Key Takeaways
- EOR lets you hire in India within 1–2 weeks with zero setup cost — ideal for testing the market
- Subsidiary gives full control and is more cost-effective at 15+ employees
- The smartest approach: start with EOR, transition to subsidiary when you’ve validated your plans
- At 30 employees, EOR costs ~$100K/year more than running your own entity
If you’re planning to hire in India, one of the first decisions you’ll face is: should you use an Employer of Record (EOR) or set up your own subsidiary?
Both are valid approaches, but the right choice depends on your timeline, budget, team size, and long-term commitment to the Indian market. Let me break it down.
What is an EOR?
An Employer of Record is a third-party organization that legally employs your India-based workers on your behalf. They handle employment contracts, payroll, statutory compliance (PF, ESI, professional tax), and benefits. You manage the employee’s work; the EOR manages the employment.
⭐ Key Point: You can start hiring in India within days, without setting up a legal entity.
What is a Subsidiary?
A subsidiary — typically a Private Limited Company — is your own legal entity in India. You’re the employer, you own the entity, and you have full operational control. It requires incorporation with the Ministry of Corporate Affairs, RBI compliance for foreign investment, and ongoing regulatory filings.
⭐ Key Point: Full control, better for long-term scaling, and often more cost-effective at scale.
The Comparison
Speed
- EOR: 1-2 weeks to first hire
- Subsidiary: 2-4 months for full setup
Cost to Start
- EOR: No setup cost (pay per employee per month)
- Subsidiary: ₹3-8 lakhs ($4,000-10,000) for incorporation
Ongoing Cost per Employee
- EOR: $200-600/month management fee
- Subsidiary: Internal cost only (accounting/compliance ~$500-1,500/month total)
Best For
- EOR: 1-15 employees, market testing, quick hiring needs
- Subsidiary: 15+ employees, long-term presence, full operational control
Compliance Burden
- EOR: Handled by the EOR provider
- Subsidiary: Your responsibility (or your advisor’s — that’s where I come in)
When to Start with EOR
Choose an EOR when:
- You need to hire in India quickly (weeks, not months)
- You’re testing the market with a small team
- You don’t want the overhead of entity management
- Your India headcount is under 15-20 people
💡 Tip: EOR is perfect for “let’s try India before we commit” — you can hire your first 5-10 people and see how things work before investing in a subsidiary.
When to Go Straight to Subsidiary
Choose a subsidiary when:
- You’re committed to India for the long term
- You plan to hire 20+ employees
- You need to invoice Indian clients or hold IP in India
- You want full control over employment terms and benefits
The Hybrid Approach
✅ Recommendation: Many of my clients start with an EOR and transition to a subsidiary once they’ve validated their India plans. This is often the smartest approach — it lets you move fast, learn the market, and make the permanent investment when you’re ready.
I help clients plan this transition from day one, ensuring the switch is smooth for both the company and its employees.
The Bottom Line
There’s no universal right answer. The best India entry structure depends on your specific situation. If you’re weighing these options, let’s talk — I’ll help you figure out the right path.