How to Hire in India Without Setting Up a Company (2026 Guide)

You don't need to set up an Indian company to hire someone in India. The most direct route is an Employer of Record (EOR) — a local entity that employs your candidate on your behalf, handles all Indian payroll and compliance obligations, and lets you stay in the background as the day-to-day manager. The employee works for you in every practical sense; the EOR holds the legal employment relationship under Indian law.

For a funded startup or mid-sized company hiring its first or second India-based engineer, this is almost always the right call. Entity setup in India costs $15,000–50,000 upfront and takes 3–6 months. An EOR costs $349/month per employee (at SynkPay) and can have your hire on payroll in 1 business day.

This guide walks you through how the process works, what it costs, and when a different approach might make more sense.

Why most companies avoid setting up an Indian entity

Setting up a Private Limited Company or branch office in India is the traditional path — but for companies making their first few India hires, it creates more problems than it solves.

Cost: Incorporating in India requires a local director, a registered office address, mandatory audit and compliance filings, and ongoing accounting. Realistic cost: $15,000–50,000 to establish, plus $3,000–8,000/month in ongoing legal, accounting, and admin overhead.

Time: The Ministry of Corporate Affairs process takes 2–4 months under normal circumstances. Factor in Director Identification Number applications, digital signature certificates, and state-level Shops and Establishments registration and you're looking at 3–6 months before you can legally employ anyone.

Ongoing compliance: Once incorporated, you're obligated for Provident Fund (PF) registrations, ESI filings, TDS deductions, Professional Tax, advance tax payments, annual statutory audits, and annual returns. Each has its own deadlines. Missing them carries penalties.

For a company hiring 1–5 people in India, this overhead doesn't make economic sense — especially when an EOR eliminates it entirely.

What an EOR actually does

An Employer of Record becomes the legal employer of your India-based hire. In practice this means:

• Drafting and signing the employment contract under Indian law

• Registering the employee for Provident Fund (PF) and Employee State Insurance (ESI) where applicable

• Running monthly payroll — calculating gross pay, statutory deductions, and net pay

• Depositing PF and ESI contributions on the mandated dates

• Filing TDS (Tax Deducted at Source) with the Income Tax Department

• Handling Professional Tax where applicable (state-dependent)

• Managing the annual Form 16 (employee tax certificate) process

• Holding employment liability — if there's ever a dispute, the EOR is the legal employer of record

You retain full control of the day-to-day work — what the person does, when they work, how they're managed. The EOR handles the Indian employment infrastructure underneath.

How the process works: from verbal offer to payroll

Here's exactly what happens when you hire via EOR, using SynkPay as the example:

Step 1: You share the candidate details
Name, proposed salary, start date, role title. You provide this to SynkPay. No Indian documentation required from your end at this stage.

Step 2: SynkPay prepares the employment contract
An India-compliant offer letter and employment agreement is drafted — covering salary structure (Basic, HRA, Special Allowance), notice period (standardised at 1 month), IP assignment, confidentiality, and non-solicitation clauses. This happens within hours.

Step 3: The candidate signs
The employee receives and signs their contract directly. They also provide their PAN (tax ID), Aadhaar, and bank account details for payroll setup.

Step 4: Employee is live
PF registration, payroll setup, and the first payroll run are handled by SynkPay. For standard cases, this process completes in 1 business day from when candidate details are submitted.

Step 5: Ongoing — you manage the work, SynkPay manages the compliance
SynkPay invoices you for the monthly salary at the start of each month and pays the employee at the end of the month. Statutory filings and remittances are handled on their mandated dates — no action required from your side.

What it actually costs: a worked example

For a candidate on INR 60,000/month gross salary (~USD 720/month):

One-time costs:

• Background verification (optional): USD 300 / INR 25,000

There is no upfront deposit or working capital hold. SynkPay invoices the monthly salary at the start of each month and pays the employee at the end of the month — a standard payroll cycle with no cash locked away.

EOR vs paying someone as a contractor

Many companies start by paying an India-based developer as an independent contractor — via Wise, PayPal, or direct bank transfer. This works at very small scale and for genuinely short-term engagements.

The risk compounds over time. India's labour courts and the Employees' Provident Fund Organisation (EPFO) look at the substance of the working relationship, not just the contract label. If someone has worked exclusively for you, full-time, for 12+ months, the contractor label provides limited protection. Reclassification can trigger back-payment of PF contributions, ESI, gratuity accrual, and statutory notice entitlements — all backdated to the start of the engagement.

The practical threshold: once you have more than 2–3 India-based people working full-time for you, or once any individual engagement exceeds 6–12 months, formalising via EOR removes a risk that becomes increasingly material as the team grows.

See also: When to switch from contractor to EOR in India →

When EOR might not be the right choice

EOR works well for companies with 1–50 India-based employees who don't need (or aren't ready for) a local entity. There are situations where a different approach makes more sense:

You're hiring 50+ people in India and plan to grow significantly: At scale, the EOR fee adds up. A company with 80 India employees paying $349/month is spending $27,920/month on EOR fees. At this headcount, entity setup costs amortise quickly and may be worth revisiting.

You need a local entity for regulatory or client reasons: Some industries (banking, defence, certain government contracts) require a local Indian entity. EOR doesn't substitute for this.

You want to eventually transition to a direct employment model: EOR is often a bridge, not a permanent structure. Most providers — including SynkPay — can help transition employees from EOR to direct employment under your own Indian entity when the time comes.

Frequently asked questions

Is it legal to hire employees in India without an Indian entity?

Yes. Using an EOR is a legally compliant method for employing people in India without establishing your own entity. The EOR is the legal employer under Indian law. This structure is used by thousands of international companies with India-based teams.

Does the employee know they're employed via an EOR?

Yes — their employment contract is with the EOR (e.g. SynkPay India Pvt Ltd), not with your company directly. In practice, this is transparent and standard. The employee understands you are the day-to-day manager and that the EOR handles their payroll and statutory obligations.

What Indian taxes and contributions does an EOR handle?

Provident Fund (employer + employee contributions), ESI where applicable, TDS deductions and remittance, Professional Tax, and the annual Form 16 process. These are all included in the EOR service — you receive one consolidated invoice.

What happens to IP and confidentiality when an employee is on an EOR?

A well-structured EOR contract includes IP assignment clauses (all work product created during employment is assigned to the client company), confidentiality provisions, non-solicitation, and return-of-materials obligations. SynkPay includes all of these as standard in every India employment contract — no premium tier required.

Can I hire multiple roles via EOR — not just engineers?

Yes. EOR covers any salaried employee — engineers, designers, product managers, finance staff, operations. The $349/month fee is flat regardless of role or salary level.

What if I want to terminate the engagement?

Employment contracts are standardised at a 1-month notice period. SynkPay manages the offboarding process — final pay calculations, PF settlement, and statutory documentation.

How is gratuity handled?

Under India's Payment of Gratuity Act, gratuity becomes payable after 5 years of continuous service. If an employee reaches that threshold, SynkPay calculates the gratuity amount and collects it from you at that point. There's no monthly accrual requirement — the obligation crystallises at 5 years and is handled then.

Next steps

If you've found a candidate and want to move quickly, SynkPay's EOR India page has full pricing and process detail. Standard onboarding completes in 1 business day.

Use the India employee cost calculator to model the total employer cost at any salary level — including PF, ESI, and the EOR fee.