How to Hire Employees in India: Legal Routes, Employer Duties and Every Step to Payday

At a glance

Can a US company hire employees in India?

Yes, and many do. Before you make an offer, know that you can't put an Indian resident on your US payroll and treat that as Indian employment. Indian employment law places its duties on an employer in India: PF registration, salary tax deduction, state professional tax and the Labour Codes. Your job is to pick which Indian company will carry those duties.

A foreign company from anywhere faces the same choice, whether it sits in Delaware, London or Singapore. If you don't want to build an Indian company yet, an Employer of Record carries the employer's duties on its own registrations. You still choose the person, set the work and manage them every day.

Three legal ways to hire in India from the US

Every lawful India hire runs through one of three structures. They differ in who the employer is, what you have to set up and which risks stay with you.

Hiring independent contractors in India

A contractor is the fastest way to start. You sign an agreement, the person invoices you and you pay them. There is no PF, no salary tax deduction and no appointment letter, because there is no employment.

The catch is time and control. A contractor who works full time for one company, on that company's hours and tools, starts to look like an employee. The India contractor misclassification quiz walks through the signs. Code is the other risk, because copyright rules treat employees and contractors differently.

Hiring through an Employer of Record

An Employer of Record is an Indian company that employs your hire on its own payroll. It issues the offer and the contract, registers the person for PF and ESI, deducts tax and pays the salary. You pay the EOR one invoice and direct the person's work.

This route suits a first hire, a small team, or a team you want to test before committing to an entity. Versatile Club's Employer of Record (EOR) service employs your team on its own Indian company, Foo Falcon Technologies Pvt Ltd. As your Employer of Record, it files PF, ESI, TDS and professional tax under its own registrations.

PEO in India: why an EOR is used instead

A professional employer organization (PEO) is a co-employment model common in the US. Your company stays the employer, and the PEO shares payroll and HR administration with you. That only works where your company is already an employer in that country.

In India, the employer's duties sit with an employer in India: PF registration, salary tax deduction and the Labour Codes. A foreign company with no Indian company has no Indian employer to share them with. So a search for a PEO in India usually ends at an EOR, which is the whole employer rather than a co-employer. If you already have an Indian entity, the nearest match to a PEO is managed payroll, where your entity stays the employer.

Setting up your own Indian company

Your own private company gives you full control, and every employer duty with it. Company law sets board rules before you hire anyone, including a director who lives in India for part of each year. The details are under what the law says, below.

After incorporation come the employer registrations and a monthly filing cycle. If you are weighing this against an EOR, the EOR vs entity break-even analysis compares the two by headcount.

Which route fits your stage

• One to a few hires, no Indian company yet. An EOR lets you employ properly from the first person, without a board or registrations.
• You already pay contractors in India. Converting them to employees on an EOR removes the misclassification risk without changing the person or the work.
• You plan a large India centre later. Run the first team on an EOR, then move it into your own entity. The GCC test plan covers this path.
• You already have an Indian entity. You need payroll run, not an employer. Versatile Club's managed payroll serves companies with an existing India entity.

How to hire employees in India, step by step

With Versatile Club as your Employer of Record, hiring takes five business days from signature to payroll. After that, the work runs monthly. Here is the whole path, with the page that covers each step.

1. Choose your route. Contractors, an Employer of Record or your own Indian company each ask different things of you. The three ways to hire in India are compared side by side.
2. Check who will employ your team. With an EOR, a named Indian company becomes the employer. Learn how to verify an EOR's entity, then compare it with the numbers we publish on our About page.
3. Sign the service agreement. This is day one. Our five-day onboarding is a commitment written into that agreement.
4. Send the offer and sign the contract. On day two the candidate gets an India-compliant offer letter. On day three the employment contract is signed and documents are collected.
5. Register the employee. On day four, PF, ESI and professional tax are initiated. The employer PF contribution page explains a main statutory cost on top of salary.
6. Pay every month. On day five the employee is active on payroll. The monthly payroll run covers deductions, tax and the payroll summary you get.
7. Keep the proof. Each month brings one USD invoice with a per-employee breakdown and a status report on what's filed and what's due. PF and ESI challan confirmations and TDS deposit receipts come with it.
8. Close the year and any exit. We commit to issuing each employee Form 130 (formerly Form 16) by 30 May. When someone leaves, the Full and Final settlement covers notice, leave encashment, gratuity, PF and the relieving letter.

