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Compare EOR employment with an Indian subsidiary using a transparent cost model and a practical transfer plan. Learn how hiring pace changes break-even, where tax risks remain, and what employers in the USA, UK, Australia, New Zealand and India should check before choosing a structure for the team.
An Employer of Record lets you employ people in India through a third-party Indian employer. A subsidiary is an Indian company your business owns and uses to employ people directly. An EOR usually suits an initial team or an uncertain hiring plan. A subsidiary becomes more compelling when your operations need a local business entity or the savings justify running one.
The decision is not determined by a universal headcount limit. A five-person operation that needs local commercial contracts can have a stronger case for a subsidiary than a 30-person remote team. And an advertised incorporation price tells you little about the cost of maintaining an employer for several years.
This guide compares both routes for businesses based in the USA, UK, Australia, New Zealand and India. We compare the responsibilities and costs of each route. We also explain what employees need when you move between structures.
Research checked on 19 October 2026. Cost scenarios are illustrative calculations, not market averages or provider quotations. Legal outcomes depend on the actual arrangement and applicable law.
The main difference is which organisation employs your India team and who owns that organisation. With an EOR, you purchase an employment service. With a subsidiary, you own the Indian employer and take responsibility for operating it.
| Decision Point | EOR in India | Indian Subsidiary |
|---|---|---|
| Legal employer | The provider's Indian employing entity | Your group's Indian company |
| Daily work | Your managers normally direct the team | Your managers direct the team |
| Employment administration | Delivered under the EOR agreement | Managed internally or through vendors |
| Indian company ownership | You do not acquire an entity through the service | Your group owns or controls the entity |
| Local commercial operations | EOR employment alone does not establish your own local trading entity | Company can conduct permitted business and enter its own contracts |
| Cost structure | Employment costs plus service fees and agreed extras | Employment costs plus setup and recurring entity overhead |
| Employment changes | Require coordination with the legal employer | Your company implements them within Indian law |
| Exit | Employment settlement and provider contract closure | Employment settlement plus any entity closure obligations |
Your business normally manages work and performance, while the EOR administers the employment relationship. The service agreement should specify which decisions require consultation or approval.
Your engineering manager can assign a sprint and assess delivery. That does not mean the manager can promise a change to contractual notice or direct an immediate dismissal. Those decisions affect an Indian employment contract and must follow the applicable process.
Before onboarding, agree how pay reviews reach payroll, who approves leave and who handles grievances. Include an escalation route when your manager’s instruction conflicts with the provider’s legal assessment. Peorient’s guide to how an Employer of Record works explains the basic relationship.
No. A subsidiary is a separate company. A branch is part of its foreign company, while a PEO label describes a service arrangement whose legal structure needs checking.
Do not choose an India arrangement from its marketing name. Providers sometimes use “international PEO” for a service that functions as an EOR. In other arrangements, your existing company remains the employer and buys HR administration. Ask whose name appears on the employment agreement and which entity remits payroll deductions.
Peorient’s EOR versus PEO comparison helps frame the questions. The signed documents determine the arrangement you actually buy.
Choose an EOR when you need employment capability before you need an owned Indian company. It is particularly useful when hiring is urgent or the future size of the team remains uncertain.
The advantage is avoiding an entity setup dependency for the initial hires. It does not remove the need to review what those employees will do in India.
Yes, if the provider can support the roles and your tax review supports the operating model. An initial remote team can begin without your group establishing its own Indian employer.
Consider a UK software company hiring four developers. It has no approved India sales plan and will decide whether to expand after a product milestone. Paying a service fee can be reasonable because the company has not committed to maintaining an Indian entity after that milestone.
Ask what happens if the team doubles or the project ends. A low monthly price loses value if the agreement contains a long minimum term or expensive employee conversion charges. The relevant comparison is the cost over the likely project life, including exit.
It can, subject to the provider’s capacity and the legal suitability of the arrangement. There is no universal commercial rule that every company must leave EOR at 20, 50 or 100 employees.
For a larger team, examine local HR capacity and payroll controls. Ask how the provider supports staff across different states and what happens if it cannot fund payroll on time. Negotiate audit rights and a documented transfer process before dependence grows.
