EOR vs PEO in India: Which Model Is Right for Your Company?

Short answer: ask whose legal entity employs the person. With an Employer of Record (EOR), the provider's Indian entity is the employer: under SynkPay's EOR, SynkPay is the sole legal employer, and you need no Indian entity of your own. A Professional Employer Organisation (PEO) is co-employment: you and the provider share the employer role, and SynkPay's PEO requires your own registered Indian entity. So if your company has no Indian entity, you need an EOR. A US-style PEO doesn't exist in the same form under Indian law, so check whose entity signs the contract before you accept any "PEO" offer in India. SynkPay's EOR is US$349 a month per employee, with no deposit and onboarding in 1 business day.

No Indian entity yet? See SynkPay's EOR India service. Already have a registered Indian entity? See SynkPay's PEO services in India.

The test: whose legal entity employs the person?

Every EOR-vs-PEO question in India comes down to one thing: whose Indian legal entity signs the employment contract and is registered as the employer for PF, ESI and state labour rules. There are three possible answers.

• The provider's entity alone: that's an EOR. Under SynkPay's EOR, SynkPay's directly owned Indian entity is the sole legal employer. You direct the work; SynkPay holds the employment contract, payroll, statutory filings and employer liability.

• Your own registered Indian entity, sharing the employer role with the provider: that's a PEO. SynkPay's PEO is co-employment: your entity and SynkPay co-employ, and SynkPay runs payroll, statutory compliance and HR administration alongside your entity.

• Your own entity, with nobody sharing the employer role: that's direct employment. A provider that only runs payroll or HR tasks for your entity is HR outsourcing, not a co-employer.

If your company has no Indian entity, only the first answer is open to you. You can't co-employ through an entity that doesn't exist, so you need an EOR.

A UK worked example

A London software company with no Indian entity wants to hire a senior backend engineer in Bengaluru on ₹30,00,000 a year (₹2,50,000 a month).

Year 1, no Indian entity: EOR. Apply the test. The company has no Indian entity that could employ anyone, so the engineer is employed through an EOR. SynkPay's Indian entity signs the employment contract and is the sole legal employer. The UK company directs the work, and SynkPay invoices it at the start of each month:

Shown in US$ for comparison; UK companies are invoiced at a fixed sterling price. Converted at ₹95 per US$ (indicative mid-market rate, 14 October 2026). SynkPay invoices from its Indian entity, so no UK VAT is added to the invoice. There's no deposit and no setup fee. Budget a gratuity provision as well, about 4.81% of Code wages (roughly US$63 a month here, with Code wages taken at 50% of gross). SynkPay doesn't pre-collect gratuity each month. When an employee becomes eligible and leaves, the gratuity is calculated under the Code on Social Security and invoiced to you at that point.

Later, with its own Indian entity: PEO or direct employment. Suppose the India team grows and the company registers its own Indian private limited company. Setting up and running your own Indian entity typically costs $15,000–50,000 upfront plus $3,000–8,000 a month, and at a flat $349 per head it usually only pays off somewhere around 15–25 India employees, depending on what the entity costs you to run. Once the entity is registered, the other two answers open up: the company can employ people directly on its own entity, or use SynkPay's PEO, where its entity and SynkPay co-employ. Employees can move from the EOR to the new entity when it's ready.

What EOR means in India

An Employer of Record (EOR) is a company that becomes the full legal employer of your India-based hire. The EOR:

• Signs the employment contract with the employee under Indian law

• Holds all employer obligations — PF, ESI, TDS, Professional Tax, gratuity

• Bears employment liability if there is a dispute or termination issue

• Does not require you to have any Indian legal entity

You direct the employee's day-to-day work entirely. The EOR is the invisible employment infrastructure underneath. Your company has no employment relationship with the worker under Indian law — which is exactly the point.

This is why EOR is the default choice for international companies entering the India market. You can hire a software engineer in Bangalore on Monday without having incorporated in India, opened a bank account, or registered for PF.

Under SynkPay's EOR, SynkPay is the sole legal employer: US$349 a month per employee, no deposit, 1 business day onboarding.

What PEO means in India

A Professional Employer Organisation (PEO) works on a co-employment model: the employer role is shared between your company and the PEO. In India that needs your own registered Indian entity, because your entity is one of the employers. SynkPay's PEO is co-employment and requires your own registered Indian entity; with no Indian entity, you need an EOR. A US-style PEO doesn't exist in the same form under Indian law, so services sold as "PEO" in India vary: ask whose entity signs the employment contract.

