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UK Companies Hiring Employees in India: Employer of Record vs Setting Up a Subsidiary (Cost Comparison)
- Saransh Garg
- Mar 23
- 8 min read
Updated: Mar 23
You have found the right talent. A senior software engineer in Bengaluru, a sharp finance analyst in Pune, or a reliable customer support team in Hyderabad. The skill is there, the cost makes sense, and your leadership is aligned. So why does actually hiring them feel like navigating a legal maze?
For most UK companies hiring employees in India, the decision to hire employees in India quickly turns into a far bigger conversation than expected.
Do you incorporate a private limited company?
Set up a branch office?
Or is there a faster, leaner way to get your India team operational without the 6 to 9 month wait?
This guide breaks it all down plainly, with real numbers and real trade-offs, specifically for UK businesses thinking about India hiring for the first time or looking to scale what they have already started.
Why UK Companies Are Increasingly Looking to Hire Employees in India
The numbers speak for themselves. India produces over 1.5 million engineering graduates annually, and the country has become a global hub for technology, finance, healthcare BPO, and customer operations talent. For UK companies, the time zone overlap with India (4.5 hours ahead of UK standard time) makes async and real-time collaboration both practical.
We work with UK clients across verticals. A London-based SaaS startup hiring its first two backend engineers. A Manchester logistics firm building a data and ops team. A financial services company in Edinburgh expanding its mortgage processing function to India.
Each of them came to us with the same core question: What is the right structure for hiring in India as a UK company?
The answer almost always starts with two options: Employer of record (EOR) or setting up your own legal entity in India.
The Two Main Options for a UK Company to Hire Employees in India
Option 1: Employer of Record (EOR)
An Employer of record (EOR) is a third-party organisation that legally employs workers in India on your behalf. You manage the day-to-day work and direction of your team. The EOR handles employment contracts, payroll, Provident Fund (PF), Employee State Insurance Corporation (ESIC), gratuity, tax deducted at source (TDS), and all statutory compliance.
Option 2: Setting Up a Subsidiary or Branch Office
This means registering a private limited company (Pvt Ltd) or a wholly owned subsidiary in India under the Companies Act, 2013. You become the legal employer directly. You handle payroll, statutory filings, ESIC, PF, labour law compliance across whichever Indian states your employees are based in, and annual ROC filings.
Alternatively, a branch office is permitted for certain foreign entities but comes with its own RBI and FEMA approvals that add time and complexity.
EOR vs Subsidiary: Direct Cost Comparison for UK Companies
Let us put real numbers to both paths, because this is where most UK companies realise the decision is clearer than they assumed.
Setting Up a Private Limited Company in India
Company incorporation: INR 15,000 to INR 50,000 (legal and filing fees)
CA and legal advisory for incorporation: INR 30,000 to INR 1,00,000
Ongoing CA retainer for compliance and filings: INR 20,000 to INR 50,000 per month
Dedicated HR or compliance person (if team exceeds 10 people): INR 50,000 to INR 80,000 per month
Director and DSC requirements, registered office address costs
Timeline to operational: 3 to 6 months minimum
Risk: Any statutory non-compliance carries penalties under Indian labour law, which varies state by state
For a UK company hiring 5 to 15 people in India, the cost of running a compliant subsidiary often ranges between INR 1.5 to INR 3 lakhs per month in pure overhead, before you have paid a single employee.
Using an Employer of Record (EOR) in India
With a specialist India EOR like Anjusmriti Global, the entire compliance and employment infrastructure is built in. You pay a fixed EOR fee per employee per month, and everything else is handled.
At Anjusmriti Global, our EOR fee sits between $100 to $150 per employee per month, making us one of the most cost-effective options for UK companies compared to global platforms that charge $599 to $1,200 per employee. There is no setup fee, no hidden compliance overhead, and no 6-month wait.
For a UK company hiring 10 employees in India:
Global EOR platform: $5,990 to $12,000 per month in EOR fees alone
Anjusmriti Global: $1,000 to $1,500 per month, with the same full statutory compliance
The savings over 12 months can easily fund an additional 2 to 3 hires in India.
What Does Full India EOR Compliance Actually Cover?
This is where experience matters. India is not a single labour market. It is 28 states, each with its own Shops and Establishments Act, professional tax structure, and labour welfare fund rules. A UK company hiring a team in Karnataka, Maharashtra, and Telangana simultaneously is dealing with three different compliance frameworks at once.
A specialist Employer of Record (EOR) in India handles:
PF registration and monthly contributions (employer: 12% of basic salary)
ESIC registration and contributions for eligible employees
Professional tax filings by state
TDS calculation and deposit under the Income Tax Act
Gratuity provisioning as per the Payment of Gratuity Act
Maternity benefit compliance and leave structuring
Offer letters, employment agreements, and IP assignment clauses
Full and final settlement management on exits
For UK companies in particular, the IP protection piece is critical. Before your engineers write a single line of code for your product, the EOR employment contract must include proper IP assignment and NDA clauses. At Anjusmriti Global, this is standard in every contract we issue, because we understand what is at stake for technology businesses.
When Does Setting Up Your Own India Entity Actually Make Sense?
Being straightforward about this matters. Employer of record (EOR) is not the right answer for every situation forever.
If you are a UK company planning to hire more than 30 to 40 employees in India on a permanent basis, want to build a Global Capability Centre (GCC), or need to invoice Indian clients directly, then setting up a private limited company will likely make more financial and operational sense over a 3 to 5 year horizon.
