How to Hire Employees in India - A Detailed Guide

India is now among the world's top hiring destinations for global companies looking to build skilled, cost-effective remote teams.

India's labour market is in steady recovery, with 56.2 crore people employed in Q2 FY26 and 8.7 lakh new jobs added since Q1 FY26, per the Economic Survey 2025-26. This growth spans IT, engineering, healthcare, and financial services, making India a reliable and growing source of talent.

With over six million software developers, a strong English-speaking workforce, and growing AI talent, India offers global companies unmatched access to skilled professionals across industries.

Here is what hiring in India typically involves:

• Choosing between a local entity, an employer of record, or working with contractors
• Complying with statutory requirements including EPF, ESI, and income tax
• Conducting background checks and correctly classifying workers
• Understanding notice periods, salary structures, and employment contracts

You will learn how to hire employees in India compliantly, from selecting the right employment model to managing payroll and local employment laws successfully.

3 Ways Companies can Hire Employees in India

In India, there are three primary options for hiring and onboarding talent: 

• establish a foreign corporation by setting up an entity
• collaborate with an employer of record
• work with contractors

Your choice will depend on various factors, including time, cost, the number of people you want to hire, and the long-term objectives of your business.

Here is an overview of the choices before you make a decision:

1. Set Up a Local Entity

You can start hiring in India by establishing a branch office or a subsidiary to build a long-term presence and set up a large team. By doing this, your business can manage internal hiring and employment processes, lowering overall staffing expenditures.

Creating an entity requires deep expertise in Indian legal, business, and payroll rules. Non-compliance while managing HR procedures and global payroll will lead to legal hassles. If you only want to hire a few people, establishing an entity is a time-consuming and expensive process with considerable risk.

2. Partner with an EOR

You can swiftly hire workers in India without a legal entity by collaborating with an international employer of record. An EOR is a third-party organization that specializes in India's employment rules and regulations and assists global companies with talent onboarding.

An EOR takes care of all hiring, payroll services, benefits, compliance, and taxes on your behalf, so you can focus on hiring and operational responsibilities. Understanding the pros and cons of employer of record EOR can help you decide if this model fits your expansion goals. Explore the benefits of EOR to understand how it accelerates compliant hiring.

3. Work with Contractors

Hiring contractors or freelancers in India is suitable for short-term or project-based work. This option offers flexibility without the overhead of setting up a legal entity or committing to permanent headcount.

However, Indian law takes worker misclassification seriously. If a contractor is treated like a full-time employee, including fixed hours, direct supervision, and ongoing work, your business could face significant legal and financial risk. It is important to draw clear boundaries between employees and contractors from the outset.

Classification of Indian Workers: Employee vs Contractors

A common mistake employers make when hiring is misclassifying employees as independent contractors. This misclassification can damage employee relationships and lead to legal issues in the country of hiring.

To ensure a smooth onboarding process, it is crucial to correctly classify employees. Here is an overview of the key differences between an employee and an independent contractor:

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Employee Background Checks in India

Why Background Checks Are Important:

‍Conducting background checks is crucial for validating a candidate's credentials, identifying potential risks to your company’s reputation and safety, and ensuring compliance with industry-specific regulatory standards. This is especially important given the rise in resume fraud due to recent job cuts.

Types of Information Collected:

• Identity Verification: Confirming the candidate's identity through documents like PAN, Aadhaar, passport, or driver's license.
• Educational Verification: Verifying degrees, diplomas, and certificates, especially due to the prevalence of fake universities.
• Employment History: Checking past job roles, responsibilities, and reasons for leaving to ensure the candidate's experience aligns with their claims.
• Criminal Record Check: Screening for any criminal records or pending cases to ensure workplace safety.
• Address Verification: Confirming the accuracy of the candidate’s residential address.
• Reference Checks: Gathering insights from previous employers or colleagues about the candidate’s work ethic and performance.
• Credit History Check: Assessing financial responsibility, particularly for roles involving financial tasks.
• Drug and Alcohol Screening: Testing for substances, crucial for safety-sensitive positions.
• Professional License Verification: Verifying necessary professional licenses, such as medical or driving permits.
• Social Media Screening: Reviewing the candidate’s online behavior to ensure it aligns with company values.

How the Background Verification Process Works

The background check process begins with obtaining written consent from the candidate. Once consent is secured, relevant information is collected across six key areas:

• Personal identification details
• Employment history and references
• Educational qualifications
• Credit history (for relevant roles)
• Criminal records
• Address confirmation

Each data point is verified using public records, private databases, and direct references. Timelines vary based on the number of checks required and the responsiveness of institutions involved. Most verifications are completed within a few days, while more complex cases may take up to a few weeks.