In practice:

• Your Indian entity co-signs or oversees the employment relationship

• The PEO provides HR infrastructure — payroll processing, compliance filings, benefits administration

• You retain more direct control over employment documentation and policies

• You share (or transfer to the PEO) specific employer obligations

PEO makes sense when you're building an India operation of meaningful scale, want to maintain your own Indian employment brand, and need an HR partner to run the back office rather than a full legal employer substitute.

The key differences

Why the distinction matters specifically in India

Indian labour law is jurisdiction-specific in important ways that make this choice more consequential than in some other markets.

PF and ESI registration is entity-level. If you're using EOR, the EOR's entity carries the PF and ESI registrations with EPFO and ESIC. If you use PEO alongside your own entity, your Indian entity has its own registration and filing obligations — independent of the PEO's. Mixing this up creates filing gaps.

The Shops and Establishments Act is state-level. Registration requirements vary by state. Under EOR, the EOR handles this. Under PEO with your own entity, your entity needs its own registration in each state where employees are based.

Employment disputes go through Indian labour courts. Under EOR, the EOR is the respondent in any labour dispute — not your foreign company. Under PEO co-employment, your Indian entity may be a party. For early-stage companies without India legal counsel, EOR's full liability absorption is a meaningful protection.

How to choose

Choose EOR if:

• You don't have a registered Indian entity (if you're setting one up, start on EOR and move later)

• You're below the point where your own entity pays off — at a flat $349 per head, usually somewhere around 15–25 India employees, depending on what the entity costs you to run

• You want the fastest, cleanest path to compliant India employment

• You want the EOR to hold full legal employer liability

Choose PEO if:

• You have your own registered Indian entity

• You want to employ people directly under your Indian company's brand

• You need HR outsourcing support for an existing India operation

• You're at a scale where co-employment makes commercial sense

Where does RPO fit? RPO (recruitment process outsourcing) doesn't compete with EOR or PEO, because it solves a different problem. EOR and PEO decide who legally employs your India team. RPO decides how you find them. If the bottleneck is unfilled roles rather than compliance, an RPO team runs sourcing, screening, interview coordination and offer management for you, and the people you hire can then be employed through an EOR. See how RPO services in India work.

Not sure which applies to your situation? Book a call with SynkPay — we offer both EOR and PEO services and can recommend the right structure based on your headcount, entity status, and timeline.

Frequently asked questions

Can I start with EOR and transition to my own entity later?

Yes. This is a common path — use EOR while your India entity is being incorporated (3–6 months), then transition employees to direct employment under your Indian entity once it's operational. SynkPay manages this transition process. Once your entity is registered, you can employ people directly or use a PEO.

Is EOR more expensive than PEO?

At SynkPay the fee is the same flat $349 a month per employee for EOR and PEO, with no setup fee and no deposit. The difference is the entity. A PEO needs your own registered Indian entity, and that entity carries its own running costs (accounting, audit, registered office, director fees), typically $3,000–8,000 a month. If you don't already have an Indian entity, EOR carries none of that overhead, so it costs less in total.

Do employees know whether they're on EOR or PEO?

Yes — their employment contract names the legal employer. Under EOR, the contract is with the EOR entity (e.g. SynkPay's India entity). Under SynkPay's PEO, your Indian entity and SynkPay co-employ, and the arrangement sets out each party's role. Employees generally prefer knowing who their legal employer is.

Does EOR work for non-engineering roles?

Yes. EOR applies to any salaried employee — engineers, product managers, finance, design, operations. The compliance structure is the same regardless of role.

What's the difference between PEO and HR outsourcing?

PEO involves a co-employment legal structure. HR outsourcing is a services arrangement where a third party manages HR functions (payroll, compliance, benefits) on behalf of your entity without becoming a co-employer. SynkPay offers HR outsourcing services as a distinct product from both EOR and PEO.

How does SynkPay's PEO service work?

SynkPay's PEO is for companies that already have their own registered Indian entity and want professional HR administration without building an in-house India HR function. It's co-employment: your entity and SynkPay share the employer role, and SynkPay runs payroll, statutory compliance and HR administration. If you don't have an Indian entity, you need SynkPay's EOR instead, where SynkPay is the sole legal employer. See SynkPay's PEO India page for details.