Global Hiring Guide

Hire and pay independent contractors in India

Mayank Bhutoria

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India is the world’s go-to destination for hiring – a labor market that seamlessly blends quality talent with affordability to build a scalable workforce. 

Whether you aim to expand globally or seek specialized skills unavailable locally, tapping into a global workforce can boost your organization’s success. Hiring contractors in India offers customizable, scalable and hassle-free opportunities for growth. However, Indian labor laws and cultural intricacies should be at your fingertips for compliant and productive operations.

In this blog, we’ll walk you through everything you need to know about hiring contractors in India, from finding them, essential hiring criteria, steps for engagement, and payment methods to crucial legal regulations and best practices, helping you simplify and streamline the process.

Why Hire Independent Contractors In India?

Let's begin by understanding what factors make India your ultimate hiring hub for independent contractors.

  • Access to Specialized Skills: From software development to creative design and customer support, Indian contractors possess high-quality expertise and experience.
  • Strong educational background: India's robust education system cultivates skilled professionals from prestigious institutions, proficient in English. They can merge cultural and traditional expertise with modern approaches, innovating fresh perspectives for businesses with international interests.

For example, if you choose to expand your product or service to the Indian market, local contractors will be a valuable asset for translations, local marketing, product design, and labeling regulations.

  • Cost-effectiveness: Indian contractors offer cost savings compared to full-time employees by reducing expenses on benefits, office space, equipment, and taxes. Due to the currency difference, their charges are typically a fraction of those compared to most Western countries.
  • Flexibility and Scalability: Contractors provide flexibility. You can quickly scale your workforce based on project needs without any long-term commitments.
  • Time Zone Advantage: Hiring contractors in India can ensure around-the-clock productivity and support if your business operates in different time zones


Things To Know Before Hiring Independent Contractors In India

Before hiring independent contractors, a robust understanding of classification of independent contractors in India, Indian employment laws, and contractor expectations is indispensable.

1. Classification of Independent Contractors in India

Defining Independent Contractors:

Regulated by The Contract Labor (Regulation and Abolition) Act, 1970:

  • Independent contractors are engaged to produce specific results through labor or subcontracting beyond just supplying goods.

Classification of Contract Workers:

  • Contract laborers are engaged either by an independent contractor or indirectly by an establishment.
  • They often handle multiple projects and may work for various employers simultaneously.

Coverage of Various Worker Types:

  • Temporary and fixed-term workers fall under labor statutes.
  • Gig and platform workers, recognized under The Code on Social Security, perform non-traditional roles.

Criteria for Worker Classification:

Tests Used in India:

  • Courts use the control and integration tests to differentiate between employees and independent contractors.
  • The control test examines the relationship and direction of work, while the integration test assesses integration into the employer's operations.

Influence of Equipment Ownership:

  • Ownership of equipment influences worker classification; use of substantial employer-provided tools may imply a contract of service.

Steps to Avoid Misclassification:

  • Allow flexible work hours and locations.
  • Permit contractors to work for multiple companies simultaneously.
  • Encourage the use of contractors' equipment.
  • Avoid non-compete agreements.

Ensuring accurate classification between independent contractors and employees is crucial, avoiding legal pitfalls and maintaining organizational integrity.

▶Read our Classifying Independent Contractors Checklist packed with vital insights that you need to know. 

2. Legal Requirements in India

  • Occupational Health, Safety and Working Conditions Code 2020 (OSH Code): Soon to replace CLRA. Introduces higher penalties for non-compliance, redefines contractor roles, and limits contractor engagement based on an establishment's core activity.
  • Visa and Work Permits: Verify if the contractors require specific visas or work permits to render services from India. Ensure compliance with immigration laws.

