Key Takeaways – Why India is the Best Expansion Hub?
- Economic Growth: India is projected to reach a $5 trillion GDP by 2025 and $8.4 trillion by 2030, making it a global powerhouse.
- Large Workforce & English Proficiency: India offers a vast, skilled, English-speaking workforce, reducing communication barriers for global businesses.
- Booming Digital Market: With over 560 million online users (expected to surpass 850 million by 2025), India has a larger digital consumer base than the entire G7 population.
- Favorable Tax Reforms: Recent tax benefits and labor law reforms have significantly reduced hiring costs, making India a business-friendly hub.
- Legal Protections: Strong India employment laws ensure compliance and a secure work environment for both employers and employees.
Growth is life and Businesses are constantly looking for growth. One of the reasons we have globally recognizable brands such as McDonald’s , The Coca-Cola Company , Sony , Toyota Motor Corporation , Google , Meta ,and so many more is that these businesses grew into new markets with time.
Over the last many years businesses have also expanded globally to hire from a new talent pool to support their core business processes and have built Global Capability Centers (GCCs) in countries outside their homebase.
Among the countries that is most popular to set up a GCC is India. It is the home to the largest number of GCCs (Source). From Software development, Accounting+ Finance, to Pharmaceutical research, engineering R&D and many more areas.
Setting up GCC’s involves setting up your own company in a new country and complying with local laws and managing the regulatory environment in the local environment.
This can be an overwhelming initiative for Finance and HR teams time lost in debating over a GO / NO GO decision to set up Operations in India.
Setting Up your Local Firm (GCC) in India
Setting up a legal entity in India needs some time and effort.
Here are some key costs you’ll face if you decide to go the traditional route:
- One-time Setup Costs: Including incorporation, director appointments, and registration with various Indian authorities, it might cost around $1500- $2000.
- Ongoing Establishment Costs: Your annual operating costs – comprise
- Director salaries (Having 2 Directors to incorporate a company is mandatory in India . You can choose other corporate structures which may cost lower)
- HR and admin expenses
- Office Rentals: Having a registered office is mandatory.
- Annual compliance services – Like Service tax, ROC filing , Income tax and Trade licenses etc all add up to a tidy amount
- Regulatory Compliance: In addition to these costs, you’ll also face compliance requirements like annual audits, tax filings among other things.
Put all these together and they add up to about an annual operating cost of $70,000 to $140,000 or more.
*Costs and time may vary depending on your preferences and the type of local professional help you engage to complete your process. For example a Big 4 Accounting firm may bill you a higher amount compared to a Local Accounting firm.
Time to Setup
The local government in various states have made efforts to improve the process and provide Single window clearances but usually the process can take several weeks to a couple of months depending on the complexity of your business structure.
Setting up a local entity in India can cost
approximately of $70,000 to $140,000 or more
and typically takes between 3 to 12 months
, depending on the complexity of the setup and
regulatory processes.
So is there a Lower Risk Affordable alternative to setup Operations?
The short answer is: YES!!!
Using an Employer of Record (EOR) like PamGro – Employer of Record is an alternative to setting up your own legal entity in India.
Employer of Record (EOR): The Lower Risk, Affordable option to Start Operations in India
So how does an EOR exactly help ?
Employer of Record services provide a simple, transparent and affordable pricing structure that offers all the benefits of having your operations set up but without the compliance overhead.
All your employees in India are legally employed by your EOR partner. Since the EOR partner is already operating in India and has the required compliances in place you save time and money on the Initial setup and Ongoing operations cost. Most EOR providers will get you up and running in less than 14 days.
The EOR partner usually charges an affordable fee per employee per month to offer services like:
- Compliant Employment Contracts in India
- Payroll and tax management
- Employee benefits (including healthcare, retirement, etc.)
- Onboarding, offboarding, and legal compliance
- Custom Requests based on your needs
For example, to set up a 15-20 employee team in India, an EOR service (like PamGro – Employer of Record ) might cost you approximately $100- $200 per month per employee (may vary depending on your preferences) without the additional manpower and overhead to set up operations.
