
Startups with small budget and small businesses are the prime consumers who often lack the resources and expertise to establish a legal entity in India.
The main reason – employer of record is a cost-effective option that helps in scaling operations quickly. EOR services in India helps small startups reach skilled employees with the help of a wide local network without setting up an entity.
At the same time, EOR services in India have a better understanding of local laws so they are able to simplify the legal and administrative processes.
Businesses Testing New Markets
Employer of record India is a good option for businesses exploring potential markets before establishing full-scale operations. Understanding the Indian market becomes hassle free and cost-effective with EOR. After that, businesses can hire local talent for short-term projects to test the market. Major help from EOR is getting insights about local employment trends and regulations.
Businesses Facing Compliance Complexities
In light of allegations of investment concealment, tax evasion, and account deception, corporations such as Foxconn, Samsung, and Walmart are subject to heavy fines. These tax concerns are used as policy by the Indian government to control and limit international investment.In light of allegations of investment concealment, tax evasion, and account deception, corporations such as Foxconn, Samsung, and Walmart are subject to heavy fines. These tax concerns are used as policy by the Indian government to control and limit international investment.
Understanding Indian labor laws, tax regulations, and payroll systems can be complex. In such situations, businesses can take help from EOR to resolve compliance complexities and understand Indian labor laws.
EOR services in India help you avoid fines and legal issues by making sure you’re totally compliant with the required rules and regulations. Also, it’s updated on ever-changing employment rules and regulations.
Companies Switching EOR From Another EOR
Businesses that have already hired EOR services in India and are facing issues related to costs, transparency, or service quality and wish to change it. These scenarios often influence businesses to switch EOR.
By switching to the right EOR, businesses gain more competitive advantage of pricing and transparency on expenses.
Reflects how businesses remain with the same hurdles instead of solving them by changing the approach.
Cost is one of the main factors why foreign companies prioritize India to have a robust team. Now, let’s look at the cost overview of EOR in India.
Cost Overview of EOR in India
When expanding business in India, cost is one of the major factors. EOR services in India are considered the most cost-effective option that saves the cost of physical presence, and administrative overheads such as compliance, payroll processing, and HR management.
EOR services in India, reduce the cost of legal risks, penalties or potential fines. It also minimizes the cost of recruitment and training because EOR services in India provides skilled talent who don’t require added training sessions. Let’s understand how much Indian EOR costs for hiring.
EOR services in India is a relatively less expensive model with an initial setup cost, which is one of the biggest advantages. This is the sum after combining the service charge and the average typical salaries of the 6-member team. The hiring cost of remote employees in India with an EOR partner is USD 13,346.34.
It can be costly to work with a worldwide EOR services provider for several teams located in several nations. Rather, using a local EOR independently for every nation significantly lowers expenses.
Here’s the Comparison
between EOR and Legal Entity
Why Use EOR in India?
India is a complex yet opportunity-rich market for foreign businesses. Using an Employer of Record in India offers plenty of benefits. Let’s understand each benefit of EOR in India.
Enter the Indian Market Easily
You need to face the intricate regulatory compliance, time, and resources while establishing an entity in India. Employer of record services act as legal employers of your workforce allowing you to commence the operations without having an entity in India.
Local EOR is an expert in cultural nuances, Indian labor laws, and business practices. EOR reduces the risk of non-compliance or cultural misunderstandings.
Cost Effective Solution
A subsidiary is a costly and time-consuming option, especially for businesses that have less understanding of that specific country or culture. Hiring an EOR allows you to pay only for the employees you hire without long-term contracts. You can downbase or scale up according to the business requirements.
By eliminating the need for physical infrastructure and administrative overheads, EOR becomes a cost-effective solution.
Employee Centric Benefits
Employer of Record providers helps you structure attractive compensation packages that are aligned with Indian market standards. Employer of Record India also helps in enhancing employee satisfaction and retention.
Statutory requirements such as compliance, provident fund, and gratuity laws are successfully managed by EOR services in India. Due to this the employer and employees experience peace of mind and focus on their core tasks.
As there are many options available to manage a team, mostly businesses get confused between EOR and other services. PEO is one of those services that is more likely EOR. Let’s understand the difference between them.
How EOR is Different than PEO
Both the Employer of Record (EOR) and Professional Employer Organization (PEO) have similar work of managing employees. But, both have different structures, responsibilities, and interactions with businesses.