A subsidiary may still be preferable because of economics or operating requirements. But the trigger should come from your cost model and business activity, rather than a headcount number copied from another company.
A subsidiary becomes more useful when the Indian operation needs to act as a business in its own right or when sustained savings justify the additional administration. Headcount matters because it changes costs, but operating requirements can decide the structure earlier.
An EOR does not, by itself, provide your company with an Indian entity that can issue local customer invoices. If your sales model requires an Indian contracting party, evaluate a subsidiary or another permitted business presence.
This is different from saying every overseas sale to an Indian customer requires incorporation. Cross-border sales can have other structures and their own tax consequences. Map the proposed transaction before deciding which entity should sell.
For an India sales hire, document who negotiates terms and who can bind the overseas business. A person described as “business development” may create different exposure from someone who only researches potential customers. The job title does not settle the tax analysis.
An owned entity is often a stronger fit for a committed Global Capability Centre, particularly when the group needs its own local management and infrastructure. It is also the natural starting point for direct employment if your business already has a suitable Indian company.
A GCC is an operating model, not a separate legal form. A group can use EOR to recruit an early team while preparing its entity. The longer-term choice should reflect what the centre will own and the work it will perform. Peorient’s GCC guide provides background on that operating model.
For an India-headquartered business, first ask whether an additional subsidiary is needed at all. Existing company payroll with outsourced administration may meet the requirement. A separate subsidiary needs a business reason, such as a distinct investment or operating structure. Foreign-investment reporting applies where relevant foreign investment exists, not merely because an Indian business opens another office.
An EOR can usually remove incorporation from the hiring timetable. A subsidiary requires a sequence of corporate and operational steps before it can reliably run employment and payroll.
Treat delivery dates as written project commitments. Neither route overrides a candidate’s existing notice obligations.
Contract review and payroll readiness can delay onboarding even when the employing entity already exists. Ask the provider to confirm the earliest achievable start after receiving a complete employee file and cleared funding.
Check these items before promising a date:
A candidate’s notice period can remain the longest step. Peorient’s notice period buyout guide explains why a buyout should be agreed rather than assumed.
A certificate of incorporation establishes the company, but payroll also needs functioning banking and completed employer processes. Plan the first salary date around operational readiness.
A subsidiary project normally includes preparing the foreign parent’s documents, completing incorporation and establishing the funding route. The company then needs the registrations and employment procedures relevant to its activities and locations. The Ministry of Corporate Affairs describes the integrated application process in its SPICe+ incorporation FAQs.
Request separate dates for incorporation, bank activation and first payroll. An adviser’s estimate should state when the clock starts and what depends on another organisation. Bank due diligence and document legalisation can make the full project longer than the filing stage.
If hires cannot wait, compare the cost of temporary EOR employment with the commercial cost of delaying their work. Use a project-specific estimate for delay rather than treating salary as a measure of lost revenue.
Compare equivalent employment packages first, then calculate the additional cost of each structure. Salary remains a cost under both routes, and statutory obligations do not disappear when you own the employer.
We recommend using a monthly forecast for the first 24 months. Show cash funding separately from expenses so deposits and share capital do not distort the result.
Include the same salaries and benefits on both sides unless the offer genuinely changes. Also account for recruitment and equipment consistently.
Use a common employment budget covering gross pay, employer contributions, insurance and applicable benefit provisions. If one proposal starts with CTC and another starts with gross salary, reconcile the components before comparing them. Avoid adding employer contributions twice when they are already included in CTC.
For a detailed breakdown, use Peorient’s Employer of Record cost guide for India. The calculations below isolate the structure-related costs so you can see what changes when you switch employers.
The EOR side needs the complete provider price. The subsidiary side needs the cost of running the company, including internal time that would otherwise be hidden.
An EOR proposal should disclose its recurring fee and any salary-linked pricing. Ask about minimum billing, onboarding charges, currency conversion, exceptional payroll work and termination administration. Confirm whether local HR support is included.
For a subsidiary, obtain an itemised setup quote and a recurring operating budget. Cover accounting and audit, corporate filings, tax administration, employer compliance and payroll support. Add the cost of internal coordination and any resident director arrangement. Transfer-pricing work belongs in the estimate where intercompany transactions require it.
