Working Remotely in India Without an Employer of Record – Risks and Solutions

Foreign companies are exploring working remotely in India to access skilled talent while avoiding opening a local office.

Even without an employer of record (EOR), such companies can find talented individuals considering working remotely in India.

Such firms can go to a staffing agency or a professional employer organization (PEO). But the alternatives to EORs have their pros and cons.

That said, the risks of those alternatives outweigh their benefits. So, let’s analyze them. But before that, we should discuss why global firms want to hire remote employees in India.

Why Foreign Companies Want to Hire Remote Workers in India?

Many talented employees are exploring working remotely in India. Besides, India has emerged as a major talent hub, as leading MNCs are hiring remote employees from India.

The following points explain why the trend of remote work in India has become popular:

1. 1. Lower operational costs: The operational costs in India are much lower than in the US and Europe. Hence, global companies are willing to hire remote employees from India.
   2. Abundance of talented workforce: There’s a huge talent pool of people working from home in India. Forbes reported that 12.7% of full-time employees worked from home in India in 2024. Many such employees work for industries like information technology (IT), business process outsourcing (BPO), financial services, etc.
   3. Remote work technology: Ever since the onset of COVID-19, several digital tools have been launched that make working remotely in India feasible. Many collaboration tools help employees work for their global employers from anywhere.
   4. Strong English proficiency: A large part of India’s population can read and write in English. Proficiency in English helps create a frictionless atmosphere in distributed teams.
   5. Improving digital infrastructure: In the last decade, India has witnessed rapid improvements in internet connectivity and cloud adoption. As a result, working remotely in India for global firms has become possible.

Can a Foreign Business Hire Remote Employees in India without an Employer of Record?

Yes, a foreign business can hire remote employees in India without an EOR by using one of the following options:

1. 1. Independent contractors
   2. taffing or recruitment agency
   3. Professional employer organization (PEO)
   4. Set up a local legal entity in India

Let’s discuss the benefits and limitations of these options in detail.

What are the pros and cons of hiring independent contractors in India?

Benefits of independent contractors for working remotely in India

1. 1. Reduces business costs: Independent contractors are less costly compared to full-time employees. This is because contractors are not supposed to be paid for insurance, paid leave, and other benefits.
   2. Improved flexibility: Independent contractors are typically engaged for a short period for a specific need.
      They are relieved of their service once the task is finished. They can be engaged or relieved based on a business’s needs. This kind of flexibility is not possible with full-time employees.
   3. Fewer training requirements: Contractors mostly don’t need much training. They come equipped with the skills needed for a job.

Working remotely in India with contractors is possible for companies, but it comes with the following limitations.

Cons of independent contractors for working remotely in India

1. 1. Lesser control: Companies don’t have as much control over their contractors as they have over their full-time employees. For example, a contractor may prefer a certain timing to work, which may not suit his employer.
   2.  More risky: Contractors often leave a project mid-way. While a full-time employee can also do so, the likelihood of a contractor doing so is higher.

What are the pros and cons of hiring a staffing agency in India?

Benefits of a staffing agency for working remotely in India

1. 1. Candidate screening: Staffing agencies know how to check resumes, verify skills, and find the best employees for a business.
      They know when a candidate doesn’t provide accurate information. So, hiring through them can be immensely beneficial for companies working remotely in India.
   2.  Access to the right candidates: Staffing agencies often have a database of talented individuals in many industries. Hence, they can help you get in touch with the right candidates easily.
   3.  Industry-specific expertise: Certain recruitment agencies have expertise in hiring for specific industries. Let’s say a company wants to recruit a financial analyst who specializes in the steel industry.
      It may find it tough to find such a candidate on its own. So, it can get in touch with a staffing agency with expertise in finding such candidates.

Cons of a staffing agency for working remotely in India

1. 1. Lack of control: At times, hiring managers want to have control over the hiring process. But they may have to give up some control if they go through a staffing agency.
      Let’s say you’re hiring for a role and you want to read the resume of each prospective candidate. You may not have this flexibility with a staffing agency.
   2. Steep cost: A staffing agency may find the right candidate for you, but it may make you pay a high fee. You may have to pay a markup over a candidate’s salary to an agency.
      In some cases, an agency may ask you to pay a percentage of a candidate’s salary. The exact amount you need to pay them may vary based on case to case, but you certainly have to pay for their services.

