How much does it cost to use an Employer of Record (EOR) in India?
- Natia Gabarashvili
- Sep 18
- 10 min read
Table of contents:
Introduction
India is a magnet for global hiring, a huge talent pool, competitive pay, and strong English skills. It’s no wonder companies want to scale teams here.
But before the first offer letter is sent, there’s always the same question on the table:
“What’s this really going to cost us?”
Most Employer of Record (EOR) providers make it hard to answer. They hide behind percentage-based pricing. Ten percent here. Fifteen percent there.
It looks simple until you hire senior staff and watch your monthly fee shoot up for no extra work on their end.
That’s not transparency. That’s just a moving target.
TeamUp works differently. We keep it flat: €199 per employee/month. No sliding scales. No hidden charges. Predictable costs you can actually plan for.
What does EOR mean in India?
Let’s start with basics: An Employer of Record (EOR) in India is the legal employer on paper for your team.
Your people work for you day to day, but the EOR takes on the compliance burden, contracts, payroll, taxes, and statutory benefits, all bundled into one monthly fee.
Here’s what that fee usually covers:
Payroll in INR, with payslips and clean monthly filings.
Taxes and contributions like Provident Fund (PF), Employee State Insurance (ESI), gratuity, and TDS.
Benefits administration, from statutory entitlements to add-ons like health insurance.
HR admin, including contracts, leave tracking, and employee records.
Compliance management so every hire is fully legal under Indian labor law.
That’s the EOR difference: it’s not just payroll, it’s the whole package.
How it differs from other hiring models
Direct hiring: You need your own Indian entity, registrations under the Shops and Establishments Act, tax accounts, and an HR/legal team on the ground. Setup takes months.
Payroll outsourcing: A vendor runs payroll for you, but you’re still the legal employer. That means compliance, contracts, and liability are still your problem.
EOR: You skip the entity setup. The EOR becomes the official employer, covers payroll and compliance, and shields you from risk—while you manage the work.
How EOR pricing works in India
Hiring in India is attractive because salaries are lower than in the US or Europe, but the compliance work is just as demanding. That’s why the way your Employer of Record (EOR) charges fees really matters. If you’re not familiar with India’s setup, here’s what you need to know.
The two pricing models
Flat monthly fee
TeamUp uses this model: €199 per employee/month.
Covers payroll processing, taxes, statutory contributions (Provident Fund, ESI, gratuity), contracts, benefits administration, and compliance filings.
The fee doesn’t change based on salary level.
Makes budgeting simple—whether you hire a junior customer support rep or a senior software architect, the monthly EOR fee is the same.
Percentage of salary
Many large global EOR platforms charge 10–15% of gross monthly salary.
Sounds small, but adds up quickly.
If your employee earns ₹100,000/month (~€1,100), you’d pay €110–€165/month in fees.
If your employee earns ₹280,000/month (~€3,100), you’d pay €310–€465/month for the same service.
The higher the salary, the higher the EOR’s cut, even though the compliance work doesn’t change.
What salaries look like in India
Here are average monthly gross salaries for common roles (2025 market):
Customer Support (junior): ₹40,000–₹60,000 (€430–€650)
Software Developer (mid-level): ₹120,000–₹160,000 (€1,300–€1,750)
Senior Backend Engineer: ₹200,000–₹280,000 (€2,200–€3,100)
Finance Manager: ₹150,000–₹220,000 (€1,650–€2,400)
Under a flat-fee model, your EOR cost stays €199 per hire across the board. Under a percentage model, the fee balloons as you move into senior-level hiring.
Why flat fees are fairer and more predictable
You can forecast. CFOs can budget headcount growth without factoring in variable fees.
You don’t overpay. Compliance filings don’t double just because your developer earns double.
You scale without friction. Whether you hire one role or 20, your EOR costs are consistent and transparent.
Total employer cost when hiring in India
When companies budget for hiring in India, they often stop at the gross salary. But salaries alone don’t tell the whole story. By 2025, the true employer cost in India is usually 15–25% higher than the base pay once you add statutory contributions, payroll taxes, benefits, and compliance.
Key employer cost components in India
Base Salary
The gross salary agreed with the employee. This is the headline figure, but only one part of the cost.
Statutory Contributions and Benefits
Provident Fund (PF): Employers must contribute 12% of the employee’s basic salary to the PF, which is a retirement savings scheme.
Employee State Insurance (ESI): Required for employees earning below ₹21,000/month. Employer share is around 3.25–4.75%.
Gratuity: Legally payable after 5 years of service. Employers typically provision ~4.81% of basic salary.
Professional Tax: Levied by some states (up to ₹2,000/year).
Mandatory Leave Benefits: Paid annual leave, sick leave, and maternity leave as required by labor laws.
Payroll Taxes and Withholdings
Income Tax (TDS): Withheld monthly by the employer and deposited with tax authorities.