Do not compare an EOR’s full employment service with a subsidiary’s bookkeeping retainer. They may cover very different work. Equally, do not charge a large office and a full HR department only to the subsidiary if the same team would need them under EOR.
The two first-party price pages checked below show why you should use your own quote in a subsidiary comparison. They are a small pricing sample, not the lowest and highest prices available in India.
| Provider Source | Published EOR Fee Checked on 19 October 2026 | Annual Fee for 10 Employees at That Price |
|---|---|---|
| Remunance pricing | Starting from US$99 per employee per month | US$11,880 |
| Deel pricing | US$599 per EOR employee per month | US$71,880 |
The annual figures are price × 10 employees × 12 months. They exclude employment costs and any separately charged items. Remunance’s figure is a starting price, and Deel’s page publishes a global EOR price. Confirm the available India package and contractual terms. These figures are not directly comparable quotations for an identical service.
The US$60,000 annual difference between these two calculations is large enough to change a structure decision. Do not translate that difference into a provider recommendation without comparing delivery scope. The rupee model below uses independent assumptions rather than an unstated exchange rate to convert these advertisements.
In the illustrative model below, the subsidiary becomes cheaper in year one at 10 employees, provided they are employed for the whole year. This result follows from the selected assumptions and is not an India-wide threshold.
Model inputs:
The fixed overhead is a modelling allowance for the entity and its support resources. Replace it with scoped quotations. Common employment costs, premises and equipment are excluded from both sides. Tax differences, financing costs and eventual exit costs are also excluded from this initial comparison and must be added before approving a decision.
| Employees for 12 Months | Annual EOR Fees | First-Year Subsidiary Structure Cost | Lower Structure Cost |
|---|---|---|---|
| 5 | ₹12.00 lakh | ₹23.10 lakh | EOR by ₹11.10 lakh |
| 10 | ₹24.00 lakh | ₹23.70 lakh | Subsidiary by ₹0.30 lakh |
| 20 | ₹48.00 lakh | ₹24.90 lakh | Subsidiary by ₹23.10 lakh |
| 40 | ₹96.00 lakh | ₹27.30 lakh | Subsidiary by ₹68.70 lakh |
Calculation: first-year subsidiary cost = ₹4.50 lakh + ₹18 lakh + employees × ₹1,000 × 12. These are nominal rupee costs with no inflation or discounting.
The ₹30,000 first-year advantage at 10 employees is small enough to disappear with an extra advisory bill or a delay in hiring. A narrow arithmetic win is a reason to investigate, not sufficient evidence to move.
Divide the subsidiary’s annual fixed cost, including annualised setup costs, by the annual per-person saving versus EOR. Use the same service scope and time horizon for both routes.
Let F be annual fixed subsidiary overhead, S be one-time setup cost and T be the comparison horizon in years. Let E be the monthly EOR fee per employee, and V the subsidiary’s monthly variable administration cost per employee.
Break-even headcount = (F + S ÷ T) ÷ [12 × (E − V)]
The formula assumes stable headcount and excludes costs that are identical under both routes. It also assumes E exceeds V. If the two are equal, there is no per-person administration saving to recover the subsidiary’s fixed cost.
With F = ₹18 lakh, S = ₹4.50 lakh, V = ₹1,000 and a two-year horizon:
| Monthly EOR Fee | Calculated Break-Even | First Whole Headcount Above Break-Even |
|---|---|---|
| ₹10,000 | 18.75 employees | 19 |
| ₹20,000 | 8.88 employees | 9 |
| ₹40,000 | 4.33 employees | 5 |
This sensitivity explains why published headcount recommendations can differ sharply. A lower EOR fee pushes the financial crossover later. A higher subsidiary overhead does the same. Changes in salary only affect this simplified result if they change percentage-based fees or other costs that differ between the models.
You pay EOR fees for actual employee-months, not your year-end headcount multiplied by 12. Using the final team size for the entire year can materially overstate the cost of EOR.
Suppose the team has five employees in the first quarter, then 10, 15 and 20 in successive quarters. That equals 150 employee-months, or an average of 12.5 employees across the year.
