Hiring Indian Talent Full-Time from Abroad

Broadly speaking, there are three routes to working with Indian talent from abroad.

1. Establish an Indian Entity to Hire

This is not recommended unless you plan to operate in India for the long term. There are a number of complicated regulations that vary from state to state, creating massive amounts of operational overhead.

2. Use a PEO to Hire

PEOs are Professional Employer Organizations. They exist solely to help companies hire employees in India without a legal entity. They can manage all human resources, benefits, payroll, and tax needs. They can also ensure payroll and legal compliance.

If you plan on hiring multiple Indian individuals, a PEO can be a good route to eliminate all the administrative and logistical headaches. They typically charge either a flat fee (~$1,000 - $2,000/year per employee) or a percentage of payroll (~2-10%).

Here are the highest rates PEOs from Investopedia:

3. Hire on a Consultant Contract

Using a Consultant Contract is by far the most common way of hiring Indian talent for startups and scale ups. We have direct knowledge of multiple Y Combinator startups and crypto startups who use this method. Anecdotally, it is well established on the ground that hiring individuals on contract is the best route to working with Indian talent.

In US terms, the individual is treated as a W8 BEN E consultant. The individual is fully responsible for their own taxes and compliance, and the employer does not need to contribute to the Provident Fund (India’s version of a 401k) or follow other Indian employer regulations.

These contracts must have a defined time limit (typically 12 months) along with a generalized scope of work. If needed, Superteam can provide templates for you to use.

Two disclaimers:

  • The regulatory risk is next to 0%, but it is not actually 0%. Though it’s incredibly common and there are no known stories of startups getting caught on the compliance side, ultimately this route does treat a FTE as a contractor. On the upside, it’s relatively easy to begin working with an individual as a contractor and, at a later date, use a PEO as the company scales.
  • That if you hire more than 20 Indian contractors, you may be subject to additional regulation under the Contractual Labour (Regulation and Abolition) Act.

Currency for Payments

If paying in fiat, Indian employees ought to be paid in INR, even if their compensation is denominated in USD. India has strict currency controls on Indian nationals holding foreign currency accounts in India. That said, some Indians have multi-currency accounts and can also accept USD.

Alternatively, paying in crypto is much simpler but does create a 30% tax obligation on the recipient when they convert the crypto token into INR.

Further Reading: