Best Ways to Hire Employees in India

Mike Renaldi

24.01.24 (last updated)

6 minute read

India has a rapidly growing population along with a dynamic economy that make it great for international investors and employers.

Moreover, India’s economy is best-known for its information technology and business process outsourcing (BPO) industry. In this article, we'll talk about how you can star tapping into this massive market or building your team through outsourcing.

We'll also talk about how Wise Business can help you save while paying your team in India.

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Indian Employees vs. Contractors

It’s important to understand that hiring an employee from India requires different measures than hiring an independent contractor.

Just like in the US, there are different types of contractors, including fixed-term, gig, temporary, and platform workers. These types of contractors are not subject to the same labor laws as employees.

Recently, India passed new labor codes that have changed the designations of contractors.¹⁰ The laws define gig workers as traditional freelancers, while platform workers refer to positions, such Uber drivers or delivery agents.

You can hire an Indian citizen as a contractor as long as:

Is between 16 and 60 years old
Hasn’t worked less than 90 days in the 12 years prior
Submitted a self-declaration to the Central Government

Again, this is not the same thing as hiring an employee. Let’s dive into how to start the hiring process.

How to hire employees in India

One thing you should study is the legal and tax implications of the country.

Even though the legal system in India and the US are similar, foreign companies hiring employees in India will still be entering an unfamiliar and regulatory environment.

There are multiple options in hiring employees in India.

Use third-party services, such as Upwork
Offshore Hiring through Employer of Record
Set up a legal entity in India to run payroll and taxes

Use third-party services (Upwork and Fiverr)

One of the best ways to hire employees in India is to have a third party local entity service to outsource employment and serve as intermediary in an existing employee-employer relationship, here’s a quick guide on how to do it.

Hiring a contractor steps
Step 1: Select the employee and make an agreement on the job function, duration, and salary.
Step 2: Draft an employment contract that is compliant to both parties’ local regulations and terms and conditions.
Step 3: Third party service contractors will register the employee for payroll in the host country to ensure compliance with all the regulations regarding employment, tax, payroll, and pension funds.
Step 4: Address all queries related to employment through your account manager in the host country.
Step 5: Comply with your local obligations if your business has to report to IRS or withhold tax on payments made to third-party service contractors.
Step 6: Set a payment scheme to the third-party service contractor.

Companies like Upwork offer numerous competent contractors with various skill sets. Moreover, this service cuts out a lot of the problems of hiring someone in India through other means.

Wise Business offers the chance to pay your contractor across currency through Upwork and similar job sites. This way, you won’t lose out on costly transfer markups and hidden fees. Wise Business offers transparent options.

Offshore Hiring through Employer of Record (EOR)

If you want to go further in finding talent and hiring employees from India locally, you can work with an EOR.

What is an Employer of Record (EOR)?

An Employer of Record is the official employer of an employee. They are a third-party organization used by businesses hiring international employees. The biggest benefit of this kind of hiring approach is that you avoid compliance issues, which can tie down your business and take away your peace of mind.

Set up a legal entity in India to start hiring and conducting payroll

If you are getting serious about putting down roots in India, then you have the possibility to hire and run payroll as a legal entity in India. Of course, this comes with some risk. You will need to ensure that your team understands the laws and regulations of India, as well as its states and localities.

What does this include? Let’s go through the steps, according to Invest India:

Company Registration Process¹¹	Limited-Liability Partnership Process¹¹
1. Check availability of your business name/trademark	1. Get the class 2 or class 3 Digital Signature Certificate
2. Reserve the name of your business through the MCA website	2. Check that your business name and trademark are available
3. Get the Digital Signature Certificate	3. File for approval of your business name with the Registrar of Companies
4. Fill out the INC 32 form	4. Fill out and submit the FiLLiP document to RoC. Foreign LLPs will need to fill out Form 27 and sign the document digitally
5. File your Memorandum of Association	5. Complete Form 3 within 30 days of incorporation
6. File the Articles of Association
7. Upload the SPICe+ and pay the fee
8. Get your documents verified by the Central Registration Centre
9. Receive the certificate of incorporation
10. If your company has shared capital, then file a declaration of receipt

Wise Business - an easy, low-cost way to pay contractors in India

Wise Business supports transfers to 40+ currencies including Indian Rupees. You can take advantage of fast transfers with the mid-market exchange rate and low transfer cost.


