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What Do Australian Companies Need to Know About EOR in India?
An Australian company can have an engineer working from Bengaluru in 15 to 20 business days without opening an Indian entity and without touching the Companies Act, 2013. That's the entire appeal of an Employer of Record (EOR). We've built this exact setup for Sydney and Melbourne based tech companies more than 40 times, and here's what Australian companies need to know about EOR in India before signing anything: Indian labour law is state administered, not central, and that single fact changes how your contract, payroll, and IP terms need to be written.
Why Are Australian Companies Choosing EOR Over Setting Up an Indian Entity?
Setting up a wholly owned Indian subsidiary under the Companies Act, 2013 usually takes 4 to 8 months once you factor in FEMA reporting to the RBI and local bank account setup. EOR compresses that to weeks because a registered Indian entity already exists as the legal employer, and your Australian company simply contracts with that provider.
Cost is the second driver. A senior software engineer in Sydney or Melbourne now costs AUD 175,000 to 210,000 fully loaded, once superannuation (11.5%, rising to 12%) and payroll tax are added. The same seniority level in India runs AUD 50,000 to 68,000 through EOR. Companies aren't only chasing lower cost. Demand for AI tooling integration, platform engineering, and cloud cost optimization skills has outpaced local Australian supply, and Bengaluru and Hyderabad based engineers with hands on GenAI and Kubernetes experience are filling that gap faster than Australian recruitment pipelines can.
Where Should Australian Companies Look for Tech Talent in India?
Bengaluru holds the deepest bench for platform, cloud, and product engineering roles, largely because it hosts the highest density of global capability centers in the country. Hyderabad has become the stronger choice for data engineering and applied AI roles, driven by large India based teams from Microsoft, Amazon, and Google. Pune suits fintech and BFSI adjacent hiring, and Chennai offers strong QA automation and backend Java talent at a lower salary band than Bengaluru.
One thing we test for explicitly: engineers from large service companies are usually disciplined but wait for instructions, while engineers from product companies ship with less oversight but cost 15 to 20% more. We run a live system design round for every candidate because a resume listing cloud certifications tells you nothing about whether someone has actually owned production infrastructure.
What Australian Companies Need to Know About EOR in India Compliance Rules
India has no single central labour code equivalent to Australia's Fair Work Act 2009. Employment is governed by four consolidated Labour Codes (the Code on Wages 2019, Industrial Relations Code 2020, Code on Social Security 2020, and the Occupational Safety, Health and Working Conditions Code 2020), layered on top of state specific Shops and Establishments Acts.
Under EOR, the Indian entity, not your Australian company, is the legal employer. It handles Provident Fund contributions under the EPF & Miscellaneous Provisions Act 1952 (12% employer, 12% employee on basic salary), Employees' State Insurance where applicable, and gratuity under the Payment of Gratuity Act 1972 after five years of service. This structure also protects your company from permanent establishment risk under the India Australia Double Taxation Avoidance Agreement.
IP assignment needs to sit inside the actual employment contract between the EOR entity and the engineer, not just your separate NDA, since Indian contract law follows the direct employment relationship. Misclassifying a long term contractor as an independent freelancer is another common error. If the working relationship looks like employment (fixed hours, direct supervision, exclusive engagement), Indian authorities can reclassify it and back charge statutory contributions.
EOR India Compliance Checklist for Australian Companies
Check | Why It Matters | Red Flag |
EOR has its own registered Indian entity | Confirms it can legally employ, not just invoice | Uses a partner entity it doesn't control |
IP assignment sits in the employment contract | Protects product IP under Indian contract law | IP clause only exists in your side agreement |
PF, ESI, gratuity itemised monthly | Confirms statutory compliance | Lump sum invoice, no breakdown |
Written notice period and termination clause | Indian states require 30 to 90 days' notice | No clause, or a copied US template |
Data processing addendum for cross border transfer | Supports Privacy Act 1988 compliance | No DPA offered |
Clear exit or novation clause | Lets you move the hire to your own entity later | Punitive transition fees |
The clause missing most often is the exit clause. Companies that later open their own Indian entity need a clean, pre agreed path to novate the employment contract, without the EOR provider treating it as a lost client.
Contract Hiring vs Full Time Hiring in India: Which Should You Choose?
Contract hiring means engaging an engineer for a defined project or period, usually through the EOR entity, with lower long term liability and easier exit. It suits pilot projects, short term platform migrations, or testing a new market before committing headcount. Full time hiring under EOR gives you a permanent employee with standard Indian benefits (PF, gratuity, paid leave), better retention, and stronger long term ownership of your codebase, but comes with notice period and severance obligations if the role ends.
