EOR for Global Companies · India Hiring Guide
India EOR vs. Setting Up a Pvt Ltd: Which Actually Costs Less for Global Companies?
18 May 2026 · By CA Rohit Lohade, ACA · 12 min read · 200+ global companies helped
⚡ In Short
If you are testing the Indian market, start with EOR and migrate to a Pvt Ltd once your team is stable. EOR costs $249 per employee per month — zero setup, zero compliance burden, and you can onboard in 5–7 days. A Pvt Ltd costs $5,000 to set up and $500–750/month to manage, plus $3,000/year in tax filings — but gives you full control and lower per-head cost at scale. On monthly cost alone, the Pvt Ltd breaks even at 3 employees. On total operational burden, EOR is the right call for most companies up to 10 people.
This article is for HR leads, finance directors, and founders at US, UK, EU, and APAC companies who are hiring in India for the first time — or reconsidering a structure they already have.
CA Rohit Lohade’s recommendation: If you are testing the Indian market, use EOR for your first 10 employees. You have zero compliance obligations, no KYC filings, no statutory deadlines to track, and you can release an employee with a standard notice period. When you are ready to commit long-term, migrate to a Pvt Ltd — PeopleEOR manages the full transition. EOR is not a compromise; it is the right structure for an early-stage India presence.
This article covers the real, all-in costs of both options. Not marketing ranges — actual numbers from setting up both structures for global clients. The cost comparison may surprise you: the monthly figures converge at just 3 employees, which means the decision between EOR and Pvt Ltd is rarely about monthly cost alone.
What is India EOR and how does it work?
An EOR — Employer of Record — is a third-party service that legally employs your India-based team on your behalf. Your employees work for you day-to-day. The EOR handles payroll, statutory filings, PF (Provident Fund — India’s mandatory employer-side retirement contribution, currently 12% of basic salary), ESI (Employees’ State Insurance — health coverage for employees earning under ₹21,000/month), and all HR compliance under Indian labour law.
You do not need to register a company in India. You do not need a local bank account, a director, or a registered office address.
PeopleEOR charges $249 per employee per month — flat, with no setup fee and no hidden per-transaction charges.
What does it cost to set up an Indian Private Limited company?
Setting up a Pvt Ltd — Private Limited company, India’s most common corporate structure for foreign-owned subsidiaries — costs $5,000 in one-time setup fees and takes 25–40 days.
That setup cost covers name reservation, DIN (Director Identification Number) applications, DSC (Digital Signature Certificate — India’s legally binding electronic signature), MOA/AOA drafting (Memorandum and Articles of Association — the company’s founding documents), ROC registration with the Ministry of Corporate Affairs, and all initial compliance registrations (PF, ESI, Professional Tax, TAN).
After registration, ongoing management costs $500/month for teams up to 10 employees, or $750/month for teams of 11–20 employees. On top of this, annual tax filing costs $3,000/year — bringing the true annual overhead to $9,000/year (up to 10 employees) or $12,000/year (up to 20 employees).
What are the full ongoing costs of India EOR vs Pvt Ltd?
The honest comparison requires accounting for every cost — not just the headline EOR monthly fee or the one-time company registration charge.
EOR: All-in cost structure
| Cost item | Amount |
|---|---|
| Setup fee | $0 |
| Monthly fee per employee | $249 |
| Payroll processing | Included |
| PF employer contribution (12% of basic) | Included |
| ESI employer contribution (3.25% of gross, where applicable) | Included |
| HR compliance management | Included |
| Annual tax filing | $0 (handled by EOR) |
| Cost for 5 employees/month | $1,245 |
No fixed overhead. No annual filing fee. Cost scales precisely with headcount.
Pvt Ltd: All-in cost structure
| Cost item | Up to 10 employees | Up to 20 employees |
|---|---|---|
| One-time setup | $5,000 | $5,000 |
| Monthly management fee | $500 | $750 |
| Annual tax filing | $3,000/year | $3,000/year |
| Effective monthly cost (incl. tax filing amortised) | $750/month | $1,000/month |
The $3,000 annual tax filing fee, spread across 12 months, adds $250/month to the real cost. The figures above use effective monthly cost — the number that matters when comparing against EOR on a per-month basis.
At what headcount does a Pvt Ltd become cheaper than EOR?