State-Level Levies: Certain states add their own small payroll-related taxes.
Recruitment Costs
Agency Fees: Commonly 8.33% of annual CTC if using a recruiter.
Screening Costs: Background checks, pre-employment medicals, onboarding and training expenses.
Administrative and Operational Costs
Payroll processing, HR compliance, employee record-keeping, and software or vendor costs.
Additional Voluntary Benefits
Many employers add group health insurance, accident insurance, meal allowances, or wellness stipends to attract and retain talent.
Equipment and Workspace Setup
Laptops, phones, or remote work stipends are now standard for knowledge workers, adding to the total cost.
Estimated total employer cost example
If an employee’s gross monthly salary is ₹100,000, the actual employer cost often reaches ₹115,000–₹125,000 or more.
PF contribution: ₹12,000
Gratuity provision: ₹4,810
Other benefits/taxes: ₹3,000–₹5,000+
Plus voluntary benefits, insurance, and equipment.
Costs are typically higher in Tier 1 cities (Delhi, Mumbai, Bangalore), where wages and benefits expectations run higher than in Tier 2 or Tier 3 locations.
Cost implications for EOR services in India
On top of employer costs, you add the EOR service fee.
Many providers charge 5–15% of payroll.
TeamUp charges a flat €199 per employee/month—making it predictable whether you hire a junior analyst or a senior engineer.
With an EOR, the compliance, payroll taxes, and statutory filings are handled for you. That reduces risk and admin load, but should be factored into your overall hiring budget.
How to compare employer costs for full-time vs remote employees in India
Building a team in India means making choices about how people work onsite, remote, or hybrid. Each model carries its own cost profile, and understanding the differences helps you plan budgets more accurately.
1. Salary and Compensation
Onsite employees in Tier 1 cities like Bangalore, Delhi, or Mumbai often command higher salaries. Location premiums, commuting time, and demand for office-based talent push compensation up. Employers may also add allowances for travel or meals.
Remote employees can sometimes be hired at lower base salaries, particularly if you expand your search to Tier 2 or Tier 3 cities. Compensation packages may lean more on performance bonuses or stock options instead of location-based perks.
2. Statutory and Benefits Costs
Regardless of location, full-time employees in India are entitled to mandatory benefits:
Provident Fund (12% of basic pay)
Employee State Insurance (3.25–4.75%, where applicable)
Gratuity (~4.81% provision of basic pay)
Professional Tax (state-specific, up to ₹2,000/year)
Where they differ:
On-site employees may also receive transport allowances, meal subsidies, or in-office perks.
Remote employees may instead be given equipment stipends or home office allowances to cover laptops, internet, or ergonomic furniture.
3. Operational and Administrative Costs
On-site teams create overhead: office rent, utilities, furniture, maintenance, and security. These can add 20–30% above salaries in Tier 1 cities.
Remote teams cut most of those costs but often require investment in digital tools, cybersecurity, and employee engagement programs to keep productivity high.
4. Recruitment and Onboarding Costs
Costs for job ads, agency fees, and background checks remain similar across models.
On-site hires may also require workspace setup, relocation support, or in-person onboarding logistics.
Remote hires typically need equipment shipment, digital onboarding programs, and software licenses, which are usually less costly.
5. Payroll Taxes and Compliance
Payroll taxes and compliance obligations—PF, ESI, gratuity, professional tax, TDS—apply equally to onsite and remote employees. The difference is that with remote teams spread across states, compliance can become more complex. An EOR manages these filings centrally so you don’t miss region-specific obligations.
Cost Comparison Example
Hiring a full-time onsite employee in a Tier 1 city: expect total employer costs to reach 20–30% above gross salary, factoring in office overheads, allowances, and in-office benefits.
Hiring a full-time remote employee: savings of 10–15% or more by cutting out office-related costs, though equipment stipends and collaboration tools add a smaller overhead.
For example:
A remote team of 6 in India, managed through an EOR, averages ~USD $10,000 per month, covering payroll, compliance, and statutory benefits.
An equivalent on-site team would push costs higher once rent, utilities, and office operations are factored in.
EOR vs setting up your own entity: Cost comparison
When expanding into India, companies usually face two options: set up their own legal entity or hire through an Employer of Record (EOR). On the surface, running your own entity sounds cheaper in the long run. In reality, the costs, both financial and operational, often outweigh the savings.
The cost of setting up your own entity in India
Creating a subsidiary in India requires:
Incorporation fees and government filings: company registration, PAN/TAN, GST, Shops & Establishments Act registration.
Compliance filings: monthly PF/ESI returns, quarterly TDS, annual audits, ROC filings.
Local HR and payroll staff: needed to manage contracts, benefits, and payroll processing.
Legal and accounting advisors: to keep up with constant regulatory changes.
These upfront and recurring costs can easily run into thousands of euros annually, even before you make your first hire.
