Contractor vs EOR: how to hire in India

Most US companies hire Indian talent as independent contractors. It's proper and easy. Here's when to use each structure, what it costs, and how to decide.

When hiring marketing talent from India, you have two clean legal structures: independent contractor or Employer of Record (EOR). This guide covers both, starting with the one 80% of companies choose first.

Option 1: Independent contractor (most common)

How it works

• You sign a contractor agreement directly with the individual
• You pay them directly to their bank account monthly
• You pay via Wise, Payoneer, or international wire transfer
• No Indian entity needed: no legal presence, no registration
• The contractor handles their own Indian taxes (income tax, GST if applicable)

When to use it

• First hire from India: simple, fast, zero setup
• Roles with clear deliverables: content, campaigns, automation
• Companies not ready to commit to full-time employment
• Budget-conscious: Salary is the only cost

What it costs

Just salary. No employer taxes or compliance obligations.

What you pay is what it costs. No hidden employer contributions, no platform fees, no overhead.

Is it legal?

Yes, if the relationship is genuinely a contractor relationship:

• The contractor controls how and when they work
• They can (in theory) work for other clients
• They use their own equipment
• You don't dictate daily hours, only deliverables and deadlines
• The contract specifies independent contractor status

In practice, most US-India contractor relationships are straightforward. India has no "misclassification crackdown" equivalent to California's AB5. The risk is low, but the structure should be genuine.

Payment logistics

Option 2: Employer of Record (EOR)

How it works

• An EOR provider becomes the legal employer in India
• You manage the person day-to-day (tasks, goals, performance)
• The EOR handles payroll, taxes, benefits, compliance
• The hire is a full employee under Indian labor law

When to use it

• Long-term hires you want to retain: EOR signals commitment
• Roles requiring access to sensitive data or IP: Employment agreements are stronger than contractor agreements
• Companies with compliance-sensitive clients: SOC 2, GDPR, etc.
• When the hire requests it: Some senior candidates prefer employment status for loan eligibility, visa sponsorship for family, etc.

What it costs

• Monthly EOR fee: typically $199–$599/month per employee (varies by provider)
• Employer statutory contributions: Local employment taxes and compliance costs

That's still 75%+ savings vs a US hire at $10,000+/month for the same role.

Major EOR providers for India

Several well-established platforms serve India: Deel, Remote, Oyster, Multiplier, and RemoFirst are the most widely used. Each has slightly different pricing and features. We don't recommend one over another. The best fit depends on your team size, budget, and existing tooling.

What the EOR handles

• Monthly payroll in INR
• Income tax withholding (TDS)
• Tax-compliant employment contracts under Indian law
• All statutory employer contributions
• Leave management and compliance with state-specific labor laws

Side-by-side comparison

When to switch from contractor to EOR

• The hire has been with you 6+ months and you want to retain them long-term
• They ask for employment status: common for senior hires who want loan eligibility or family visa sponsorship
• Your company is undergoing SOC 2 or similar compliance audit: Auditors prefer employment relationships
• You're building a team of 3+ in India: Managing multiple contractors gets messy; EOR centralizes payroll and compliance
• GTMly can handle the conversion: It takes about 2 weeks from contractor to full employee

The choice is yours

Common questions

Can my contractor work for other clients?

In theory, yes. In practice, most full-time contractors work exclusively for one company. This is fine as long as you don't control their daily schedule. The contractor agreement should specify that they are free to take on other work, even if neither side expects them to.

What if I want to hire 5+ people in India?

At that scale, consider setting up your own Indian subsidiary. It's more work upfront: registration, compliance, local accounting. But it's cheaper long-term than paying 5 EOR fees ($2,500–$3,000/month in platform fees alone). GTMly can advise on when the crossover point makes sense for your team size and growth plan.

Do I need a written contract?

Yes, always. We provide contractor agreement templates. The contract should cover scope of work, payment terms, IP assignment, confidentiality, and termination provisions. A handshake agreement is not sufficient, for your protection or theirs.

What about data security?

Both structures can include NDAs and data protection clauses. EOR employment agreements are slightly stronger under Indian law, but a well-drafted contractor agreement is sufficient for most cases. If you handle sensitive customer data (healthcare, finance), EOR gives you a cleaner compliance story.