At ₹20,000 per employee-month, EOR fees total ₹30 lakh. With the same model inputs, subsidiary structure costs total ₹24 lakh: ₹4.50 lakh setup, ₹18 lakh fixed overhead and ₹1.50 lakh variable administration. The subsidiary’s first-year advantage is ₹6 lakh.
Using 20 employees for all 12 months would suggest a ₹23.10 lakh advantage. That would overstate the saving by ₹17.10 lakh. Both calculations are arithmetically consistent, but only one follows the stated hiring plan.
A refundable deposit increases funding needs without automatically becoming an expense. Currency charges can increase the actual cost even when the EOR fee stays unchanged.
For example, if a contract requires ₹10 lakh security, show that amount in the cash forecast. If your assumed annual funding cost is 12%, holding it for a year has an illustrative financing cost of ₹1.20 lakh. Do not label the ₹10 lakh itself an annual service charge.
Similarly, a 1% conversion spread on ₹1.20 crore of annual payments is ₹1.20 lakh. Ask which invoice lines the spread applies to and which exchange-rate source is used. Run the same check on subsidiary funding and intercompany payments.
Share capital also needs separate treatment. Money contributed to the subsidiary is funding, not automatically an incorporation expense. What the company spends it on determines the underlying cost.
No. An EOR employment contract does not determine whether the overseas business has a taxable permanent establishment in India. That assessment depends on the activities and the applicable treaty, alongside Indian domestic law.
The question is what your business is doing through the people and premises in India. A payroll intermediary cannot change those facts by calling the arrangement “compliant”.
Review the arrangement before employees exercise commercial authority or operate from premises available to your foreign business. Service delivery can also require analysis even when employees do not sign customer contracts.
The India–US tax treaty includes fixed-place and agency rules, as well as a service provision in Article 5(2)(l). That provision refers to more than 90 days within a twelve-month period in one limb and separately addresses services for a related enterprise. It is not a blanket 90-day exemption for every remote worker.
The UK–India treaty’s Article 5 also contains service provisions. Its text includes more than 90 days generally and more than 30 days for the specified associated-enterprise case. The service scope and exclusions matter as much as the day count.
Ask a tax adviser to review the proposed activity before assigning a label to the risk. Include reporting lines, customer involvement, office access and authority to negotiate. Record the assumptions and revisit them when the role changes.
No. A subsidiary provides a separate Indian taxpayer, but the parent’s own activities still need analysis. Incorporation is not a certificate that the parent can never have an Indian taxable presence.
A sensible structure documents which company performs the work and which company contracts with customers. Intercompany agreements should reflect actual behaviour. Visiting executives and staff acting for the parent can raise questions beyond the subsidiary’s payroll obligations.
The practical comparison is the cost of operating each structure with the required controls. Avoid assigning “zero PE risk” to either option.
A subsidiary adds corporate obligations alongside employment administration. It also introduces investment reporting where foreign capital is involved and intercompany tax questions where it transacts with overseas group companies.
With EOR, the provider administers its own company and the agreed employment processes. Your business still needs to review its own tax position and monitor the provider’s performance.
A conventional Indian private company needs at least two members and two directors. At least one director must meet the India stay requirement of 182 days during the financial year, applied proportionately for a newly incorporated company.
These requirements come from sections 3 and 149 of the Companies Act 2013. Residence is a stay requirement, not a requirement that the director hold Indian citizenship. A wholly owned group structure must still satisfy the applicable membership rules.
The Consolidated FDI Policy permits up to 100% foreign investment through the automatic route in unlisted permitted sectors, subject to applicable conditions. Check the actual activity and subsequent amendments. Investor and beneficial-owner circumstances can change the approval route.
Under the RBI’s foreign-investment payment and reporting regulations, equity instruments generally must be issued within 60 days of receiving the consideration. FC-GPR reporting is due within 30 days of issue. The annual FLA return is generally due by 15 July where applicable. These deadlines make ownership a continuing administrative commitment.
A subsidiary serving its overseas parent needs support for its intercompany pricing and its Indian taxable income. Removing the EOR fee does not mean the parent can simply reimburse salaries without reviewing the tax treatment.
