EOR vs Own Entity: The Cheapest Legal Way to Hire in India
An EOR runs $99–$699 per employee monthly; a subsidiary costs $60K–$105K a year to operate. The real 12-month math, the crossover headcount, and a third option most comparisons skip.
Quick answer: For 1–15 hires in India, an EOR (employer of record) is almost always cheapest and fastest: service fees run $99–$699 per employee per month (Wisemonk, 2026) with hiring possible in days. Your own entity wins at scale: setup is only ₹1.5–6L, but running it costs $60K–$105K a year all-in (Husys' 12-month comparison) in compliance, accounting and administration — a fixed cost that only makes sense spread over 15–25+ employees.
The real 12-month math (one engineer, then twenty)
| Route | Year-1 cost structure | Break-even logic |
|---|---|---|
| EOR | Salary + $99–$699/employee/month fee; zero setup | Cheapest below ~15 heads; scales linearly |
| Own entity | Salary + ₹1.5–6L setup + ₹1.8–3.5L+/yr compliance run-rate + management time | Fixed overhead amortizes past ~15–25 heads |
| Contractors | Invoice rates typically above employed cost; misclassification risk | Short projects only — Husys prices 1 Bangalore engineer at $24.6K–$32.6K/yr vs $21.2K via EOR |
What the EOR fee actually buys
- Legal employment, payroll, TDS, PF/ESI and statutory compliance under the EOR's Indian entity;
- Compliant contracts and terminations (the expensive thing to get wrong in India);
- Speed: offer-to-onboarded in days, not the months an entity takes;
- Clean exit: no entity to wind down if plans change.
Rates vary widely — India-specialist providers charge $99–$399/employee/month while global platforms bill $400–$650 for the same country — so quote at least three.
When the entity genuinely wins
- Headcount 15–25+ and growing: the fixed compliance base beats per-head fees.
- IP-sensitive work where you want employment and IP assignment inside your own group structure.
- Long-horizon India strategy — building a brand employer presence, claiming R&D incentives, opening a GCC (see our Pune GCC guide).
The third option comparisons skip
A managed dedicated team: a provider recruits, employs and houses your named, full-time India staff — but unlike a plain EOR also handles sourcing, workspace, IT, HR and retention, at India economics. You get EOR-grade legal simplicity plus the operational layer an EOR never touches. That is our offshore hiring model: you interview and select every hire, we run everything else, typical all-in savings of 40–60% versus equivalent US/UK cost.
Decision rule
- 1–5 hires, speed matters: EOR (or managed team if you also want sourcing + management).
- 5–15 hires: managed dedicated team — the operational overhead is now real, and it's what you're not staffed for.
- 15–25+ hires, permanent commitment: incorporate — and consider EOR-first for the transition period.
Frequently asked questions
Is an EOR legal in India?
Yes — the EOR is the legal employer under Indian law and assumes statutory obligations (PF, ESI, gratuity, TDS). Verify the provider employs through its own Indian entity rather than sub-contracting.
What do I still pay besides the EOR fee?
The employee's full gross salary plus statutory employer costs (typically 12–18% over gross), and usually extras like group medical insurance. The fee covers administration, not compensation.
Can I move from EOR to my own entity later?
Yes — standard practice: employees transfer to your new entity once it exists. Negotiate transfer terms into the EOR contract upfront to avoid exit fees.
Yash founded Growth Hacking® in Pune in 2014 and leads the strategy behind the playbooks our teams run for 500+ clients across 25+ countries.