Employment Laws You Must Know Before Hiring in India

1. Minimum wages in India

The Minimum Wages Act, 1948 sets minimum wages for various categories of workers in different industries. Employers must pay employees the specified minimum wage under this law within seven days from the end of the wage period. The wage period should not exceed one month. Also, employers must provide employees with a payslip containing the wages paid and the deductions made.

2. Payroll contributions and deductions

Like many countries, India’s labor laws mandate employers to make statutory contributions on behalf of the employee or in addition to the employee’s contributions. Below is the list of payroll contributions employees must make:

1. Provident fund:  Employers with 20 or more employees must contribute 12% of the employee's basic salary and dearness allowance towards EPF (Provident Fund).
2.  Professional Tax:  Professional Tax is a state-level tax levied on salaried individuals and professionals. Employers must deduct professional tax from their employees' salaries and deposit it with the state government.
3. Income Tax: Employers must deduct income tax from their employees' salaries under the Income Tax Act, 1961. The tax deducted depends on the employee's salary and other factors such as exemptions, deductions, and investments.

3. Maternity leaves

The Maternity Benefit Act, 1961 provides maternity leave and other benefits for female employees. It specifies the duration of maternity leave, the conditions for eligibility, and the benefits that must be provided. During the 26 weeks of maternity leave, women employees are entitled to pay equal to the average daily wage earned by them in the 3 months preceding their maternity leave. This pay is subject to a maximum limit set by the central government.

What are the Costs of Hiring in India?

Hiring in India involves more than just a base salary. Before you finalize your hiring plan, it is important to account for every cost involved so you can budget accurately and avoid surprises down the line.

Here are the key expenses to factor in:

• Entity registration costs: If you choose to set up a local legal entity, expect registration fees, legal advisory costs, and ongoing compliance expenses.
• Employment agency fees: If you work with a recruitment agency or staffing partner, their fees will add to your overall hiring budget.
• Recruitment and advertising: Job postings on platforms like LinkedIn, Naukri, and Indeed, as well as costs tied to job fairs and hiring events, should all be included.
• Hiring manager travel: If your team needs to travel to India for interviews or onboarding, account for travel and accommodation expenses.
• Relocation costs: For roles requiring the employee to relocate, joining and relocation allowances are commonly offered.
• Background check fees: Third-party verification services charge per candidate, depending on the scope of checks required.
• Onboarding costs: This includes training materials, IT setup, software access, and any initial onboarding support.

Partnering with an employer of record software platform can help consolidate several of these costs into a single predictable fee, making budgeting significantly easier.

What is the Process of Hiring in India?

Whether you start your own business or work with an EOR, understanding India's hiring process end to end is essential for avoiding delays and compliance gaps.

Step 1: Post Jobs on the Right Platforms

Start by identifying the right channels for your target role. For remote and tech positions, platforms like LinkedIn, Naukri, Indeed, and WorkIndia offer the widest reach.

When creating your job listing, make sure to cover:

• A clear description of the role and day-to-day responsibilities
• Required qualifications, credentials, and experience
• Nice-to-have skills and tools
• Salary range and employment type (full-time, contract, or remote)

For companies with 25 or more employees, vacancies must also be reported to the local employment exchange as per regulatory requirements.

Step 2: Screen and Shortlist Candidates

Review applications based on skills, experience, and domain knowledge relevant to the role. Consider sending a short skills assessment before moving candidates to the interview stage. This saves time and provides a more objective basis for comparison. Whether you are hiring full-time employees or contractors, judge candidates against the specific requirements of the role.

Step 3: Conduct Interviews

For companies without an office in India, virtual interviews work well. Be mindful of the time zone difference and schedule interviews at a time that works for both parties. During this stage, assess both technical skills and cultural fit to ensure long-term alignment.

Step 4: Issue an Offer Letter and Draft an Employment Contract

Once you have identified the right candidate, send a formal offer letter. 

Follow it with a detailed employment contract that includes:

• Compensation, benefits, and allowances
• Probation period and performance expectations
• Termination clauses and notice periods
• Statutory compliance clauses as per state-specific regulations

Given the complexity of India's employment rules, ensure the contract is legally sound and reviewed by someone with knowledge of local labor law.

Step 5: Complete Onboarding and Register for Statutory Benefits

Once the candidate accepts the offer, begin the onboarding process. 