The Income Tax Department’s advance pricing agreement guidance explains the arm’s-length principle for international transactions. The appropriate remuneration depends on the subsidiary’s functions and risks. A cost-plus margin should not be selected just because another company uses it.
For group budgeting, distinguish the invoice between group companies from costs paid outside the group. An intercompany markup is not automatically an additional consolidated operating expense. But tax on the subsidiary’s profit and the cost of maintaining documentation can affect the group’s economics.
Also use the correct tax-year framework. The department’s Income-tax Act 2025 transition FAQs confirm the new Act applies from 1 April 2026, with transitional treatment for earlier periods. Do not reuse an old filing checklist solely because a blog has changed its title to “2026”.
No. GST depends on the actual supply and the conditions for its treatment, not simply on which employment structure you choose. Obtain a written explanation of the proposed invoice treatment.
CBIC Circular 161/17/2021-GST clarifies that an Indian subsidiary and its foreign parent are separate persons for the relevant export-of-services condition. Their relationship does not, by itself, prevent export treatment. The remaining export conditions must still be satisfied.
Apply the same discipline to EOR invoices. Confirm the contracting parties and the nature of the service. Ask whether tax is charged, on which value, and whether any credit or refund is available to the recipient. A blanket claim that every foreign-client EOR invoice is GST-free is inadequate.
Compare the tax that ultimately remains a cost. Separately model the cash timing of recoverable tax. Those figures can differ.
Both routes must operate under the applicable Indian employment framework. An EOR changes who performs employment administration, while a subsidiary places that work within your company or its appointed vendors.
The Labour Ministry’s March 2026 FAQs on the Labour Codes refer to implementation from 21 November 2025. Advice that treats the Codes as wholly unimplemented is therefore outdated. Applicable rules and state requirements still need checking for the specific workplace.
No. Naming part of a package an allowance does not decide whether it is excluded from the statutory wage base. The calculation must follow the law applicable to that payment.
The ministry’s FAQs discuss the 50% wage calculation and the add-back of specified exclusions above the permitted limit. They also distinguish gratuity and other components when explaining remuneration. “Basic pay must equal 50% of CTC” is an oversimplification of that calculation.
Require the EOR and your subsidiary payroll adviser to show their wage-base assumptions. If they produce different statutory costs for the same person, resolve the reason before treating the difference as a saving. Also check work-state rules using Peorient’s Shops and Establishments registration guide and India leave policy guide.
No. The provider’s legal duties and your contractual payment obligations are different questions. An EOR agreement can require your business to fund lawful termination costs and indemnify the provider for specified events.
Review the contract for liability caps and exclusions. Establish who pays for payroll errors, delayed funding and claims arising from your managers’ conduct. An indemnity allocates costs between contracting parties. It does not remove an employee’s statutory rights.
Do the same exercise for a subsidiary’s outsourced payroll vendor. Paying a processor does not transfer every obligation away from your company. Compare the evidence and remedies available under each agreement.
The Indian employment analysis is only one part of the decision. Your home jurisdiction affects treaty access and the reporting consequences of owning an overseas company.
Do not group Australia and New Zealand into one tax analysis because they share an ANZ commercial region. They have separate treaties and domestic rules.
A US business should assess the India–US treaty and the US reporting consequences of owning an Indian corporation. Using EOR and owning a subsidiary create different corporate reporting facts.
The IRS explains that specified US persons with roles or ownership interests in foreign corporations may have Form 5471 filing obligations. Ask your US adviser to scope the filings and tax treatment before comparing subsidiary overhead with an EOR fee.
A US parent’s employment policies also need local adaptation. Do not assume an at-will termination clause can be carried into an Indian employment agreement unchanged.
A UK business should review the current UK–India treaty text and the actual services performed in India. The relevant permanent-establishment analysis cannot be replaced by a generic statement about “remote employees”.
Use the official UK–India treaty collection, including the synthesised text reflecting the Multilateral Instrument. Give the adviser the real operating plan rather than only the provider’s contract.
Where the India team accesses UK personal data, include that access in your privacy review. Ask which organisation receives employee information and whether client data is accessible through managed devices. The employment model does not settle those questions.
