Global Hiring Guide

How to hire employees in India - A detailed guide

Mayank Bhutoria
16
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India’s well-educated, employable, English-speaking talent have positioned the country as a desirable hiring destination. India is touted to have the 3rd-largest web 3.0 workforce. Its six million software developers and plethora of professionals in data analytics, robotics, and cyber security have turned India into a hotspot of tech professionals. 

In parallel, the U.S. Bureau of Labor Statistics reported in 2022 that the IT sector is anticipated to grow 15% from 2021 to 2031, creating 682,800 new jobs. Evidently, India’s talent surplus can fulfill the US’s need for tech skills.

How to hire in India: All You Need To Know

Before you start hiring in India, let us discuss a few things you should know:

Job Market in India

It is safe to say that the hiring outlook in India is promising. While companies in other regions are slowing recruitment, demand for Indian talent is growing – 46% of youth are considered employable, mostly in the technology and engineering sectors. 

Besides, January 2023 saw a 2% year-on-year (YoY) increase in job opportunities in non-IT sectors. Experts reveal that sectors like Insurance, Oil & Gas, Banking, Hospitality, Real Estate, BPO, Automobile, and Healthcare showed financial resilience amid recession fears and inflationary headwinds.

Manpower Group found in its survey that almost 45% of Indian employers said they would hire more people in Q1FY24. White-collar jobs recorded a 5% month-on-month surge, with domestic employers focusing on their growth story.

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India Remote Hiring Trends

749 million Indians have access to high-speed internet. This number is anticipated to increase to 900 million in the next five years. With lockdowns catalyzing the adoption of remote work, India’s broadband penetration has been higher than in many countries, and India’s workforce has quickly adapted to remote work. 

Remote working is the preferred mode of employment for 82% of Indian employees, reports the Times of India. 64% feel they are more productive when working remotely. In light of the shift toward remote work, co-working spaces have doubled since 2019. Before the pandemic, India's flexible office spaces market spanned 30 million sq. ft with 471,782 seats. The market shrunk to 20 million sq. ft with 312,990 seats in 2020 but has now impressively grown to 43.4 million sq. ft with over 679,760 seats.

Here’s how Indian employees feel about working remotely:

  • Employers are increasingly embracing remote hiring, with 47% of tech companies in India using online assessment tools to screen talent. 
  • 44% of remote employees feel they are more laid-back, mentally relaxed, and have a better work-life balance. Employees credit this to the flexibility in choices of venue and timings, which have made integrating professional and personal work easier. 
  • The Great Mid-size Workplaces 2022 report reveals that organizations witness reduced burnout among remote employees.

The process of hiring in India

Whether you start your own business or work with an EOR, you must be aware of the hiring procedure in India. 

Publish ads on LinkedIn

It is preferable to post job openings on LinkedIn or online job portals like Indeed, WorkIndia, and others if you're seeking remote employees in India. You must cover the following points in the ad:

  • What does the job entail?
  • Credentials you seek in a candidate.
  • Nice-to-have skills

Remember that Indian professionals are very active online when hunting for work. Hence, select the job boards that correspond to your target audience.

Publish ads for the vacancy

Writing and publishing job advertisements are the initial steps in the hiring process in India. You must cover the following points in the ad:

  • What does the job entail?
  • Credentials you seek in a candidate.
  • Nice-to-have skills

It is preferable to post job openings on LinkedIn or online job boards if you're seeking remote employees in India.

Remember that Indian professionals are very active online when hunting for work. Hence, select the job boards that correspond to your target audience.

Review applications

Whether you are hiring full-time employees or independent contractors in India, judge a candidate based on their skills, experience, and business knowledge.

Before leading a set of candidates to the next level of the hiring process, consider sending them an assessment task. The task can test the skills required for the job and prove their abilities.

Draft employment contract

Conduct interviews online if you don't have an office in India. Consider the different time zones, and select an interview time convenient for all parties.

Make job offers to qualified applicants after the interview. Given the complexity and ambiguity of India's employment rules, this is the most challenging phase.

It is preferable to have a thorough employment contract in this regard. You must outline all of the requirements and conditions pertaining to the job. By doing this, you can ensure that your staff members know their rights.

Provide relevant details, such as pay, perks, and other allowances. Get the employee to study the contract and add termination procedures as well.

Onboard the employee

Once you have your new hires, you must complete the onboarding procedure. This is crucial since your new recruit needs to know all the specifics of your workplace culture and rules. The onboarding procedure typically includes an introduction to the workforce, the workflow cadence, and job-specific training (if required).

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Employment Laws You Must Know Before Hiring in India

Minimum wages

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.

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.

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.

The Cost of Hiring in India

Ensure to include the following expenditures to figure out/determine the true cost of each new employee. 