Taxation Considerations:

  • Income Tax: Independent contractors need to complete IRS W-8 BEN forms for NRA taxpayer information. Self-employed contractors pay taxes through TDS (Tax Deducted at Source). 
  • Understand the tax implications for hiring international contractors in terms of IRS regulations, such as Form 1099 reporting.
  • Withholding tax, known as tax deduction at source (TDS) in India, applies to payments made to non-residents for services performed within India. This tax, governed by the Indian Income Tax Act, involves deducting a portion of payments to contractors at specified rates. Understanding the applicable rates and provisions under the Double Taxation Avoidance Agreement (DTAA) is crucial to ensure correct withholding and timely remittance to the Indian tax authorities.
  • Under the DTAA, withholding tax obligations vary based on the agreement between countries, impacting cross-border transactions and tax liabilities for international entities.
  • Goods and Services Tax (GST) Implications: Indian contractors providing taxable services may fall under the purview of GST. Depending on the nature of the services and their GST registration status, contractors might be required to charge GST on invoices. Additionally, the reverse charge mechanism might shift the responsibility of paying GST to the recipient of services. Ensuring compliance with GST regulations, including registration thresholds, payment, and reporting, is essential to meet Indian tax obligations.
  • Income Tax Filing and Liability: Self-employed individuals must file income taxes annually by July 31. Tax liability depends on income levels and age, as per the Income Tax Act of 1961.

Minimum Wage and Working Conditions:

  • Minimum Wages Act: Local governments set minimum wages. The Code on Wages of 2019 aims to establish a standard minimum wage for all employees, including foreign contractors, based on living standards and regions.
  • Employee Protection Laws: Indian laws protect employees from harassment and discrimination, and ensure workplace safety, child labor laws, and privacy regulations.

Termination Regulations:

  • Industrial Disputes Act: Termination rules vary based on employee type and company size. Natural justice principles apply to terminations related to misconduct, while larger employers require government permission for certain dismissals.

Documentation and Reporting Regulations:

  • IRS Reporting: Understand the reporting requirements for payments made to international contractors, such as filing Form 1099.
  • Documentation of Services: Maintain detailed records of services rendered, invoices, and any communication related to the contractual agreement.


3. Understanding Contractor Expectations

Spend some time understanding India's work culture and professional norms sets the stage for successful collaborations. 

For instance, Indian contractors might follow diverse work patterns or communication styles. Recognizing and accommodating these differences leads to smoother interactions and higher productivity.

Looking for more information on hiring independent contractors globally? 

Read our guide here.

How To Hire Contractors In India?

To ensure a successful process for hiring independent contractors in India, follow these key steps:

1. Post a Clear Job Description

To attract talented contractors, create a detailed job description specifying required skills, qualifications, and project expectations. Outline the scope of work, deliverables, and timeline. Essential components for job posting include:

  • Role Summary: Explain how the role fits into your company's framework.
  • Requirements: Clearly state necessary skills, responsibilities, and qualifications.
  • Contract Duration: Specify the duration (e.g., six months, one year).
  • Scope of Work: Detail specific tasks or hours expected per week.
  • Independent Contractor Status: Clarify the contractor's classification.
  • Portfolio Request: Ask for samples of past work to evaluate expertise.

Share your job description widely. Post it on your website, social media, relevant job sites in India, and consider using staffing companies or recruiting firms. Utilize platforms like KillerLaunch, Indeed,, PlacementIndia, ClickIndia, and WorkIndia for wider reach.

2. Screening and Selection Process

When engaging with Indian contractors, several key strategies streamline the process:

  • Firstly, utilize video conferencing for effective communication during assessments, evaluating technical expertise and remote work capabilities. 
  • Flexibility in scheduling, considering time zone differences, ensures a comfortable interview process. 
  • Post-assessment, provide constructive feedback for professional development and a positive impression. 
  • Before final decisions, validate skills and work ethic through thorough reference checks. 

These steps pave the way for successful collaborations with Indian contractors.

For instance, evaluating a developer's coding proficiency through tests or assessing a designer's portfolio against project needs assures a suitable match.

3. Prepare an Independent Contractor Agreement

Once you've identified the right contractor, it's critical to establish a precise agreement defining the terms and conditions of your collaboration. This agreement should comprehensively outline the contractor's status, project specifics, payment terms, confidentiality agreements, and intellectual property rights. Seeking guidance from legal professionals well-versed in Indian law ensures compliance and addresses any specific considerations.