Each should assess its own treaty and home-country rules. Australia’s treaty materials and New Zealand’s treaty materials should not be treated as interchangeable.
Australian businesses can start with the Treasury’s income tax treaty register. New Zealand businesses should use Inland Revenue’s India tax treaty collection, which identifies the agreement and protocols.
Ask local advisers to review overseas ownership reporting and intercompany transactions where a subsidiary is proposed. For an EOR arrangement, assess the overseas company’s activity in India. On the operating side, define meeting hours so a convenient overlap does not become routine unrecorded overtime for India staff.
Both models need documented rights to work product and controls over data access. A subsidiary shortens some contractual relationships, but ownership does not automatically pass to the overseas parent merely because it funds the work.
It can hold the necessary rights if the contractual chain is properly structured. A service invoice and a confidentiality clause alone do not establish a complete copyright assignment.
The Copyright Act’s ownership and assignment provisions are relevant. Section 17 addresses employer ownership in specified employment circumstances, subject to exceptions and agreement. Section 19 requires a written assignment identifying the work and rights, including duration and territory. Where those details are omitted, statutory defaults can apply, including five years for duration and India for territory.
Have counsel check the employee agreement and the EOR-to-client assignment together. Include future work where appropriate. Patents and inventions need their own review. Under a subsidiary model, document any onward assignment or licence to the parent rather than assuming group ownership is enough.
No. Your business still needs to control access to its systems and define how personal data is handled. The provider’s employee records are only part of that picture.
Agree which party decides how data is used, which subprocessors receive it and how incidents are reported. Check device controls and the deletion or return of information when employment ends. Record any customer restrictions on third-party personnel before providing access.
India’s Digital Personal Data Protection Rules 2025 have phased commencement. The published rules place specified provisions on one-year and eighteen-month schedules. As of this article’s review date, it would be inaccurate to describe every rule as already operative. Build the relevant commencement dates into the compliance plan.
Recent public questions focus on employment identity and continuity, alongside the clarity of compensation. Addressing those concerns before an offer is signed can prevent avoidable confusion.
Reddit posts are evidence of questions people ask. They are not verified findings about a provider’s conduct or a representative survey of Indian employees.
The legal employer should be clearly identified, and the client assignment should be explained consistently. Employees need to understand why their payslip may carry a different company name from the team they work with.
A June 2026 discussion about EOR employment documents asked who would issue an experience letter and why the startup’s name was absent from the agreement. A March 2026 discussion about long-term EOR employment raised background verification and PF continuity.
Before hiring, agree who issues employment verification and how the client assignment is described. Keep the employee’s dates and job title consistent across records. Do not promise that a future background-check company will never ask questions. Give the employee the documents needed to answer them.
The signed employment documents should clearly establish the agreed pay and the treatment of benefits. A written annexure can prevent disagreements about a figure discussed separately during recruitment.
An August 2026 discussion about a missing CTC breakdown shows why this matters to candidates. The concern is whether the package they accepted matches the document they are asked to sign.
Ask for a schedule that distinguishes gross pay from employer-funded benefits and deductions. Explain who decides annual increases and when an approved increase reaches payroll. If the client assignment ends, the agreement should explain the applicable employment process rather than leave the employee to infer it.
Plan the move as a change of legal employer with a documented treatment of accrued rights. Completing incorporation alone does not transfer employees or settle benefits.
Start the migration terms when selecting the EOR. Retrofitting them after the relationship becomes difficult can increase both delay and cost.
Agree the commercial exit terms and the employment transfer method before employees receive new documents. A transfer agreement or new employment offer needs to fit the facts and applicable law.
Use the following sequence:
A parallel payroll calculation can reveal mismatches before money moves. It means comparing calculations for the transfer period, not paying two salaries for the same work.
The employee’s existing UAN should be carried into the new employment record, while gratuity and service continuity need separate treatment. PF portability does not automatically settle every employment entitlement.
The EPFO’s UAN member FAQs explain that a UAN is a permanent identifier across jobs. The transition team should verify the new member record and any required transfer, rather than creating a duplicate UAN.
For gratuity, document whether the outgoing employer settles an entitlement or the new employer recognises service under a lawful arrangement. Reconcile the amount funded and the party responsible. A balance in an EOR invoice is not proof that the employee’s legal entitlement has been discharged.