- EOR takes full responsibility for the employees’ contracts, compliance, payroll, and taxes where PEO enters into co-employment deals.
- With EOR services in India the client company retains control over day-to-day tasks and assignments. With PEO the client holds responsibility as legal employer, and PEO handles administrative functions.
- Employer of Record India is Ideal for companies that want to expand into a new market and PEO is ideal for the companies already operating within a country.
How to Choose the Right EOR Partner in India
Selecting the right Employer of Record partner in India needs a whole lot of research. The research has to be aligned with your business goals. Let us simplify your research by providing key considerations.
What are the Key Considerations for the Right EOR?
Now that you have understood how EOR can be beneficial, it is very important to understand the considerations when choosing the right one.
Let’s understand one by one.
Expertise in Indian Compliance
Indian employment laws and compliance requirements vary by state and industry, which enhances the complexity of the process. The EOR must be an expert in handling payroll, taxes, and labor laws adherence seamlessly.
- Companies must check EOR’s knowledge of local employment laws.
- EOR must have a proven track record in managing statutory compliances.
Better Pricing Structure
Unclear cost structure and hidden fees may lead to budget overruns.
Ensure checking:
- itemized fee structures
- Absence of hidden charges or surprising service fees
- Flexibility in cost structure for scaling teams
Payroll and Benefits Management
Simplified payroll processing and benefits help retain employees and avoid issues.
Ensure checking:
- Timely and error-free payroll processing
- Customized employee benefits to align the company’s global standards
- Management of benefits such as insurance, paid leave, and retirement plans
HR and Administrative Support
Employees are more productive and loyal when they are satisfied with the support. EOR plays a vital role in HR support and employee engagement.
Ensure checking:
- Availability of HR support for remote employees
- Seamless onboarding, compliance education, and career progression
- IT and infrastructure support for remote or hybrid employees.
These are the key considerations you should make while selecting the right EOR partner. Now, that you understand how to select the right EOR partner, let us introduce you to one of the best EOR partners – Remunance.
Click to know parameters for the Best Employer of Record.
How Remunance Helps Excel Businesses
It can be challenging to get into a new market like India. But Remunance, an established Employer of Record (EOR) service provider, simplifies the process so businesses can concentrate on innovation and growth.
Remunance accelerates access to markets while reducing costs and by taking away administrative pressures and overheads without having to start a local company. Its expertise in managing compliance ensures that businesses meet India’s complex tax rules, labor laws, and legal benefits, preventing costly penalties. Remunance also hires new employees, offering access to an able diverse workforce while managing payroll and onboarding with accuracy and transparency.
Competitive advantages, IT infrastructure support for remote employment, and a smooth work experience all help to retain and satisfy employees. By filling in compliance holes and putting perks into accordance with global standards, Remunance ensures an effortless adjustment for returning Indian expats.
Businesses might quickly shift without making long-term commitments due to its scalable, affordable options. Remunance handles administrative and cultural differences by combining local expertise with a customer-centred approach, offering customized options that meet a range of business needs.
Remunance guarantees excellence in operation and steady development in India’s competitive market by managing non-core operations like payroll, compliance, and employee assistance, allowing enterprises to focus on their business objectives.
Hope this guide has covered all your questions regarding Employer of Record India. For more information and better assistance get in touch with Remunance Services now.
FAQs
Is employer of record legal in India?
It is legal in India for employers to offer Employer of Record (EOR) services. They operate within the constraints of Indian labor laws, which involve adherence to labor standards, income tax regulations, the Employees’ Provident Fund (EPF), and Employee State Insurance (ESI).
In order to allow international enterprises to hire employees in India without creating a legal corporation, the EOR serves as the legal employer on their behalf, making sure that all payroll, tax, and legislative compliance needs are fulfilled.
What are the benefits of using an employer of record in India?
There are various advantages to using an EOR in India, such as:
- Guarantees compliance with regional tax and labour laws.
- Allows businesses to hire staff without having to wait for the creation of a legal company.
- Eliminates the trouble and expense of setting up and running a local office.
- Lets companies concentrate on long-term objectives while the EOR takes care of payroll and human resources duties.
- Increases employee satisfaction by giving access to both statutory and non-statutory benefits.
- Lowers the legal risks connected to employee misclassification or noncompliance.