This includes:

• Introducing them to your team, workflows, and workplace culture
• Providing any job-specific training required for the role
• Registering them for mandatory statutory benefits, including EPF (12% employer contribution) and ESI (4.75% employer contribution)

A smooth onboarding experience sets the tone for long-term employee engagement. Explore the benefits of hiring remote workers in India to understand how a structured onboarding process maximizes the value of your remote team from day one.

How to Pay Employees in India

Paying employees in India correctly is as important as hiring them compliantly. India's payroll structure involves several statutory components that employers must understand before running their first payroll.

1. Salary Structure in India

Indian payroll is made up of multiple components, and the basic wage is the most critical one. As per Indian law, the basic wage must constitute at least 50% of the total Cost to Company (CTC). The remaining portion can include allowances such as:

• HRA (House Rent Allowance)
• Special allowance
• Travel and conveyance allowance
• Performance-linked pay

2. Statutory Deductions and Employer Contributions

Employers are responsible for making the following mandatory contributions for each eligible employee:

• Employees' Provident Fund (EPF): Employers contribute 12% of the employee's basic salary toward EPF. The employee contributes an equivalent amount.
• Employees' State Insurance (ESI): For employees earning up to INR 21,000 per month, employers contribute 4.75% and employees contribute 0.75%.
• Professional Tax: Varies by state and is typically deducted monthly from the employee's salary.
• Income Tax (TDS): Employers must deduct tax at source from the employee's salary based on the applicable income tax slab and deposit it with the government.

3. Payment Timelines and Payslip Requirements

India's labour laws require employers to pay wages within seven days from the end of the wage period. The wage period cannot exceed one month. Employers must also issue a payslip to each employee clearly showing the gross salary, all deductions, and net pay.

4. Notice Periods and Final Settlement

Notice periods in India, particularly in the tech and IT sectors, typically range from one to three months. When an employee exits, employers are required to process full and final settlement, which includes outstanding salary, any earned leave encashment, gratuity (if applicable), and the release of EPF and ESI documentation.

5. How an EOR Simplifies Payroll in India

Managing Indian payroll manually involves tracking multiple statutory deadlines, filing requirements, and state-specific rules. This is where an employer of record adds significant value.

An EOR like Gloroots handles the entire payroll cycle on your behalf, including:

• Calculating gross and net pay in line with Indian salary structure norms
• Deducting and remitting EPF, ESI, professional tax, and TDS
• Generating compliant payslips for every employee every month
• Filing statutory returns with the relevant government authorities
• Managing final settlements when employees exit

Using employer of record software ensures payroll runs accurately and on time without requiring you to build an in-house payroll team or navigate India's compliance landscape independently.

Job Market in India

India's hiring outlook in 2026 remains strong and wide-ranging. Demand for Indian talent continues to grow across both technology and non-technology sectors, driven by digital transformation, infrastructure investment, and a large young workforce entering employment.

Key trends shaping India's job market in 2026:

• Growing workforce and employment: India's labour market has added significant new jobs, with growth concentrated in IT, engineering, banking, healthcare, and real estate.
• Non-IT sector resilience: Sectors like insurance, oil and gas, banking, hospitality, and automobile continue to generate steady employment, reflecting broader economic resilience.
• White-collar job growth: White-collar hiring has seen consistent month-on-month growth, with domestic employers expanding their teams in response to rising business demand.
• High employer confidence: A growing share of Indian employers have expressed plans to increase headcount, signaling confidence in economic stability and long-term growth.
• Youth employability: A significant share of India's youth are considered employable, particularly in technology, engineering, and business services, giving companies access to a growing entry-level talent pipeline.

If you are exploring how to hire employees for a startup, India provides strong options across engineering, operations, and product functions at competitive costs.

India Remote Hiring Trends

Remote work has become a permanent fixture of India's employment landscape. With a rapidly expanding digital infrastructure and nearly 900 million people expected to have high-speed internet access in the near term, India is one of the most remote-work-ready talent markets in the world.

Key remote hiring trends in India for 2026:

• Strong preference for remote work: A large majority of Indian employees prefer remote work arrangements. Many report improved productivity, better work-life balance, and reduced commute-related stress as key reasons.
• Online talent assessment adoption: A growing number of tech companies in India now use online assessment tools to screen candidates, making remote hiring faster, more standardized, and more scalable.
• Flexible office space expansion: Co-working and flexible office spaces have grown significantly, now spanning over 43 million square feet across major Indian cities, with hundreds of thousands of available seats.
• Reduced burnout among remote workers: Organizations report better engagement and retention outcomes among remote employees, with lower reported burnout compared to in-office counterparts.
• Accelerating broadband penetration: India's high broadband adoption rate has enabled teams across tier 1 and tier 2 cities to participate equally in remote work arrangements.