Understanding the scope of contractor engagements goes beyond job roles, encompassing benefits, project timelines, and deliverables. 

Important aspects to cover are:

  • Service description
  • Project duration
  • Confidentiality terms
  • Safeguarding intellectual property
  • Non-solicitation rules
  • Resolving disputes
  • Payment specifics
  • Termination conditions and more.

For instance, outlining specific project milestones tied to payment releases ensures that progress aligns with compensation.

While a written employment contract isn't always mandatory in India for employer-employee relationships, crafting one for international contractors is highly recommended. It should cover project details, timelines, fees, and termination clauses.

When creating an independent contractor agreement (ICA), consider critical provisions such as intellectual property rights, payment terms, confidentiality, and liabilities. Note that certain restrictive covenants like non-compete and non-solicitation might be unenforceable under the Indian Contract Act. Such agreements serve as valuable references in potential disputes and provide clarity for all parties involved.

If the idea of collaborating with highly skilled professionals excites you but navigating the complex tax laws seems overwhelming, choose Gloroots’ employer of record (EOR) platform. 

Our global hiring experts handle everything from hiring independent contractors in India and generating contracts to smooth onboarding and ensuring timely payments with 100% compliance. 

Want to explore how we can contribute to your business expansion in India? 

Book a demo today.

Paying An Independent Contractor In India

It's vital to plan and set up how to pay to Indian contractors. Simplifying the payment process from the start is key. Currency fluctuations and exchange rates impact payments. Stay updated on rates and anticipate potential transfer fees based on your chosen payment method.

Get a good grip on the Indian taxation system for independent contractors, establish a payment schedule, and choose a payment structure that aligns with your business needs and contractor preferences.

1. Payment Structure and Timeline

You can compensate Indian contractors hourly, for specific projects, upon project completion, or provide an upfront portion of their wages. 

Payment options include upfront payments before project commencement, payments upon project completion offering safer control over quality and performance, or partial payments combining both methods. Ensure your contract includes refund contingencies for upfront payments.

The payment plan and timeline might vary, tailored to suit your business and the contractor's preferences.

2. Payment Methods

Choose a payment method that aligns with your business's needs and provides convenience and security for both parties involved. Let’s take a look at the possible options:

International Bank Transfer

An international bank transfer, also known as a wire transfer, is a conventional way of moving funds directly between global bank accounts. Utilizing the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network ensures a secure transaction, yet it might take about five days and involves fees for both sender and receiver.

Online Money Transfer Companies

Online money transfer services enable swift fund transfers between international user accounts, usually offering lower fees and reasonable currency conversion rates. Some, like Wise, even provide physical account details in multiple countries, minimizing international wire fees. However, service availability varies, and transfer times depend on various factors. Always check the service's availability and review the fine print for potential fees.

Money Order

Money orders and cashier’s checks are secure options for sending money abroad, both involving smaller fees than wire transfers. A money order, purchasable from banks, post offices, or stores, is secure and refundable if lost, but challenging for others to cash. On the other hand, cashier’s checks, only available at banks for larger sums, are more secure but may take longer to replace if lost. Both methods involve purchasing the desired Rupee amount and mailing it, albeit being time-consuming and fee-variable based on the purchase location.

Contractor Payment Platform

A contractor payment solution is a cloud-based, centralized global payroll platform for approving invoices and securely paying independent contractors worldwide.

Opting for a Global Payroll Platform when paying an independent contractor in India provides various benefits. These platforms allow you to pay contractors in their chosen currency, ensuring adherence to Indian regulations. This streamlined process guarantees prompt and precise payments, contributing to a favorable rapport with Indian contract workers.

For example, a Canadian firm plans to engage six marketing specialists in India using an EOR platform offering global contractor payment features. Through this platform, the professionals submit their invoices digitally for approval, enabling the company to review and process payments efficiently. Additionally, the system handles currency conversions seamlessly, formulates locally compliant contract templates, and stores documents, simplifying the entire payment process. 