What are the pros and cons of hiring a professional employer organization (PEO) in India?

Benefits of a PEO for working remotely in India

1. 1. HR services and admin support: A PEO’s services include managing human resources (HR) and admin tasks pertaining to a business’s employees. This includes handling employee payroll, benefits, and legal compliance.
      PEOs allow a business to focus on its core operations, like marketing, finance, sales, etc.
   2. Cost savings: Let’s say a small company wants to offer health insurance to its employees. It may not be able to negotiate a good rate for the premium with an insurer.
      But a PEO can do that because it negotiates rates on behalf of several companies.
   3. Help in legal compliance: India has many central and state-level laws. Companies may find it tough to follow all the regulations. A PEO with legal expertise can help companies meet all the necessary laws.

Cons of a PEO for working remotely in India

1. 1. A local entity is needed: If a foreign company wants to hire employees working remotely in India through a PEO, it has to set up a local legal entity before doing so.
      Setting up a local entity can be time-consuming. Besides, it will require certain costs to be incurred.
   2. Reduced control: Engaging with a PEO may result in a company losing some level of control over certain HR-related functions. Let’s say a company partners with a PEO to manage employees’ payroll and benefits.
      But the PEO has a standardized benefits plan, which it uses for many clients. So, if the company wants to change the benefits plan, it may not be possible because the PEO may not be willing to do so.

What are the pros and cons of setting up a local legal entity in India to hire remote employees?

Benefits of a local legal entity for working remotely in India

1. 1. Direct control over employees: Your own local office can help you directly hire, manage, and supervise your employees. So, it definitely allows you better control over your employees.
   2.  Higher flexibility in HR policies: Going through a PEO or an EOR to hire remote employees may limit your flexibility to some extent. But if you have your own office in India, you’ll have greater flexibility in designing your HR policies.
   3. Better image among job seekers: If you have your own legal office in India, it may help you project a better image among job seekers.

Cons of a local legal entity for working remotely in India

1. 1. Higher setup costs: You may incur considerable costs to set up and register your local office in India.
   2. Compliance responsibility: If you set up a local office in India, you must ensure compliance with all central and state-level laws. But if you go through an EOR/PEO, it will be that agency’s responsibility to manage compliance.
   3. HR-related responsibilities: Having your own office and hiring remote employees means you have to handle day-to-day HR functions yourself, including employee onboarding, employment contract preparation, offboarding, etc.

Why Should Foreign Companies Use an EOR to Hire Remote Employees?

If you’re running a foreign company, it makes a lot of sense to use the services of an employer of record (EOR) to hire remote employees in India. Here’s why:

Reduces your HR and admin load

An EOR can take care of the HR tasks of your employees, like the preparation of employment contracts, onboarding of employees, salary processing, etc.

A staffing agency may help you with some of these tasks, but the scope of an EOR’s service is broader and deeper. Meanwhile, if you are hiring an independent contractor for working remotely in India, you’ll have to take care of all HR functions yourself.

Compliance burden is taken care of

An EOR can take care of your labor law compliance in India by ensuring that you follow all the central and state laws and regulations. This greatly reduces your compliance risk.

Options, like a staffing agency, are not responsible for compliance. Hence, EOR is a better option.

No need to set up a local legal entity

If you use an EOR to hire employees to work remotely in India, you don’t have to set up a local legal entity. This saves a lot of time and money.

On the other hand, if you engage a PEO to recruit in India, you have to set up a local entity.

Quick hiring and onboarding

An EOR can help you hire and onboard employees much faster than setting up a local entity.

Often, companies can hire and onboard employees through an EOR within a few days or a few weeks.

Access to a wide talent pool

If you’re running a foreign company, an EOR can help you access a wide talent pool of people working remotely in India.

Conclusion

There’s no denying that an employer of record (EOR) is one of the best options to remotely hire employees in India. And, if you’ve decided to go through an EOR, then Remunance is certainly one of the best options for you.

Remunance provides you with total compliance support, transparent pricing, quick hiring, and scalable solutions.

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