The benefits of hiring remote workers in India are well-established. With the right compliance framework in place, companies can build high-performing remote teams at scale.

Top Sectors to Hire from in India

India's economy continues to expand across a diverse range of industries, creating strong hiring opportunities in both established and emerging sectors. 

Here are the top areas to focus on in 2026:

1. Information Technology

India's IT sector remains one of the largest employers of skilled professionals globally. 

The IT sector is projected to employ nearly 9.5 million tech professionals by FY2026, with the industry reaching $300 billion in value.

Demand is concentrated in software development and engineering, cloud computing and DevOps, cybersecurity, and data analytics and business intelligence. Digital transformation initiatives across industries continue to drive sustained demand for qualified IT professionals.

2. Artificial Intelligence and Machine Learning

AI and ML roles are among the fastest-growing in India's job market. There are over 50,000 open AI/ML positions in India as of early 2026, with a demand-to-supply ratio of 3.3:1 due to only 15,000 qualified candidates. 

Companies building these capabilities are actively seeking machine learning engineers, data scientists, NLP specialists, and AI product managers. Both global technology firms and Indian product companies are scaling AI teams out of India at an accelerating pace.

3. Data Science, Analytics, and Big Data

Data-driven decision-making has become a business priority across sectors. India has one of the largest concentrations of data professionals in the world. Roles in high demand include data analysts, data scientists, big data engineers, and business intelligence developers.

4. Medical and Health Services

India's healthcare sector is growing rapidly, driven by an ageing population, increased health awareness, and expanding medical infrastructure. Demand is rising for healthcare administrators, nursing and allied health professionals, and health technology specialists.

5. Sustainability and Clean Energy

As organisations worldwide commit to net-zero goals, India's renewable energy sector is expanding fast. Opportunities exist in renewable energy generation and storage, energy efficiency consulting, and sustainability reporting and ESG compliance.

Hire Indian Employees Compliantly with Gloroots

Hiring in India is complex. Compliance obligations, payroll calculations, benefits administration, and employment contracts all require careful attention to detail. Managing all of this without local expertise can expose your business to significant legal and financial risk.

Partnering with Gloroots takes the complexity out of hiring in India. As a trusted employer of record, Gloroots handles everything from onboarding to payroll, statutory contributions, and ongoing compliance, so you can focus entirely on building your team.

Here is what Gloroots offers:

• Onboard candidates within a day and get operations started quickly
• Manage payroll for your entire team with a single click
• Generate invoices, administer mandatory benefits, and file taxes without the hassle
• Stay compliant with both local and global employment laws
• Skip entity setup entirely and go straight to building your remote team

Whether you are a growing startup exploring how to hire employees for a startup or an enterprise scaling operations across India, Gloroots is built to support your goals at every stage.

For more information on our platform and assistance, Book a Demo with Gloroots.

FAQs

1. How much does it cost to hire an employee in India?

Payroll costs in India include basic salary, dearness allowances, EPF contributions, state-level professional tax, and cess. Other hiring expenses include advertising, joining bonuses, and onboarding costs. Costs also vary by skill set, experience level, and city.

2. Where can I hire employees from India?

Cities like Bangalore, Chennai, Hyderabad, Delhi, and Mumbai offer strong talent pipelines, especially for tech roles. Employers use campus recruitment, job fairs, and online portals like Naukri, Indeed, and LinkedIn to source candidates across locations.

3. How do companies recruit employees in India?

Companies identify talent through online job ads, LinkedIn outreach, and social media. Depending on goals, budget, and team size, onboarding can be done via a local entity or an EOR partner like Gloroots.

4. What is an employee's minimum salary in India?

The Minimum Wages Act, 1948 sets the minimum wage at INR 178 per day and INR 5,340 per month. Employers are advised to research current salary benchmarks for the specific skills, experience levels, and job functions they are hiring for.

5. What is the business culture like in India?

Indian workplaces follow a hierarchical structure where senior management leads key decisions. Employers are expected to communicate job expectations clearly. Compensation expectations are rising steadily, and offering benefits such as remote flexibility, health insurance, and a strong workplace culture is essential for attracting and retaining top talent.

6. How do Indian employees feel about working remotely?

Remote and flexible working arrangements are highly valued by Indian professionals. Many employees report greater productivity and reduced burnout when working remotely. Offering flexibility in work timings and location has become a key factor in talent retention for companies hiring in India.