With PeopleEOR’s EOR fee of $249/employee/month and a Pvt Ltd effective monthly cost of $750 (for up to 10 employees), the crossover happens at 3 employees.
| Headcount | Monthly EOR cost | Pvt Ltd effective monthly cost | Pvt Ltd cheaper? |
|---|---|---|---|
| 1 employee | $249 | $750 | No — EOR cheaper by $501 |
| 2 employees | $498 | $750 | No — EOR cheaper by $252 |
| 3 employees | $747 | $750 | Break-even |
| 4 employees | $996 | $750 | Yes — cheaper by $246/month |
| 6 employees | $1,494 | $750 | Yes — cheaper by $744/month |
| 10 employees | $2,490 | $750 | Yes — cheaper by $1,740/month |
| 15 employees | $3,735 | $1,000 | Yes — cheaper by $2,735/month |
At 4 employees, the Pvt Ltd saves $246/month over EOR. The $5,000 setup cost is recovered in approximately 20 months at that headcount. At 6 employees, setup cost recovery takes under 7 months.
For a team that starts at 4 and grows to 10 within 18 months, the Pvt Ltd saves approximately $8,000–12,000 over the same period — after accounting for the $5,000 setup cost.
How long does each option take to set up?
EOR takes 5–7 business days to onboard the first employee. Some providers complete onboarding in 3 days for standard employment contracts. There is no government filing required on your side.
A Pvt Ltd takes 25–40 days from start to Certificate of Incorporation. The breakdown: name reservation via RUN (Reserve Unique Name) takes 1–3 days, DIN and DSC processing takes 3–7 days, and ROC incorporation filing takes 15–25 days for approval. Bank account opening adds another 7–14 days after incorporation.
The practical implication: if you need someone hired in India within 2–3 weeks, EOR is your only viable route. The Pvt Ltd timeline is fixed — no amount of urgency shortens the ROC approval window.
What are the compliance obligations under each option?
Under EOR, your compliance obligations in India are effectively zero. The EOR is the legal employer. They file all returns, handle labour law compliance, manage terminations, and bear the risk of non-compliance. You receive a single invoice each month.
Under a Pvt Ltd, your company is the legal employer. Monthly filings include TDS returns (Tax Deducted at Source — due by the 7th of every month), PF ECR (Electronic Challan cum Return — the monthly PF contribution statement, due by the 15th), and GST returns (if applicable, due by the 20th). Quarterly advance tax payments are due in June, September, December, and March. The annual tax filing — covered under the $3,000/year fee — includes the statutory audit, income tax return, and ROC annual return.
Missing any of these deadlines triggers penalties. TDS defaults carry 1.5% per month interest. ROC late fees run ₹100/day per document. These are not hypothetical — they are the most common avoidable costs we see global companies incur in year one.
What does each option include for employee benefits?
Both EOR and Pvt Ltd structures must comply with the same Indian statutory benefits. These are not optional:
- PF (Provident Fund): 12% employer contribution on basic salary, mandatory for employees earning under ₹15,000/month basic; typically provided to all salaried employees in practice.
- ESI (Employees’ State Insurance): 3.25% employer contribution on gross salary, mandatory for employees earning under ₹21,000/month gross.
- Gratuity: 4.81% of basic salary accrual per year, payable after 5 years of service.
- Leave encashment: Statutory earned leave of 21 days/year.
Under EOR, these are calculated and remitted by PeopleEOR. Under a Pvt Ltd, you calculate and remit these directly — or through your compliance vendor. The statutory benefit cost is identical under both structures.
What do most providers not tell you about these costs?
What the EOR brochures leave out
Most EOR providers quote a per-employee monthly fee as the full story. Three costs that are often disclosed only in the small print:
- Offboarding fees: $200–500 per employee termination is standard across most EOR providers. PeopleEOR’s fee structure is disclosed upfront — ask before signing.
- Currency conversion markup: If employees are paid in INR but you pay in USD, check whether the FX rate includes a 1–3% markup above the mid-market rate. On a ₹15 lakh annual salary, that adds $300–800/year in hidden cost.
- Benefits administration add-ons: If you want group health insurance beyond statutory ESI, some EORs charge a separate administration fee of $30–80/employee/month — outside the base EOR fee.
What the accountants leave out about Pvt Ltd
The $5,000 setup cost and $500–750/month management fee are the figures most firms quote. Four costs that rarely appear in initial proposals:
- Virtual office address: Required for ROC registration if you have no physical India office. Typically $120–360/year — not always included in setup quotes.
- Director KYC renewal: Every Indian company director must renew their DIN KYC annually by September 30. A missed renewal deactivates the DIN; reactivation costs ₹5,000 per director.