From offer to first payday: the legal anchor for each step

Start here

Find what you need by role

Who employs your team

Versatile Club's Employer of Record (EOR) service employs your team on its own Indian company, Foo Falcon Technologies Pvt Ltd, registered in Bengaluru. As your Employer of Record, we file each employee's PF, ESI, TDS and professional tax under our own registrations, not yours.

We are an India-only EOR, working across all 28 states and 8 union territories with registrations in every state. EOR is a new service for us. The entity and the compliance work behind it were built and tested through our Contract-to-Hire business, which places people with US and UK companies.

The agreement also settles the question your lawyers will ask first. Versatile Club is the sole legal employer, and your company directs the work.

Primary hiring cities

The primary hiring cities, from the Contract-to-Hire record, are Bengaluru, Hyderabad and Pune. Versatile Club serves companies hiring from the US and hiring from the UK, and invoices in USD from its Indian entity.

What the law says

India's four Labour Codes now set the rules for wages, social security, workplace conditions and industrial relations. Tax on salary sits under the Income-tax Act, 2025, and professional tax under each state's law. Each duty below falls on the legal employer. These were checked against the original documents on 29 October 2026.

Rates and deadlines for India employers

These are the figures a US company meets when it employs in India, each with the instrument that sets it. The India statutory rates and thresholds reference holds the full set.

Worked example: one engineer in Bengaluru

Here is how the rules play out for one hire. The salary is a round sample figure, not a quote or a benchmark.

Say you employ a software engineer in Bengaluru at a monthly gross of ₹50,000. Basic is ₹25,000, and HRA plus allowances make up the other ₹25,000. The allowances are exactly one-half of pay, so nothing is added back under the 50% wage rule, and wages stay at ₹25,000.

1. Provident Fund. Wages of ₹25,000 sit at the ₹25,000 ceiling. At 12%, the employer pays ₹3,000 on top of gross, and ₹3,000 comes out of the engineer's salary.
2. ESI. A gross of ₹50,000 is above the ₹21,000 coverage limit, so ESI doesn't apply to this hire.
3. Professional tax. A monthly gross of ₹50,000 is above Karnataka's ₹25,000 exemption threshold, so professional tax is deducted.
4. Gratuity, if they stay five years. Fifteen days' wages is ₹25,000 ÷ 26 × 15 = ₹14,423 per year under section 53. After five years, that is ₹72,115.

Salary tax depends on the engineer's own tax position, so it isn't computed here. To estimate the full employer cost for a salary you have in mind, use the India employee cost calculator.

How to hire Indian developers and programmers

Most US founders who look to hire Indian developers want React and Flutter developers, app developers, ML engineers or full-stack programmers. Hiring Indian coders follows the same legal path whatever the stack. A developer is an employee like any other, with the same PF, tax and contract duties.

Contractor developer or employee

Many first India developers start as contractors found through a marketplace or a referral. That works for a short project. Once the developer works full time, only for you and inside your team, the arrangement starts to look like employment. Moving them onto an EOR payroll keeps the person and the work, and changes the legal employer.

Versatile Club's Contract-to-Hire service follows that pattern: start as a contractor, convert to a full-time employee when ready. The contractor conversion planner maps the switch for an existing team.

Who owns the code

For a software company, code ownership decides whether your product is really yours. An employee's code made in the course of employment belongs to the employer under the Copyright Act, unless an agreement says otherwise. With an EOR, the employment contract and the service agreement pass that ownership on to your company.

What to settle before the offer goes out

• Salary structure. Basic should be at least half of total pay, so the PF and gratuity figures in your budget hold.
• Start date. Developers often serve notice with a current employer, so agree the date before day one of onboarding.
• Where they will work. Professional tax follows the state where the person works, so a Pune hire and a Bengaluru hire differ.
• Fixed term or open-ended. A fixed-term contract is lawful, on equal terms with permanent staff.
• Code and confidentiality. Confirm the IP terms in the employment contract before signature.

