The World Health Organisation acknowledges that India is one of the fastest-growing markets or economies on the planet. For global businesses, India has been a preferred destination for the past few decades or so, with globalisation opening up the economy. The country’s growing talent pool of skilled workers, supported by business-friendly laws, cost-effective operations, and an increasingly digitalised ecosystem, provides the much-needed confidence to international companies to establish or expand their presence in the country.
However, entering any foreign market comes with unique challenges and in India, certain aspects of workforce management like regulatory compliance, local labor laws, and the complexities of payroll and taxation can be daunting for new and foreign businesses. This is where an EOR service provider in India becomes a strategic asset.
Before moving ahead with the advantages of partnering with an EOR service provider, let’s understand what EOR is.
What is EOR?
Employer of Record is an organisation that works on your behalf to recruit and manage employees. It is a third-party entity and has a legal entity in India. Therefore, foreign businesses entering India can start their operations in the country without a legal entity.
Benefits of an EOR Service Provider in India
1. Faster Market Entry
Establishing an Indian subsidiary can be a time-consuming affair. It can take several months. This is because there is extensive paperwork and intricate legal procedures to meet. The business needs to register with multiple government departments.
When you partner with an EOR service provider in India, you work with companies that have a good local talent pool and access it within days. The EOR already has an established legal structure in India. Its operations are compliant with Indian employment laws. This eliminates delays and gets your operations up and running quickly.
2. Compliance with Indian Labour Laws
An employer of record company ensures that your business meets all the requisite labour laws of the country. It is important to mention here that the labour law framework in India is pretty complex. Also, it varies from state to state. The laws cover mandatory elements like minimum wages, provident fund contributions, gratuity, professional tax, maternity leave, and termination procedures.
It is crucial to mention here that businesses cannot afford to be non-compliant. It can lead to endless legal disputes followed by financial penalties. The EOR is responsible for legal responsibilities when employing workers on behalf of your company. They take care that all statutory obligations are met by your business. This allows foreign companies to operate worry-free and focus on core business goals.
3. Cost Efficiency
The costs of setting up a business in India can be huge. There are costs related to leasing a full-fledged office, hiring legal counsel, maintaining HR and payroll teams, and even managing day-to-day administrative processes. All of these can be costly. This is especially true for new companies, startups, small companies, or those testing new markets. An
EOR service provider in India can be a big help – they help businesses avoid the initial capital investments and also avoid the daily administrative and operational costs. Most EOR providers work on a ‘pay-as-you-go’ model. This offers the much-needed flexibility your business requires to operate in new market conditions. This helps reduce the cost of entry into the Indian market.
4. Streamlined Payroll and Benefits Administration
Another advantage of partnering with a trusted EOR service provider in India is that you can have a streamlined process of payroll processing and benefits administration. Remember that payroll administration in India requires management of multiple components. This includes basic salary, HRA (House Rent Allowance), PF (Provident Fund), ESI (Employee State Insurance), tax deductions at source (TDS), and more.
The EOR handles all this on your behalf. It computes and processes payroll, deducts taxes at source, and ensures benefits are administered in a compliant manner with Indian regulations. This way, employees are paid on time and correctly, reducing administrative burdens for the parent company.
5. Risk Mitigation
When foreign businesses hire employees without a legal entity or take the help of freelance contracts, there could be multiple risks that the company is exposed to. For example, if workers are not classified the right way or there is no classification at all, there could be penalties, and the company may even be banned.
The EOR provider has the total legal responsibility, especially employment relationship. They will manage all employment contracts, terminations and resolve disputes. And, all of this legally and compliant with regulations.
6. Focus on Core Business Objectives
This is undoubtedly one of the biggest advantages of an employer of record company. With human resources being managed by an outsourced company, the team and the leadership can stay focused on the core business functionalities.
Conclusion
As a company looking to enter or expand in India without going through the complexities of entity setup, compliance management, and payroll processing, getting an EOR service provider in India ionboard s a smart and efficient solution. With globalisation, EOR services are much in demand today, helping companies finding success in the Indian market.