Also avoid treating every EOR employee as a fixed-term employee for gratuity purposes. The ministry’s Labour Code FAQs distinguish direct fixed-term employment from contract labour. Use the actual employment arrangement when deciding the applicable treatment.
Switch when the expected future savings recover the remaining transition investment within a period your business can support. A lower annual cost does not necessarily mean an immediate cash saving.
Using the earlier model, 10 employees generate annual EOR fees of ₹24 lakh. Recurring subsidiary structure costs are ₹19.20 lakh, so annual savings are ₹4.80 lakh. If the remaining setup and migration expenditure totals an assumed ₹7.50 lakh, payback takes 18.75 months after those savings begin.
At 20 employees, annual savings are ₹27.60 lakh and the same expenditure is recovered in about 3.3 months. These calculations exclude ramp-up, financing and tax differences. Use future costs only for a new decision. Money already spent cannot be recovered by changing the comparison.
Both routes require a lawful employment exit. A subsidiary can also require an entity closure process after the team has left.
No. The commercial contract and the employment relationship have separate obligations. The provider must manage the applicable employee process, with the costs allocated under your agreement.
Before signing, request an example exit calculation for your proposed role and work state. Check notice, accrued pay and applicable benefit settlement. Identify the provider’s own administration fee separately.
Peorient’s full and final settlement guide helps identify the components to reconcile. Different payments can have different legal timing, so avoid treating a single contract payment deadline as the deadline for every employee entitlement.
The company can still have filing obligations and unresolved balances. Removing the workforce does not automatically remove the legal entity.
An exit budget should cover the appropriate company closure route and professional work, as well as the settlement of contracts and taxes. Eligibility and timing depend on the company’s condition. Do not assume every company can use a simple strike-off procedure.
Compare an expected exit scenario when the India plan is uncertain. Include the EOR’s contractual closure charges on one side and the entity’s continuing administration on the other. That gives the flexibility of EOR a measurable place in the decision.
Choose the structure that supports the actual work at an acceptable total cost. Use the following questions to make the decision reviewable.
Compare the legal employer and the delivered service alongside the price. A low quote should still make the employment documents and exit process clear.
Use Peorient’s EOR due-diligence checklist to organise the review, then compare the available options in the India EOR provider guide. Ask shortlisted providers to price the same roles and locations so the proposals are comparable.
To discuss your plan, contact Peorient about your India hiring requirements. Share your expected headcount by month and describe what the employees will do. Those details are more useful than asking for the lowest monthly fee alone.
An EOR arrangement must comply with the Indian laws applicable to the actual employment and service relationship. The label itself is not a legal approval. Check the employing entity and relevant registrations, and have counsel assess any contract-labour or principal-employer obligations that arise from the facts.
Yes, subject to a suitable arrangement. Agree migration rights at the start, and keep EOR employment in place until the subsidiary can reliably employ and pay the team. Budget for temporary overlap in provider fees and entity setup work.
Potentially, where there is a clear reason and the arrangement remains suitable. Document which entity employs each person and how costs are allocated. Splitting payroll does not itself resolve tax or employment questions, so review the reason for retaining both models.
Only where the relationship is genuinely appropriate for independent contracting. A contract label does not settle classification. Compare the actual autonomy and working arrangement using Peorient’s employee versus contractor guide, then obtain advice on the proposed roles.
They may be eligible under a suitably designed plan, but eligibility is not automatic. Review the issuer’s plan and the Indian tax and foreign-exchange treatment before making an offer. Direct subsidiary employment can change the analysis, but it does not remove the need to check those rules.
No. It is cheaper only when its relevant recurring costs fall below the EOR costs you would otherwise pay. Low headcount or a low negotiated EOR fee can keep EOR economical for longer. Recalculate using actual monthly staffing and the same service scope.
Written by
Director of Global Hiring Advisory · 6+ years experience
Arjun runs the global hiring advisory practice at Peorient. He previously led APAC operations at an EOR startup and advised at Singapore's EDB, overseeing workforce launches in 18 countries across EOR, PEO, and subsidiary models.