Our primary hiring cities are Bengaluru, Hyderabad and Pune. The EOR guide for AI companies covers ML and research engineering hires.

What it costs

Versatile Club charges a flat monthly fee per employee, with no setup fee and no exit fee, and the first month is free for new hires. The figures are on the pricing page.

The employer's statutory costs come on top of salary. The largest is usually the employer's PF share, shown in the worked example above.

What goes wrong and what to check

• Salary reaches the employee after the seventh day. The wage slip is late or missing, and a September salary arrives after 7 October. Check the monthly compliance status report for what is filed and what is due.
• A full-time contractor starts to look like an employee. The risk shows when one person works full time for one company, on its hours and tools. Take the misclassification quiz, or convert the person to an employee through an EOR.
• Allowances run above half of total pay. The excess counts as wages, so PF and gratuity come out higher than your budget assumed. Check the salary structure before the offer goes out.
• Professional tax follows the wrong state. Thresholds and payment dates differ by state, and Karnataka's is the 20th of the following month. Confirm where the employee works before onboarding.
• Final wages go out late. Wages due on resignation or removal must be paid within two working days. Ask for the Full and Final settlement before the last day.

Common questions

Can a US company hire employees in India without an Indian entity?

Yes, through an Employer of Record. The EOR's Indian company employs your team and files their statutory contributions. Versatile Club's EOR service employs your team on Foo Falcon Technologies Pvt Ltd.

Can a foreign company hire employees in India directly?

Only through an Indian company that acts as the employer. That can be the foreign company's own Indian subsidiary or an Employer of Record. A UK, Singapore or US parent faces the same choice.

Who is the legal employer under Versatile Club's EOR service?

Foo Falcon Technologies Pvt Ltd, the registered Indian company that operates Versatile Club. As your Employer of Record, it files your employees' PF, ESI, TDS and professional tax under its own registrations.

How long until a new hire is on payroll?

Five business days from signing the service agreement. That timeline is written into the agreement as a commitment, and the employee is active on payroll on day five.

Can we hire independent contractors in India instead?

Yes, for genuine project work. A contractor who works full time for you alone, inside your team, carries misclassification risk. Converting them to employees through an EOR keeps the same person and removes that risk.

Are fixed-term employment contracts allowed in India?

Yes. The Industrial Relations Code allows written fixed-term contracts, but hours, wages and benefits can't fall below those of comparable permanent staff. Fixed-term staff qualify for gratuity after one year.

When must salaries be paid in India?

For monthly pay, before the seventh day of the following month, under the Code on Wages. Each payment comes with a wage slip.

Who owns code written by a developer we employ in India?

The employer owns code made in the course of employment, unless an agreement says otherwise. Through an EOR, the contracts pass that ownership to your company. A contractor needs a written assignment.

What do we receive each month?

One USD invoice with a cost breakdown per employee, a payroll summary showing gross, deductions and net pay, and a compliance status report. PF and ESI challan confirmations and TDS deposit receipts come with it.

Which parts of India does Versatile Club cover?

All 28 states and 8 union territories, with registrations in every state. It is an India-only EOR and works nowhere else.

What does Versatile Club charge?

A flat monthly fee per employee, with no setup fee, no exit fee and the first month free for new hires. The figures are on the pricing page linked under what it costs, above.

How do I hire Indian workers from abroad?

Choose a legal route first: a contractor agreement, an Employer of Record or your own Indian company. With an EOR, you pick the person, and the EOR issues the offer and contract, registers them for PF and pays them monthly.

Is a PEO the same as an EOR in India?

No. A PEO shares employer duties with a company that is already the employer. A foreign company with no Indian entity can't be that employer in India, so an EOR takes on the whole role.

How do we reach the Versatile Club team?

Write through the contact page. Tell the team how many people you plan to hire, and where in India.

About this documentation

Each page shows who it applies to, its status and the date it was last checked. Statutory figures link to the original government document they come from. Versatile Club is a service, so these pages describe what the team does and what you receive. Terms you don't know are in the India EOR and payroll glossary.