How to hire developers in India from a US company: contractors, an EOR or your own subsidiary

India is one of the most common places for a US startup to hire its first engineers abroad. The talent pool is deep, English is the working language of the industry, and the time difference can give a team close to round-the-clock coverage. The question isn't usually whether to hire there. It's how.

A US company has three routes: hire developers as independent contractors, hire them as employees through an employer of record, or set up its own Indian company and employ them directly. Each fits a different stage, and most companies move through them in that order. This guide covers what each route involves, what it costs at one, five and fifteen people, and the Indian rules that apply along the way.

The three routes at a glance

Hiring a contractor

Many Indian developers work as independent professionals for clients abroad, and a contractor arrangement is the fastest way to start. On your side, it needs three things.

A contract. It should describe the work as deliverables, set the fee and currency, assign all intellectual property to your company, cover confidentiality, and set out how either side can end it. The IP assignment matters most. Without it, the developer may own the code they write for you.

A Form W-8BEN. It certifies the developer isn't a US person. For work done entirely in India, the payment is foreign-source income, so you don't withhold US tax and you don't file a Form 1099-NEC.

A way to pay. A US bank wire works but is often expensive. A service such as Wise Business sends rupees as a local transfer, usually for much less. Our guide to paying international contractors compares the options.

On the developer's side, payment from a foreign client generally counts as an export of services. A developer registered for GST in India can usually invoice a foreign client without charging GST, by filing a letter of undertaking. Their bank may ask for an invoice and the purpose of each incoming payment. Those are the developer's obligations, but it helps to know why they might ask you for paperwork.

When a contractor stops being a contractor

The risk with contractors is drift. A developer who started on a three-month project and is now working full time, only for you, on your sprint schedule, using your laptop and accounts, looks like an employee under most countries' tests, India's included. If the arrangement is challenged, the consequences can include back payment of statutory contributions and other employee benefits.

If that describes your developer, or will soon, move to an employer of record. Our guide to employer of record or contractor explains where the line falls.

Using an employer of record

An employer of record employs the developer through its own Indian company. It issues an Indian employment contract, runs payroll in rupees, deducts income tax, pays statutory contributions and handles leave and exit paperwork. You direct the work and pay one monthly invoice.

Published EOR fees per employee a month, checked on October 13, 2026:

• Deel: $599
• Remote: $599
• Oyster: $699

The developer's salary and the employer's statutory costs come on top. EOR providers often ask for a deposit too, from nothing at Remote for most customers to about one to one and a half months of total cost at Deel. Our comparison of the best employers of record covers the differences.

The Indian employer costs to budget for

Whichever way you employ someone in India, a few statutory costs apply. An EOR shows them as separate lines in its quote.

Employees' Provident Fund. The employer contributes 12% of the employee's basic wages to the EPF, and the employee contributes the same from their pay. Since September 17, 2026, the wage ceiling for mandatory coverage is ₹25,000 a month, up from ₹15,000. Many employers calculate their contribution on wages up to that ceiling, which works out to ₹3,000 a month per employee. Others contribute on full basic pay. Ask your EOR which approach it uses.

Gratuity. India's labor codes, in force since November 21, 2025, keep gratuity for permanent employees after five years of continuous service, and make fixed-term employees eligible after one year. Employers usually set money aside for it each month so the payout doesn't come as a surprise.

Other rules under the labor codes. Every worker must receive an appointment letter, and for IT and IT-enabled services workers, salary must be paid by the 7th of each month. The codes also changed how "wages" are defined, which affects how salary packages are structured. An EOR builds all of this into its contracts and payroll.

Leave, holidays and benefits. Indian employees expect paid leave, public holidays such as Republic Day on January 26, Independence Day on August 15 and Gandhi Jayanti on October 2, and festival holidays that vary by state. Many employers also offer group health insurance, which is common in tech roles.

Setting up your own Indian subsidiary

Once you have a sizable team in India and plan to stay, you can set up your own Indian company, usually a private limited company, and employ developers directly. It's how most US companies with large Indian engineering teams operate. If you live in India and control the US company yourself, ask a CA first: India's overseas investment rules can limit whether your US company may own an Indian subsidiary.