- FEMA compliance for fund transfers: Every transfer of money from your foreign parent to your Indian subsidiary must be reported to the RBI within 30 days as a foreign investment. Missing this filing triggers compounding penalties of $500–3,000 per instance — the single most expensive mistake we see first-time India operators make.
- Transfer pricing documentation: If your Indian subsidiary transacts with your parent company — management fees, software licences, intercompany services — you need annual transfer pricing documentation from a Chartered Accountant. Cost: $800–2,500/year, separate from the standard annual tax filing fee.
Real case study: US fintech company, 5 employees in India
? Case Study
A US-based fintech startup with 45 employees globally engaged PeopleEOR to hire their first 5 India-based engineers in early 2025. Their initial plan was to use EOR for 6 months and then evaluate a Pvt Ltd.
What they needed: 5 developers onboarded fast, with the option to scale to 12 within a year. Budget was a key constraint — they wanted India costs to be predictable.
What happened: EOR onboarding for all 5 engineers was completed in 8 days. At month 3, reviewing their 12-month cost projection, they realised the break-even with a Pvt Ltd was at 3 employees — meaning they were already paying more than an entity would cost month-on-month. They began the Pvt Ltd setup process at month 4.
The outcome: The Pvt Ltd was operational by month 6. They transitioned all 5 employees from EOR to the new entity, with PeopleEOR managing the employment transfer. The $5,000 setup cost was recovered within 5 months of the transition, by which point the team had grown to 7 employees.
Cost comparison — first 18 months:
- EOR cost (months 1–6, 5 employees): $7,470
- Pvt Ltd setup cost: $5,000
- Pvt Ltd management cost (months 7–18, average 8 employees): $6,000 + $3,000 tax filing = $9,000
- Total via EOR + transition to Pvt Ltd: $21,470
- Estimated cost if EOR used for full 18 months: $35,856
“At $249/employee/month, the EOR fee is low enough that the Pvt Ltd crossover happens at just 3 employees — earlier than with almost any other provider. But the $5,000 setup cost means EOR still makes sense for the first 3–6 months while you validate the India hire. The optimal play: use EOR to hire fast, then build the Pvt Ltd in parallel once you know the team is permanent.” — CA Rohit Lohade
8 days
Time to first hire via EOR
3 employees
Break-even crossover point
$14,386
Saving from transitioning to Pvt Ltd at month 6
India EOR vs Pvt Ltd: Full cost comparison table
| EOR (PeopleEOR) | Indian Pvt Ltd | |
|---|---|---|
| Setup cost | $0 | $5,000 |
| Time to first hire | 5–7 days | 35–55 days (incl. bank account) |
| Monthly fee per employee | $249 | $0 (no per-head fee) |
| Fixed monthly management cost | $0 | $500 (≤10) / $750 (≤20 employees) |
| Annual tax filing | $0 | $3,000/year |
| Effective monthly cost at 3 employees | $747 | $750 — break-even |
| Effective monthly cost at 10 employees | $2,490 | $750 |
| Break-even headcount | N/A | 3 employees |
| Setup cost recovery at 4 employees | N/A | ~20 months |
| Setup cost recovery at 6 employees | N/A | ~7 months |
| Compliance responsibility | PeopleEOR’s | Your responsibility |
| FEMA/RBI reporting required | No | Yes — every inbound transfer |
| Statutory audit required | No | Yes — annually (in $3,000/year fee) |
| Termination risk | Low — PeopleEOR manages | Higher — direct employer liability |
| Best for | 1–10 employees, early-stage, fast hire | 10+ employees, committed India presence |
Is cost the only reason to choose between EOR and a Pvt Ltd?
No. Cost is one factor — and for small teams it is often not even the deciding one.
Under EOR, compliance is fully off your plate. There are no monthly filing deadlines to track, no director KYC renewals to manage, no FEMA reporting obligations, no statutory audit to commission. PeopleEOR handles every one of these. Your India team operates — you receive one invoice.
Exiting an employee is straightforward. Under EOR, an employee can be released with the contractual notice period — typically 30–90 days depending on the offer letter. Under a Pvt Ltd, you are the direct employer and termination carries higher procedural and legal risk, particularly for employees with more than 6 months of tenure.
You can convert to a subsidiary at any time. EOR is not a permanent structure — it is a starting point. PeopleEOR manages the full transition from EOR to Pvt Ltd when you are ready, including employment transfer, statutory registrations, and FEMA filings. Nothing you do under EOR locks you in or complicates the eventual migration.
