The operational side of hiring employees in India from a US company is more straightforward than it appears, once the structure is clear.
Most of the confusion is about sequencing rather than legality. Yes, a US company can employ people in India, and there are two well-worn routes to doing it. This playbook covers the full operational picture: legal structure, payroll mechanics, statutory obligations, benefits, notice periods, and how to manage the team once it exists.
Legal Structure: EOR or GCC
This is the first decision and it drives everything else. An Employer of Record employs the person on your behalf. A Global Capability Centre is your own Indian subsidiary employing them directly.
| EOR | GCC (Indian subsidiary) | |
|---|---|---|
| Entity required | No | Yes |
| Setup time | Days | 4 to 6 months |
| Employer of record | EOR provider | Your entity |
| Payroll and compliance | Handled by the EOR | You, or a payroll provider |
| Control | Functional management only | Full |
| Best for | 1 to 25 hires | 30+ hires |
How to choose without over-thinking it
If you are hiring your first few people and testing whether India works for you, use an EOR. The cost per head is higher but the setup cost is near zero and you can reverse the decision. If you already know India is a multi-year commitment and headcount will pass thirty, start the entity process early, because four to six months is a real constraint on hiring plans.
The GCC versus EOR comparison covers the model decision in more detail, and the US companies hiring in India guide covers region-specific considerations.
Payroll and Statutory Compliance
India's statutory obligations are specific and non-negotiable. Under an EOR these are handled for you; under a GCC they become your finance team's responsibility.
- Provident Fund (PF): a mandatory retirement contribution, 12% each from employer and employee on basic salary.
- Employee State Insurance (ESI): health insurance for employees earning below the statutory monthly threshold.
- Tax Deducted at Source (TDS): the employer deducts income tax from salary and remits it to the government.
- Gratuity: payable after five years of service, typically fifteen days of last drawn salary per year served.
- Professional Tax: a state-level tax that varies by state.
The mistake that causes most friction
US companies frequently quote compensation as a single gross figure, as they would at home. Indian offers are read as a CTC structure with basic, allowances, and statutory components, and candidates compare structures rather than headline numbers. Quoting the wrong way makes a competitive offer look worse than it is, and creates renegotiation at the point where you can least afford it.
Building a team in India?
Tell us the roles and the timeline. We will come back within one business day on structure, sequencing, and what the market pays.
Discuss a mandate →Benefits and Leave
Standard benefits are group health insurance, paid leave of roughly twelve to eighteen days plus national and state holidays, sick leave, and maternity and paternity leave in line with statute.
Competitive employers add learning budgets, remote work stipends, and annual health checkups. It is worth being clear-eyed about this: benefits are table stakes in the Indian senior market and rarely differentiate an offer. Scope, the quality of the engineering leadership, and the credibility of the roadmap do.
Notice Periods and Exits
This is the single biggest planning difference from US hiring. Senior employees in India commonly serve 60 to 90 day notice periods, and the practice is normal rather than negotiable in most cases.
What this means for your hiring plan
A role you open in January is unlikely to be productive before April. Plan backwards from when you need the capability, not forwards from when you start the search. Buyouts are sometimes possible but are not reliable, and pressing on them can sour a start before it begins.
Exits require a full and final settlement covering earned salary, leave encashment, gratuity where applicable, and any variable pay. The notice period management guide covers how to run the notice window from the hiring side, including staying engaged with a candidate through a long gap.
Managing the Team Day to Day
You manage the work regardless of structure. The EOR is an employment mechanism, not a management layer, and treating it as one is how India teams end up feeling like vendors.
Sequence leadership first
The most common and most expensive mistake is hiring individual contributors before a senior India leader exists. Without that layer, decision rights are unclear, context arrives filtered through a time zone, and attrition rises in year one. Anchoring an India team build with a senior operator first and sequencing the team around them is slower to start and considerably faster to productivity.
Time zones and meeting load
India overlaps with US Eastern in the early morning and with US Pacific barely at all. Rather than pushing the overlap onto the India team permanently, fix a small number of genuinely shared hours and move everything else to written updates. Teams that rely on synchronous meetings across this gap either burn out the India side or quietly exclude it from decisions.
Not sure whether to use an EOR or set up an entity?
The answer depends on headcount, timeline, and how permanent the commitment is. Tell us the plan and we will give you a straight view.
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