This is precisely what Gloroots does and more.

Check out how Gloroots helped PriceLabs and Sketchnote build their Indian team, ensuring 100% compliance with Indian taxation and hiring norms.

Where To Find Contractors In India?

Dive into online platforms and job portals to find a wealth of options:

1. Popular Job Listing Websites:

Explore Upwork, Freelancer, Guru, Toptal, Fiverr,, Indeed etc. LinkedIn acts as a thriving nexus, empowering you to discover top-tier contractors in India. These hubs connect you with an extensive pool of talented contractors, allowing you to scout for specific skills and expertise, all at competitive rates.

2. Leveraging Freelancer Communities and Forums:

Engage with freelancer communities and forums to connect directly with contractors worldwide. These interactive spaces serve as invaluable networking platforms, offering insights, experiences, and a broad range of talent for your project requisites. 

3. Local Networks and Referral Systems:

Tapping into Local Networks and Referral Systems brings unique benefits, allowing you to forge connections within industry circles and local talent hubs. These associations often result in reliable recommendations and streamlined access to adept contractors who match your specific needs. Likewise, Engaging with Professional Associations and Networks offers robust resources, granting access to a specialized talent pool that meets industry benchmarks. This avenue ensures you land solid quality leads.

What To Look For While Hiring Contractors In India?

When hiring contractors in India, keep these key factors in mind:

  • Expertise and Experience: Seek Indian contractors with the necessary skills and proven track record in their field. Verify qualifications and past projects to gauge their suitability for your requirements.
  • Communication and Availability: Ensure hired contractors have strong communication skills and can align with your preferred work hours. Clearly define expectations for responsiveness and availability.
  • Flexibility and Adaptability: Discuss and agree on work schedules to accommodate the flexibility independent contractors often offer. Aligning expectations ensures a harmonious working relationship.
  • Cultural Understanding: Look for contractors familiar with local practices and global standards. Their cultural grasp eases communication and fosters smooth project execution, reducing misunderstandings.

Considering these factors while hiring contractors in India ensures finding skilled professionals aligned with your expectations.

Managing Indian Contractors - Best Practices

1. Effective Communication Strategies

Effective Communication Strategies involve overcoming language and cultural barriers by fostering an inclusive environment. Addressing language disparities and cultural differences with patience and openness helps bridge communication gaps. Encouraging open channels for communication nurtures an atmosphere where team members feel comfortable sharing ideas, fostering a culture of inclusion and collaboration.

2. Setting Clear Expectations and Feedback Mechanisms

Setting Clear Expectations and Feedback Mechanisms is crucial. Clearly defining project expectations and establishing efficient feedback systems ensures alignment and transparent dialogue. Regular check-ins to monitor progress and provide constructive feedback promote improved performance and stronger relationships among team members.

3. Conflict Resolution Strategies

When it comes to Conflict Resolution Strategies, effective approaches are essential. Encouraging dialogue, mediation, and finding common ground can help resolve conflicts amicably. Prioritizing communication and collaborative problem-solving leads to smoother conflict resolution and contributes to a more harmonious work environment.

4. Stay on top of evolving Indian labor laws

Stay updated on evolving labor laws, especially in India, as remote work reshapes global regulations. Keeping abreast of these changes is vital to ensure compliance. When hiring in India, be mindful of specific labor laws, including varying minimum wage rates across regions, sectors, and skills, the regulations concerning paid leaves—like sick time at 70% of the employee's rate—and mandatory contributions like the Employees Provident Fund, state insurance, and the Health and Education Cess.

Again, working with Gloroots can ensure that your company stays up-to-date with evolving labor laws and maintains productive working relationships with Indian workers.

Read our step-by-step guide on Effective Contractor Management to learn more about onboarding and managing Indian contractors.

By implementing these best practices, you can effectively manage Indian contractors, promote collaboration and teamwork, and ensure a successful working relationship.

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