The Bonus: You can start your operations in
India in under 14 days if you’re able to hire
quickly, at a cost of $100-$200 per
employee per month.
So what happens after your team expands and you have the confidence to set up your entity in India ?
Moving to your own Entity from EOR
This is quite easily handled. Your team members legally employed with the EOR Partner can be transitioned to your newly setup entity once its ready and can be built in as part of your commercial arrangement with the EOR partner.
EOR also provides you with an easier exit option. If your business needs change and you no longer wish to outsource to India you can close out the contract with your EOR partner.
Go or No Go: Entity Setup in India vs EOR
Eventually, you have to make a choice that works for your business. Here’s a simple principle we found worked for many of our Happy Customers.
- If you are already committed to India and have a long term roadmap to build a large team size to tap into the deep talent pool, don’t wait, get your entity setup started.
- If you want to test the waters and do a pilot project to build more confidence or have a short term roadmap for your India presence an EOR partner might be a better option.
The real question now is: What does your business need?
PamGro – Employer of Record is ready to help.
Need help making that decision?
How PamGro EOR Helps You Enter the Indian Market in Record Time:
PamGro – Employer of Record services enable businesses to launch in India in under two weeks. By managing all payroll, legal compliance, and HR functions. PamGro reduces the time it takes to set up operations by 90%.
This means you’re not just saving money, but you’re also avoiding months of delays and getting your business up and running fast.
For example:
A U.S.-based SaaS company used PamGro’s EOR services to expand into India. In just 10 days, they onboarded 20 developers. Saving $40,000 in initial costs and 6 months of time, all without setting up a legal entity.
If you’re looking for speed, affordable, and a low-risk entry into the Indian market, partnering with an Employer of Record is the obvious choice. EOR services like PamGro can help you test the market, hire international talent, and grow your business in India without the burden of high upfront costs and regulatory headaches.
But if you’re looking to establish a long-term presence, build a local brand from the ground up, and have complete control over operations and HR, setting up your own entity might be the way to go.
Not sure which option is the best fit for your expansion into India?
Let us help you make the right choice. At PamGro, we specialize in supporting businesses like yours in scaling globally, and we’re here to provide the expertise and guidance you need.
Book a free 15-minute consultation with my team today, with no obligations, and get the insights you need to make an informed decision for your business’s future.
By choosing the right model whether it’s EOR or entity setup. You can unlock the potential of the Indian market with confidence, efficiency, and cost savings.
FAQs
1. When should I use an EOR?
Use an EOR when you’re hiring full-time employees in a different country and don’t want to open a legal entity. The EOR handles everything from compliance to benefits administration, mitigating legal risks associated with misclassifying employees and not adhering to local employment laws.
2. When is an AOR the better option?
Choose AOR when working with short-term freelancers or project-based workers. It helps reduce risk around worker classification, mitigates misclassification risks, and simplifies administrative tasks.
3. Is it legal to use contractors through an AOR?
Yes, as long as your AOR ensures contractor compliance with local labor laws. That’s their job: making sure contractors stay contractors and you avoid non compliance penalties.
4. Can I switch from AOR to EOR?
Absolutely. As your business grows, you might move from flexible independent contractor models to more permanent hiring. EOR is perfect for that transition, as it manages various employment-related tasks such as handling payroll, taxes, and compliance with local labor laws.
5. Do I need both AOR and EOR services?
In many cases, yes. Companies use AOR for agile, freelance-heavy teams while ensuring proper contractor classification and EOR for long-term talent and global expansion, especially when entering new markets. However, choosing between eor and aor services can be complex. It’s crucial to partner with a reputable provider to effectively navigate these complexities, mitigate risks, and drive growth in new markets.
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Unrivaled Payroll Solutions for 15 Years
Soham wasn’t always an international employment guru. He began with a passion for numbers, surprising shopkeepers with his mental math skills.
At PamGro, Soham spearheads international expansion and EOR (Employer of Record) services, driving global business strategies and ensuring compliance across multiple regions.