Most Australian companies we work with start with a 3 to 6 month contract to validate fit, then convert to full time once the engineer proves out, since Indian EOR contracts allow that conversion without a break in service. At AnjuSmriti Global, we structure both paths into the same initial agreement so clients aren't renegotiating terms mid project.
How Does the EOR Hiring Process Work for Australian Companies?
Our timeline runs in four stages. Week one covers role scoping and confirming which Indian state the EOR entity will register the employee in, since this affects notice periods and gratuity rules. Weeks two and three cover sourcing and technical assessment, typically presenting 4 to 5 shortlisted candidates after screening 40 to 60. Week three to four covers offer, background verification, and contract execution. The candidate is live by day 15 to 20 in most cases, or day 30 if the role needs deeper background checks, common with our fintech clients.
One proof point: a Melbourne based payments company, around 60 employees, needed a senior platform engineer to own a Kubernetes migration independently since their Melbourne team worked Australian hours only. We placed a Bengaluru based engineer within 22 days.
Our first choice candidate cleared the technical round, but reference checks surfaced an undisclosed 12 month non compete covering cloud infrastructure work from his previous employer, something that could have exposed the client to a legal claim in India. We flagged it before the offer went out and moved to our second ranked candidate instead. The migration finished on schedule, and the client has since hired two more engineers through the same structure, saving an estimated AUD 140,000 a year against equivalent Melbourne hiring.
What Does EOR in India Actually Cost Australian Companies?
Level | Australia Fully Loaded (AUD/year) | India EOR Salary (AUD equivalent) | EOR Fee (monthly) |
Mid (3 to 5 yrs) | AUD 130,000 to 150,000 | AUD 32,000 to 43,000 | AUD 350 to 500 |
Senior (6 to 9 yrs) | AUD 175,000 to 210,000 | AUD 50,000 to 68,000 | AUD 400 to 550 |
Lead/Staff (10+ yrs) | AUD 220,000 to 260,000 | AUD 75,000 to 104,000 | AUD 450 to 600 |
The EOR fee is a flat monthly amount per employee rather than a percentage, which keeps budgeting predictable. Add the 12% PF employer contribution and gratuity accrual, and total India cost still lands at 55 to 65% of the equivalent Australian fully loaded cost, even at the lead level. Most clients reinvest the savings into a second or third India based hire rather than treating it as pure margin, which is how a 60 person Melbourne company ends up with an 8 person Bengaluru pod within 18 months.
Talk to our team about what your specific role and timeline actually need.
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FAQs
1.Is EOR legal for Australian companies hiring in India?
Yes. EOR is a recognised employment structure in India where a registered Indian entity is the legal employer while your Australian company directs the work. There is no special licence required on the Australian side, and it does not require setting up an Indian subsidiary or filing with the RBI.
2.What is the difference between EOR and a Professional Employer Organization?
An EOR is the sole legal employer of record in the host country and carries full statutory liability. A PEO co-employs staff alongside a client's own registered entity, so it only works once you already have an Indian entity. Australian companies without an Indian entity need EOR, not PEO.
3.How much does EOR cost per employee in India?
EOR fees for Australian clients typically range from AUD 350 to 600 per employee per month, charged as a flat fee rather than a percentage of salary. This sits on top of the employee's salary and statutory contributions like Provident Fund and gratuity.
4.Can an Australian company get sued in India through an EOR employee?
Direct liability sits with the EOR entity since it is the legal employer, but your Australian company can still face exposure if the employee is misclassified, if IP assignment is missing from the employment contract, or if the arrangement creates permanent establishment risk under the DTAA.
5.Do EOR employees in India get the same benefits as full time staff?
Yes. EOR employees receive Provident Fund contributions, gratuity after five years, statutory leave, and Employees' State Insurance where applicable, the same as a directly employed Indian staff member, because they are legally employed by the EOR entity under Indian law.
6.How fast can an Australian company hire through EOR in India?
Most roles go from role scoping to a live start date in 3 to 4 weeks. This compares to 4 to 8 months for setting up an Indian subsidiary, which is why EOR is the default route for companies hiring fewer than 20 to 25 people in India.
7.Can we convert a contract hire to full time later under EOR?
Yes, provided the original contract includes a conversion clause. The transition typically happens without a break in service, and tenure, leave balance, and gratuity accrual carry forward once the employee moves to full time status under the same EOR entity.
8.What happens if we later want to open our own Indian entity?
A properly drafted EOR contract includes a novation clause that lets you transfer the employment relationship to your own newly registered Indian entity, usually within 2 to 3 weeks once your entity has its own PF and ESI registrations, without losing the employee's tenure.
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