These expenses could include the following:

  • Indian entity registration costs
  • Employment agency expenses - if you decide to outsource
  • The expense of organizing or going to hiring events
  • Job advertisement costs
  • Hiring manager travel expenses for going to India
  • New employee relocation fees
  • Third-party background check fees

Business culture in India 

The following points shed light on the business culture and India and what sets it apart:

  • Employers must communicate job expectations and responsibilities clearly to their employees.
  • Senior management makes most decisions.  The leadership team takes accountability for decisions that impact the business long-term.
  • Salary inflation has been substantial. In 2023, employees' salaries are anticipated to increase by 10.3% compared to 10.6% in 2022. The increased employee attrition in the tech sector has prompted employers to attract and retain talent with salary increases and bonuses. Inflation has also impacted employee salaries greatly.
  • To attract and keep employees, offering a fantastic workplace culture that includes benefits like working from home, a robust insurance plan and a pleasant working environment is important.

Top sectors to hire from in India

India's economy is growing swiftly because of its diverse range of industries. Here is a list of emerging industries with the most employment potential in 2023:

Information technology

The rapid expansion of the IT and technology sectors in India and abroad has opened up a wide range of job options for qualified professionals. Due to the growing demand for digital transformation and automation, a skilled workforce is needed in data analysis, cybersecurity, cloud computing, and software development.

Medical and health services

One of the sectors with the quickest growth rates in India and globally is healthcare. As the population ages and the demand for medical services rises, there is a rising demand for competent workers in professions like nursing, nursing, and medical assistants.

Sustainability and clean energy

Over the coming years, the renewable energy sector will expand significantly as sustainability and reducing carbon emissions gain importance. Its expansion will make it feasible to create jobs in generating renewable energy, energy storage, and energy efficiency.

Machine Learning and Artificial Intelligence

Businesses and consumers are paying attention to emerging industries like artificial intelligence and machine learning. Businesses like Google, Amazon, and Microsoft are investing in these technologies and creating job opportunities for experienced industry professionals. These technologies have the power to fundamentally alter several industries, including finance, logistics, healthcare, and transportation.

Data Science, Data Analytics, and Big Data

In 2023, emerging industries like data analytics, data science, and big data are expected to expand and present various job opportunities. Google, Amazon, Microsoft, IBM, Oracle, SAS, and Salesforce are some of the top firms in these fields. 

They offer a range of careers, including data analysts, data scientists, and big data engineers. The demand for qualified expertise in these sectors will increase as IT firms depend heavily on data-driven insights to make strategic decisions. Other companies, such as Adobe, Tableau, and Splunk, also offer jobs in big data analytics.

Getting Started: How to hire in India? 

In India, there are three options for hiring and onboarding talent: establish a foreign corporation, collaborate with an employer of record, or work with contractors. 

Your choice will rely 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:

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.

Remember that creating an entity requires expertise and knowledge of the 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 fraught with risk.

Partner with an EOR

You can swiftly hire workers in India without a legal entity by collaborating with an international Employer of Record (EOR). In simple terms, an EOR is a third-party that specializes in India's employment rules and regulations and assists global companies with talent onboarding. 

An EOR will take care of all hiring, payroll services, benefits, compliance, and taxes on your behalf so that you can focus on hiring and operational responsibilities.

Hire Indian employees compliantly with Gloroots

Hiring in India is complex due to compliance, HR processes, benefits administration, and taxes. In such cases, it is wiser to partner with an Employer of Record like Gloroots to onboard remote Indian talent quickly and compliantly.

Gloroots’ EOR platform helps onboard a candidate within a day so that you can kickstart your operations as soon as possible. Gloroots’ speed and expertise in local and global compliance ensure you comply with local employment laws.

The platform allows companies of all sizes to seamlessly manage payroll for their entire team in a single click. Employers can generate invoices, manage mandatory benefits, and pay taxes hassle-free. With Gloroots, you can avoid all the heavy lifting of setting up a local entity and skip straight to onboarding your candidates to develop a fully remote team. 

For more information on our platform and assistance, connect with us.

FAQs

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

Payroll costs in India include basic salary, dearness allowances, PF contributions, state-level taxes, and cess. Besides payroll costs, other hiring expenses include but aren't limited to advertising costs, joining bonuses, and onboarding costs. Employers should also note that hiring costs depend on skill set, work experience, and location.

Where can I hire employees from India?

Cities such as Bangalore, Chennai, Hyderabad, Delhi Mumbai should fill your talent pipeline, especially if you are looking for tech talent. Employers use tactics such as campus recruitment, job fairs, and walk-in recruitment to hire candidates in these cities. Companies can look for candidates through online job portals. Indeed, Naukri and Linkedin are some popular sites.

How do companies recruit employees in India?

Companies identify talent using online ads and social media posts. Depending on the organization's goals, budget, and needs, onboarding can be done via a local entity or an EOR partner.

What is an employee’s minimum salary in India?

According to the Ministry of Labour,The Minimum Wages Act, 1948 and its subsequent amendments have set the minimum wage rate at INR 178 per day and INR 5340 per month. However, we advise employers to research the salary trends for the skills, experience, and job functions they seek.

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