The flat EOR fee model
An EOR bypasses entity setup. For a flat fee—€199 per employee/month with TeamUp—you get:
Legally valid employment contracts
Payroll and tax compliance in INR
Statutory benefits administration (PF, ESI, gratuity)
HR recordkeeping and support
No incorporation costs. No audit fees. No local HR overhead.
Time-to-hire = Cost of delay
Setting up an entity in India can take 3–6 months. Every month spent waiting is a month without the engineers, designers, or support staff you budgeted for. That delay translates directly into lost productivity and revenue.
With an EOR, employees can be onboarded in weeks, not months. The speed advantage alone often offsets any perceived savings of setting up an entity.
Salary benchmarks in India (2025-2026)
Hiring in India is cost-efficient compared to the US or Europe, but it’s not a “cheap labor market.” Salaries are rising fast, especially in Tier 1 cities and high-demand sectors like IT, finance, and green tech. If you want to hire here in 2025–2026, you need a realistic picture of what talent actually costs.
General salary overview
Average annual salary: ~₹358,000 (≈ $4,186 USD)
Median monthly salary: ~₹27,300 (half of workers earn less, half more)
Salary range: ₹8,000 – ₹1,40,000/month depending on role, seniority, and city
Projected salary growth in 2025: 9.2–9.5% (slightly down from 2024’s 9.8%, but still among the fastest in Asia-Pacific)
City premiums: Bengaluru, Mumbai, and Hyderabad command the highest pay levels
Industry and role-specific trends
High demand sectors: IT, finance, healthcare, engineering, green tech.
Hot roles: AI, machine learning, data analytics, cloud engineering. Senior specialists here often see 20–30% salary growth year over year.
Fresh tech graduates: In-demand grads earn up to 30% above industry norms due to talent scarcity.
Job switchers: External moves deliver 15–25% raises, far higher than internal promotions (6–10%).
Salary growth & increases
Expected hikes in 2025 range 6.2–11.3% across sectors.
Consumer durables, retail, EV infrastructure, and NBFCs are leading with double-digit growth.
India remains the leader in salary growth across Asia-Pacific.
Regional and experience variations
Tier 1 cities (Bengaluru, Mumbai, Delhi, Hyderabad): Salaries can be 20–40% higher than Tier 2/3 cities.
Entry-level employees: Job switches often deliver 20–35% salary jumps.
Senior professionals: Top engineers, finance leaders, and product managers command premium salaries, especially if they’ve worked with global firms.
Indicative salary table
Average monthly salaries for key roles
How employer costs scale with experience
Employers should budget an extra 15–25% on top of salaries for statutory contributions (PF, ESI, gratuity, professional tax), benefits, and compliance.
Example:
Mid-level developer at ₹140,000/month → total employer cost ~₹165,000–₹175,000/month once contributions and benefits are added.
Senior backend engineer at ₹250,000/month → employer cost rises to ~₹290,000–₹310,000/month.
This is before adding EOR fees, which are either a flat monthly rate (like TeamUp’s €199) or a % of salary (10–15% with many global providers).
Additional factors that affect EOR costs in India
The monthly EOR fee covers payroll, compliance, and statutory benefits, but the true cost of employing someone in India depends on more than just salary + contributions. A few extra factors can shift the budget depending on the type of hire and your company’s policies.
Employee benefits
Health insurance: Not legally required beyond ESI, but most employers in India add private group health coverage. Premiums vary by plan, family size, and city.
Allowances: Housing, meals, or transport allowances are common in onsite roles, especially in Tier 1 cities.
ESOPs (Employee Stock Options): More startups are using stock options to compete for top tech talent. While ESOPs don’t create a monthly cash cost, they do require proper legal structuring under Indian law.
Equipment and workspace support
Remote hires often expect laptops, accessories, and stipends for internet or home office setup. A one-time cost, but important to budget.
On-site hires may receive workspace benefits like subsidized meals, transportation, or wellness allowances.
Visa and immigration services for expats
If you’re relocating foreign nationals to India, immigration adds both time and cost:
Employment visas can take weeks or months, depending on nationality.
FRRO registration is required for stays over 180 days.
Renewals must be filed annually. These steps often involve government fees, legal support, and EOR assistance.
Conclusion
Hiring in India is cost-effective, but it’s never just about the salary. Employers need to factor in statutory contributions, payroll taxes, benefits, equipment, and the EOR service fee. Put it all together, and the real cost of a hire in India is higher than the headline salary, but predictable if you have the right partner.
That’s where Team Up makes the difference. Instead of chasing hidden markups or dealing with percentage-based models that punish you for hiring senior talent, you get a flat €199 per employee/month. Simple, transparent, and built for teams that want to scale without surprises.
If you’re ready to grow in India with full clarity on costs and zero compliance guesswork, Team Up is ready to help.
Talk to TeamUp today about hiring in India with complete cost transparency and start building your team in weeks, not months.
