EaseValueAlmost every page comparing an employer of record with your own Indian subsidiary is published by a company that sells one of the two, and it shows. The comparison is also usually set up wrongly. Salary, provident fund, employees state insurance and gratuity are paid either way — an EOR pays them and bills them straight through to you — so they cancel out of the comparison entirely. What is left is a much narrower question: is the EOR's margin bigger or smaller than the fixed cost of running your own Indian company? That reframing is why the answer is a headcount rather than a salary, and why it arrives sooner than vendors suggest: because the fee is normally a percentage of pay, a small team of senior people can burn more in EOR margin than a company would cost to run. This calculator sets the two against each other and gives you the break-even. It also sets out the things cost does not decide — visa sponsorship, licences, GST recovery, owning assets, and permanent-establishment exposure, which follows what your people do in India rather than whose payslip they are on.
How it’s calculated
- Enter your intended India headcount and the average gross salary. Statutory employer costs are deliberately left out of both sides, because they are identical either way and including them only makes the gap look smaller than it is.
- Choose how your EOR charges. A percentage of salary is the common model, usually somewhere between 8% and 15%; some charge a flat monthly fee per person. Ask which base the percentage applies to — gross salary or total employment cost — because the difference is real money.
- Enter what your own entity would cost to set up. Incorporation, apostille or consularisation of documents, the bank account and the registrations. The calculator spreads it over three years.
- Enter what your own entity would cost to run each year: accounting, payroll, withholding returns, GST where you are registered, ROC filings and the statutory audit. Note that an Indian company is audited every year whatever its size, including a dormant one — this is not an optional line.
- Read the break-even headcount. Below it the EOR margin is less than the cost of a company; above it your own entity is cheaper, and the gap widens every month.
Frequently asked questions
At what headcount does an Indian subsidiary become cheaper than an EOR?
It depends far more on salary than on headcount, which is why a single number quoted by a vendor is not much use. At a 12% fee and ₹1,20,000 average monthly salary, the EOR margin is about ₹1.7 lakh per person per year, so a company costing ₹3 lakh a year in fixed terms is cheaper from roughly the second or third hire. At ₹40,000 salaries the same company needs six or seven people to break even. Put your own figures in — the point of the calculator is that the answer moves.
Is an EOR legal in India?
Yes. Using a third party to employ staff on your behalf is lawful, and the EOR is the legal employer, responsible for the payroll, the provident fund and the withholding. What matters is that it is genuinely doing that — the statutory registrations, the monthly filings and the gratuity provision — because where it is not, the exposure does not stay neatly with the provider.
Can an EOR sponsor a visa so I can work in India myself?
No, and this is the limit that usually decides the question. An EOR employs Indian staff for you; it does not give your business a presence in India that can sponsor a foreign national to come and work in it. If you or a colleague needs to be in India in your own business rather than as a visitor, you need your own entity. Visa applications themselves are for an immigration specialist, not for us.
Does using an EOR protect me from permanent establishment risk in India?
Not by itself, and this is the point vendors are quietest about. A permanent establishment depends on what is actually being done in India — a fixed place of business, or people habitually concluding contracts or securing orders for your foreign company. If your India team is selling and closing, that exposure follows the activity, not the payslip. Where a PE is found, your foreign company has an Indian filing obligation and Indian tax on the profit attributable to it. It is worth testing this before headcount grows, not after a notice arrives.
Can I just pay people in India as contractors instead?
You can, and it is the most common way foreign companies acquire a problem. If someone works fixed hours, under your direction, using your systems, exclusively for you, calling them a contractor does not make them one. A reclassification brings provident fund, insurance and gratuity for the whole period, with interest, plus the withholding that should have been deducted on salary rather than on professional fees. The savings are small and the tail is long.
What can my own entity do that an EOR cannot?
Hold licences and registrations in your own name, including an Import Export Code. Invoice Indian customers and recover GST input tax. Own assets, sign a lease and open a bank account. Grant equity to Indian employees on your own cap table. Sponsor an employment visa. Build a balance sheet and a filing history that a buyer or an investor can inspect. An EOR is a good way to test a market and a poor way to build one.
We already use an EOR. How do we move those people across?
Carefully, because it is a change of employer rather than a transfer. Continuity of service matters for gratuity, the provident fund account moves rather than restarts, and notice and consent have to be handled properly. The sequence is usually to incorporate, obtain the employer registrations, run one parallel payroll cycle, then transition — with the employment-law side handled by an Indian employment lawyer and the registrations, payroll and filings by us.
Want us to handle it for you?
CA-led filing, planning and compliance — EaseValue Advisors LLP, Jaipur.