CA Rohit Lohade’s recommendation: If you are testing the Indian market — validating a hire, building a small team, or unsure of your long-term India commitment — use EOR for your first 10 employees. The compliance protection alone is worth more than the monthly cost difference at low headcounts. Once your India team is stable and you are confident in the long-term plan, migrate to a Pvt Ltd. That is the path we recommend to most global companies entering India for the first time.
Frequently Asked Questions
Is EOR legal in India?
Yes, EOR is legal in India. The EOR provider registers as the legal employer under Indian law — holding all statutory registrations including PF, ESI, and Professional Tax. Your company contracts with the EOR as a service vendor. There is no prohibition on this structure under Indian labour law, FEMA, or the Companies Act.
How much does PeopleEOR charge per employee in India?
PeopleEOR charges $249 per employee per month. This fee includes payroll processing, statutory compliance (PF, ESI, TDS filings), and HR administration. There is no setup fee. Employer-side PF (12% of basic salary) and ESI (3.25% of gross salary) contributions are calculated on top of the employee’s CTC (Cost to Company — the total annual employment cost including all employer contributions).
How much does it cost to set up an Indian Pvt Ltd company?
Setting up an Indian Private Limited company with PeopleEOR costs $5,000, covering all registration, government filings, and initial compliance setup. Ongoing management costs $500/month for teams up to 10 employees, or $750/month for teams of 11–20 employees. Annual tax filing costs an additional $3,000/year, making the true annual overhead $9,000 for teams up to 10 employees.
At what team size does a Pvt Ltd become cheaper than EOR?
With PeopleEOR’s EOR fee of $249/employee/month and a Pvt Ltd effective monthly cost of $750 (including the $3,000 annual tax filing amortised), the break-even is 3 employees. At 4 employees, the Pvt Ltd saves $246/month. The $5,000 setup cost is recovered in approximately 20 months at 4 employees, or 7 months at 6 employees.
How long does it take to set up an Indian Pvt Ltd company?
The incorporation process takes 25–40 days from document submission to Certificate of Incorporation. Bank account opening adds a further 7–14 days, making the full timeline 35–55 days. EOR onboarding, by comparison, takes 5–7 days.
Can a foreign company own 100% of an Indian Pvt Ltd?
Yes. Under the automatic route for most sectors — including tech, SaaS, and B2B services — a foreign company can own 100% of an Indian Private Limited company without prior government approval. Sectors including defence, media, and insurance have FDI (Foreign Direct Investment) caps and require separate government approval.
What is the difference between EOR and a subsidiary in India?
EOR means a third party is the legal employer of your India staff — your company has no Indian legal entity. A subsidiary (typically a Pvt Ltd) means your company owns an Indian registered company that is the direct legal employer. EOR involves zero setup and zero compliance burden on your side; a Pvt Ltd gives direct control, a local brand presence, and significantly lower per-employee cost at 10 or more staff.
What happens if I want to switch from EOR to a Pvt Ltd later?
You can transition from EOR to Pvt Ltd at any point. The process involves registering the Pvt Ltd (25–40 days), completing post-incorporation registrations for PF, ESI, and Professional Tax (10–15 days), and transferring employment with new offer letters. PeopleEOR manages the full transition. A well-planned transition takes 60–75 days end to end.
Do employees hired via EOR get the same benefits as those hired via a Pvt Ltd?
Yes. Statutory benefits — PF, ESI, gratuity, and earned leave — are identical under both structures because they are mandated by Indian law, not by the employment vehicle. PeopleEOR administers these on your behalf under EOR; your Pvt Ltd would administer them directly. The employee’s entitlement is the same either way.
Is EOR more expensive than a Pvt Ltd over 3 years?
For teams of 1–3 employees, EOR is less expensive — the $5,000 Pvt Ltd setup cost and $750/month effective overhead mean EOR wins until headcount consistently exceeds 3. For teams of 4 or more, the Pvt Ltd becomes cheaper within 7–20 months depending on headcount. At 6 employees for 3 years, a Pvt Ltd saves approximately $26,000–28,000 over EOR.
Ready to work out the right structure for your India team?
We have helped 200+ global companies choose between EOR and entity — and manage whichever option fits their headcount, timeline, and budget.
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CA Rohit Lohade, ACA
Chartered Accountant specialising in India entity setup and cross-border employment structures for global companies. Has helped 200+ US, UK, and EU companies set up compliant India operations — from first EOR hire to full subsidiary. Connect on LinkedIn →