Many of our clients start with EOR for speed and compliance certainty, then transition to their own entity once the India operation is stable. We support that transition too through our HR consulting services, helping you structure the entity, transfer employees compliantly, and maintain uninterrupted payroll throughout.
For most UK companies hiring between 1 and 25 people in India, EOR is simply the smarter, faster, and lower-risk path.
Real UK Client Scenarios
A UK SaaS Startup: Speed Was Everything
A venture-backed SaaS company based in London needed 6 engineers in Bengaluru within 30 days of a funding close. Setting up a Pvt Ltd would have taken 3 to 4 months. We onboarded all 6 engineers via our Employer of Record (EOR) in 8 business days. The engineering team was shipping code for the UK product within the same month the funding landed. Our IT hiring team also supported them in sourcing 2 additional QA engineers, making it a fully integrated recruitment and EOR engagement.
A UK Healthcare BPO: Compliance Was the Priority
A healthcare data processing company in Birmingham had attempted to hire two India-based medical coders through a freelance arrangement. When they scaled to 12 people, the compliance exposure became untenable. Within 3 weeks of engaging Anjusmriti Global, all 12 employees were on compliant employment contracts with full PF, ESIC, and TDS coverage. The UK management team had zero involvement in the compliance shift.
A UK Financial Services Firm: Combination of EOR and Payroll
A regulated financial services firm in Edinburgh needed India-based finance analysts but could not absorb the risk of non-compliant employment. We provided a combination of Employer of Record (EOR) and global payroll services, giving them a single vendor for both employment compliance and payroll reporting in a format their UK finance team could reconcile easily.
Ready to Hire Employees in India as a UK Company?
If you are a UK company evaluating your India hiring options and want a straight answer on cost, timeline, and compliance, our team is ready to walk you through it.
How Long Does EOR Onboarding Take for UK Companies Hiring in India?
One of the most common concerns we hear from UK HR leads and founders is timeline. The short answer: with a specialist India EOR provider, your employee can be fully onboarded and on payroll in 5 to 10 business days from the date documents are collected.
This includes employment contract execution, PF and ESIC registration, bank account verification, TDS setup, and first payroll processing. Compare this to 3 to 6 months to incorporate and operationalise a private limited company in India, and the trade-off becomes obvious, especially if your talent has competing offers.
Our recruitment and staffing team also works in parallel for UK clients who need help sourcing talent before engaging EOR, creating a single pipeline from candidate identification to compliant employment.
Interesting Reads:
Frequently Asked Questions
1. Can a UK company legally hire employees in India without registering a company?
Yes. Using an employer of record (EOR), a UK company can legally employ Indian workers without incorporating a subsidiary or branch office in India. The EOR is the legal employer on record and handles all statutory obligations on your behalf.
2. What is the difference between an EOR and a PEO in India?
An employer of record (EOR) owns the employment relationship and is the entity of record for compliance. A PEO (Professional Employer Organisation) co-employs workers alongside your entity, meaning you still need your own legal presence in India. For UK companies without an India entity, EOR is the relevant model.
3. How much does it cost to hire employees in India via EOR as a UK company?
At Anjusmriti Global, the EOR fee is $100 to $150 per employee per month. On top of this, you pay the employee's agreed gross salary plus employer-side statutory contributions (PF at 12% of basic, ESIC at 3.25% of gross for eligible employees), which adds approximately 13 to 15% to the net salary cost.
4. How long does it take to onboard an Indian employee via EOR?
Typically 5 to 10 business days from document submission to first active payroll run. This timeline covers contract execution, PF and ESIC registration, and TDS setup.
5. What statutory deductions apply when hiring in India?
Employer contributions include PF (12% of basic salary), ESIC (3.25% of gross wages for employees earning below INR 21,000 per month), professional tax (state-specific), and gratuity provisioning. The EOR handles all of these.
6. Can we protect our IP when hiring Indian engineers via EOR?
Yes. All Anjusmriti Global employment contracts include IP assignment clauses and confidentiality agreements as standard. Under Indian law, IP created in the course of employment belongs to the employer, but explicit contractual documentation is strongly recommended and always included.
7. What happens if an employee needs to be terminated? Does the UK company face India labour law risk?
The employer of record (EOR) manages the termination process in compliance with applicable Indian labour laws, including notice period obligations, full and final settlement, and statutory dues. UK companies are shielded from direct exposure to India's labour tribunals through the EOR structure.
8. Can we hire across multiple Indian cities via one EOR provider?
Yes. Anjusmriti Global can onboard employees across all Indian states and cities, including Bengaluru, Hyderabad, Mumbai, Pune, Delhi NCR, and Tier 2 locations. Compliance is managed state-specifically by our in-house team.
9. When should a UK company consider transitioning from EOR to its own India entity?
Most advisors recommend evaluating this when your India headcount exceeds 25 to 30 people on a long-term basis, or when you need to invoice Indian clients directly, attract senior local leadership, or set up a GCC. Anjusmriti Global supports this transition through our HR consulting and payroll services.
10. Does Anjusmriti Global also help with sourcing talent in India, not just EOR?
Yes. We offer an integrated model where our recruitment and staffing team sources candidates and our EOR service employs them, giving UK companies a single partner for the full hiring lifecycle in India.
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