It comes with real obligations:

• Directors. A private company needs at least two directors, and at least one director of every Indian company must stay in India for at least 182 days in the financial year.
• Accounting and audit. Every Indian company keeps books, files annual returns and has its accounts audited by a chartered accountant.
• Company secretarial work. Board meetings, minutes and filings with the Ministry of Corporate Affairs.
• Payroll and registrations. EPF, professional tax where it applies, income tax deduction from salaries, and the other registrations for an employer.
• Pricing between the two companies. The Indian company usually invoices the US parent for its services at an arm's-length price, which brings transfer-pricing documentation in India and the US.
• US reporting. A US company that owns a foreign subsidiary files Form 5471 with its tax return, and the penalties for missing it are steep.

None of this is unusual, and local firms handle it routinely. But it costs money every year, whether you have three employees or thirty, and it takes months to set up.

The cost at one, five and fifteen developers

Here are the provider fees alone for each route, before salaries and statutory costs, which you pay under every route except contracting.

One developer:

• Contractor: payment fees only, or $348 to $588 a year on a contractor platform at $29 to $49 a month.
• Employer of record: $7,188 a year on Deel, $8,388 on Remote or Oyster.
• Own subsidiary: rarely worth it for one person.

Five developers:

• Contractors: $1,740 to $2,940 a year on a platform, if the work really is independent. At five people working full time for you, it rarely is.
• Employer of record: $35,940 a year on Deel, $41,940 on Remote or Oyster.
• Own subsidiary: worth pricing, especially if more hires are planned.

Fifteen developers:

• Employer of record: $107,820 a year on Deel, $125,820 on Remote or Oyster.
• Own subsidiary: compare that EOR bill with written quotes for a year of accounting, audit, company secretarial work, payroll, transfer-pricing documentation and the US filings, plus the one-time setup cost.

Somewhere between five and fifteen people, the fees for an EOR usually start to look large next to the running costs of your own company. Where exactly depends on your quotes, so get them before the team grows, not after.

Working across the time difference

India Standard Time is UTC+5:30 and doesn't change for daylight saving. That puts it 9½ hours ahead of US Eastern time in summer and 10½ in winter, and 12½ to 13½ hours ahead of Pacific time. A US East Coast team and an Indian team typically overlap in the Indian evening and the US morning.

Teams that make it work agree a fixed daily overlap window of two or three hours for meetings, write things down so work can move on without a meeting, and avoid scheduling recurring calls late at night in India. The time difference can also be an advantage: work handed over at the end of the US day can be done by the next US morning.

Finding and hiring developers

Hiring channels in India include LinkedIn, local job boards, referrals from developers you already know, and recruiting agencies. Whatever the channel, a few practices help:

• Run a paid trial project. A short, paid piece of real work tells you more than any interview, and it can be done on a contractor basis before an EOR offer.
• Expect notice periods. Employed developers in India often have to serve a notice period of one to three months before they can join you. Plan start dates around it.
• Be clear about the employer. If you hire through an EOR, explain to the candidate that their legal employer will be the EOR's Indian company, while they work for you day to day.
• Match the offer to local norms. Indian offers are usually expressed as an annual "CTC," or cost to company, that includes the employer's statutory contributions. Agree with your EOR how the package will be structured before you quote a number.

Switching from one route to the next

Moving a developer from contractor to EOR means a new employment contract with the EOR, a start date, and an end to the contractor agreement. Moving from an EOR to your own subsidiary means each employee leaves the EOR and joins your company on a new contract. Ask your EOR in advance how it handles transfers out, what notice it needs and how accrued leave and gratuity are settled. Plan the move for a quiet period, and tell the team early.

Which route fits you

• Testing with one or two developers on defined work? Start with contractors.
• Hiring someone full time who will be part of the team? Use an employer of record from day one.
• Building a permanent team that's heading toward ten or more? Price up a subsidiary now, keep using the EOR while it's being set up, and move people across when it's ready.

Whichever route you choose, bring in a CPA on the US side and a chartered accountant on the Indian side before you set up a subsidiary. The structure is simple to get right at the start and expensive to fix later.