What is India EOR? Overview of services and introduction benefits
As more Japanese companies seek to utilize excellent IT talent and engineers from India, a new employment scheme called "EOR (Employer of Record)" is gaining attention. This article will provide a detailed explanation of the structure of India EOR, its differences from traditional contracting methods, and the benefits of its implementation.
Contents
What is EOR (Employer of Record)?
EOR (Employer of Record) is a system in which the EOR provider acts as the legal employer for employees, instead of the company directly becoming the employer, handling labor management such as payroll and social insurance procedures.
Company (Client): Focused on business instructions and project management
EOR Provider: Responsible for labor management and procedures as the employer under the employment contract
Unlike the common practices of "establishing a local corporation", "outsourcing", or "dispatch contracts" in hiring overseas personnel, the EOR takes care of payroll, tax, and social insurance processing, significantly reducing the complexity of local regulatory compliance for companies.
Features of India EOR
2-1. Able to hire without establishing a local corporation
Typically, to employ staff overseas, it is common to establish a local corporation that hires employees. However, by utilizing EOR, you can hire engineers and staff without having your own corporation. The EOR provider’s Indian corporation (or partner company) becomes the legal employer, and the Japanese company only needs to give business requests and instructions.
2-2. Reducing labor risks
India's unique labor laws, social insurance system, and tax regulations are complex, posing the risk of compliance violations locally. With EOR, all employment procedures, payroll calculations, and insurance premium payments are handled by the local corporation (EOR), significantly reducing labor risks and management costs.
2-3. Speedy recruitment of talent
If you want to quickly secure talented Indian engineers and professionals, using EOR can allow you to hire local staff in a few weeks to a month. This is characterized by an overwhelming speed of initial implementation compared to waiting to establish a corporation or obtain licenses.
Advantages of implementing India EOR
Benefits of Introducing EOR in India
Benefit 1: Cost Reduction Without Local Corporations
Establishing a corporation incurs initial costs ranging from several hundred thousand to millions of yen, along with monthly maintenance costs for audits and accounting. With EOR, you can cut these fixed costs, and operating expenses are limited to the EOR service fees, allowing for small-scale introduction and test operations.
Benefit 2: Peace of Mind for Labor and Tax Compliance
India's labor laws and tax filings are complex, and it can be a significant burden to employ specialized personnel in-house. In the case of EOR, salary and social insurance procedures, as well as withholding tax (TDS) management, are handled by the EOR provider, who also supports you during any issues.
Benefit 3: Improved Speed of Recruitment and Management
Many EOR providers offer recruitment and staffing functions as a package, making it easier to gather talented engineers and staff in a short period. Onboarding after recruitment and local support can all be consistently requested, allowing Japanese companies to focus on development and business progress.
Benefit 4: Differences Between Temporary Staffing and Outsourced Work
Outsourcing: Contracts focus on deliverables, posing legal risks if the actual situation resembles temporary staffing.
Temporary Staffing: Involves regulations not only from Japan's domestic staffing laws, including licensing and responsibilities for staffing destinations but also involve different regulations internationally.
With EOR, the employment relationship exists with the EOR provider, and it is not structured where the Japanese company acts as the direct
What kind of companies do you recommend?
✔I want to test overseas expansion：
I am interested in the Indian market, but would like to develop and conduct research with a small team first.
✔I want to secure excellent IT engineers：
Startups and small to medium-sized enterprises that want to utilize highly skilled personnel unique to India early on.
✔I lack resources for establishing a local corporation：
In cases where it's a high hurdle to suddenly establish a corporation in terms of cost and know-how.
✔I have concerns about labor management：
If there are no personnel in the company who are knowledgeable about Indian labor laws and tax matters.
Summary
EOR is a new scheme that allows for the employment and utilization of Indian talent without the need for the presence of a corporate entity in the local area. The legal employer is the EOR provider, freeing Japanese companies from the complexities of labor management and compliance. For companies aiming to secure excellent engineers and expedite overseas expansion, it can be considered a viable option due to its low barriers to entry and manageable risks. Phinx provides India-specific EOR services backed by a strong local network and extensive project experience, supporting the employment of talented individuals.
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