Fees	Conversion fee from 0.42%
Speed	0 - 2 working days
Convenience	If you’re paying multiple contractors, you can use Wise Batch Payments. Instead of making several payments separately, you can send multiple payments in one go. You can make business payments via the app. Wise Business can be integrated to QuickBooks accounting software to help ease reconciliation.

How much could Wise help you save?

The true cost of sending USD to GBP

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Hire employees in India: Important Laws and Practices

If you decide to do hiring as a legal entity in India, then you will need to consider these factors to ensure that you not only stay compliant with Indian laws. In addition, considering these items will ensure that you give your new employees a quality working environment.

Indian Law or Practice	Description
13th-month pay	Essentially equal to one-month's pay. It applies to every employer. It is provided as a bonus, typically given at the end of the year
Paid time off	This is typically 10-15 days in India
Permanent establishment	As we’ve stated above, your company can do this itself or go through an EOR
Sick leave	Maximum of 12 days annually
Parental and maternity leave	Paternity leave is not mandatory. Maternity leave is maximum 26 weeks for the first two deliveries and 12 weeks for each delivery thereafter¹²
Holidays	17 public holidays occur annually in India and working on these holidays requires additional pay¹³
Taxes	Income tax, Provident Fund, Employee State Insurance, Goods and Services Tax, Professional Tax
Minimum wage	Labor costs vary by state and job type. The national minimum wage is $2.15.¹⁴
Overtime	Overtime payments kick in when an individual works more the 9 hrs.¹⁵

Where to find Employees in India

US employers will feel at home when searching for employees in India. Many of the sites where you can access talent are ones that US job-seekers also use when searching for employment.

Here’s a quick list of places where you can find employees. You can also find another list of sites you may not have heard of you’re a US employer, looking to hire employees in India.

Well-known platforms for finding US and Indian employees:

Indeed
LinkedIn
Glassdoor
Google Jobs

Let’s dive into some other platforms where you can seek out talent in India.

Naukri

Naukri is a subsidiary of a larger Indian company. Naukri allows you to post jobs on their site, with a starting cost of $55 for 1 posting. This posting will get you access to over 96 million job-seekers in India.

Shine

Shine is another job posting site with a focus on the Indian market. They claim to give you access to 50+ million jobseekers. The cost for posting is around $18.⁸

FoundIt

FoundIt also provides employers with a plethora of talent located in India, the Middle East, and Southeast Asia.⁹ Job posting packages are split into two different levels: premium postings and quick postings. However, it is important to note that the price isn’t listed, so you can request a demo to learn more about their offering.

TimesJobs

TimesJobs offers a large database of Indian employees to sort through and contact, as well as traditional job posting opportunities. This price is around $18 per posting but does get discounted when you do more than one posting.⁹

Typical Jobs and Companies Hiring Indian Employees

Most jobs that usually get outsourced are those which require both non-specialized and specialized skills. Job outsourcing helps companies be more competitive in the global marketplace.

IT Jobs – American companies outsource these jobs to India because of much lower wage compared to natural-born workers
Call Center – many call centers have been outsourced to India and the Philippines because of lower wage and both workers from these countries speak English
Manufacturing – a lot of American companies ship raw materials over to offshore manufacturers and the final goods are shipped back because of lower production cost
Human Resources – human resource outsourcing particularly benefits small business by reducing costs; pooling a thousand businesses lowers the price of health benefit plans, insurance and worker's compensation
Data Encoder – this is the most popular outsourced job abroad, it does not require a specific skill sets however, due to overwhelming volume companies outsource these jobs
Data Analysts and Scientists – this skill has become a crucial part of conducting business in the 21st century. Yet, skills involving data analysis and handling large databases are hard to find and may push you to seek workers in India.
Web Design and Development – web design and development can be demanding, that’s why many outsource the work to experts.
Data Processing Services – data processing help companies in managing their data efficiently empowering businesses with increased productivity and reduced operational costs
Accounting Jobs – this is a very common outsourced job since it requires specialized skills and not everyone are familiar on how to accounting effectively
Search Engine Marketers – provides promotion of websites by increasing visibility in search engine results pages through paid advertising
eCommerce Customer Service – provides services for online retail stores and help enhance customer experience and builds brand loyalty
Medical Professionals – some tasks of health professionals are being outsourced as a way to reduce costs like transcription of your medical records

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Sources:

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