The top executives at Citi, PwC and EY explained various elements like enormous availability of unmatchable skilled professionals, especially in the IT & AI industry along with the radiant and flexible time zones and the easily affordable Indian lifestyle of the India environment to completely resonate with foreign companies requirements to hire in India. Earlier when it was mostly about IT professionals in Bangalore and Hyderabad, India is now home to world class Accountants and Doctors too, which is gaining traction from over the globe.
Hiring for a foreign company in India is relatively easy as compared to many other nations with a supply of similar talent pool. Setting up a GCC is never a choice of all and is limited to large enterprises only. Foreign entities operating in India with partnering local EORs understand the risk and know that to establish their own legal entity they will have to face up to 40% tax on profits and increased compliances to bookkeeping, tax filings and other labor laws and taxes.
With contractual laws for employment and a wide range of services with EOR you can definitely hire an employee in India while operating from foreign land. What are your chances and what services like EOR you shall go for depends upon the type of services you are into and what talent you need to hire. I will help you understand the factors related and give information so that you can decide how to proceed.
How Much Does It Cost To Hire An Employee In India?
To understand the cost structure for hiring in India, let me help you with the basics. The cost of hiring an employee in India is at least 16.75% of the employee’s base salary as the employer would also have to contribute 12% of the employee’s base salary towards the Employees’ Provident Fund (EPF) and 4.75% to the Employees’ State Insurance (ESI).
Also Read: What is the Difference Between EOR and PEO: A Comprehensive Guide for Singapore Businesses
This is the basic structure over which you can add costs of hiring. But you will only have to ensure this if you are establishing and operating your own legal entity and if you go for the easy option to partner with an EOR, then they will take care of all this. Understand below, your best options on hiring in India.
Can A Foreign Company Hire Employees In India?
The two simple or less complexed options which most of the small scale to mid scale companies are preferring are explained, understand the pros and cons of both as mentioned below;
Hiring Via Your Own Legal Entity
To build a subsidiary and hire in India, you must have to obtain;
- Director Identification Number (DIN);
- Digital Signature Certificate (DSC);
- Business name approved by the Registrar of Companies;
- Memorandum and Articles of Association;
- Incorporation application;
- Certificate to commence operations;
- Permanent Account Number (PAN);
- Employees’ Provident Fund Organization filing;
- Goods and Services Tax (GST) registration
- Medical insurance application
Partnering With An Employer Of Record
The term became famous when some startups or small scale companies from foreign started to hire in India and came to know about the secret enterprises that have been following from the last many years to cut costs and acquire best talent. Employer of Record (EOR), also known as a professional employment organization (PEO) is simply a local entity based in India helping you acquire talent as per your needs but at 60-70% reduced cost. They have established networks and have complete compliance with legalities and other labor laws assuring you a complete set of services as required without any hassle you aren’t aware about. Top EOR services providers like Recruitment Central is helping thousands of foreign companies secure talent in India.
Benefits Of Partnering With EOR
- OWNED LOCAL ENTITIES ENSURING EMPLOYEE BACKGROUND CHECKS.
- HRMS INTEGRATION WITH GEOFENCING
- TAILORED SOLUTIONS FOR VARYING WORKSTATION NEEDS
- INCREMENTS & BONUSES AS PER LOCAL REGULATIONS
Important Indian Labor Laws Characteristics
If you have been planning to establish your own legal entity in India, then you must consider below mentioned factors to ensure compliance;
| Indian Law or Practice | Description |
| 13th-month pay | Essentially equal to one-month’s pay. It applies to every employer. It is provided as a bonus, typically given at the end of the year |
| Paid time off | This is typically 10-15 days in India |
| Permanent establishment | As we’ve stated above, your company can do this itself or go through an EOR |
| Sick leave | Maximum of 12 days annually |
| Parental and maternity leave | Paternity leave is not mandatory. Maternity leave is maximum 26 weeks for the first two deliveries and 12 weeks for each delivery thereafter¹² |
| Holidays | 17 public holidays occur annually in India and working on these holidays requires additional pay¹³ |
| Taxes | Income tax, Provident Fund, Employee State Insurance, Goods and Services Tax, Professional Tax |
| Minimum wage | Labor costs vary by state and job type. The national minimum wage is $2.15.¹⁴ |
| Overtime | Overtime payments kick in when an individual works more the 9 hrs.¹⁵ |
| 65 – 70 | SGD 50 – SGD 500 |
| SGD 500 – SGD 750 | |
| SGD 750 & above | |
| Above 70 | SGD 50 – SGD 500 |
| SGD 500 – SGD 750 | |
| SGD 750 & above |
Also Read: How to Minimize Risk Using an Employer of Record in Singapore
Know The Benefits Of Hiring Employees From India?
Expansion is what every organization thinks about, but the actual growth and expansion lies in how you plan things and implement to obtain optimised results. Hiring employees from India could be your first steps towards growth and cost saving.
There are plenty of other benefits to foreign companies and some of the top ones are explained below for you to understand;
Cost-Saving
India enjoys a low cost lifestyle which doesn’t limit demands but requires less money for them to be fulfilled. As compared to countries like Singapore, employers can hire more skilled and talented staff without compromising on quality.
Skilled Workforce
It was in ancient times when India was limited to its vedic scripts only, Indians now hold world class degrees and certifications from top universities of the world. There are unmatchable IT engineers, Doctors and Accountants.
Multilingual
In India, culture variations and language shifts can be observed over every 20 kms, which makes India a multilingual and multicultural nation. The impact from Britishers still remains and English is the second language, but they are not limited to this only and are proficient to many other globally known languages.
Time Zone Flexibility
India’s time zone is flexible because talent located there is radially available to work in different shifts which makes it an ideal location for desired outsourcing and offshoring. Flexibility with time zones is always a decisive factor for a foreign company as it largely reduces turnaround times (TAT )improving productivity.
Conclusion
Located anywhere in the world, hiring employees from India is always a well planned and a smart business move for foreign companies anticipating growth and multinational presence. Considering the factors like cost savings, a highly skilled workforce, India is eagerly available to offer them to the world.
