Employer of Record Services: What They Include and What They Cost

Most companies looking at employer of record services are solving a specific problem: they want to hire someone in a country where they have no legal entity, and they want that person on payroll within weeks, not months.

Employer of record services make that possible. The EOR becomes the legal employer of your hire in that country, handles employment contracts, payroll, statutory contributions, and compliance, while you retain full control over the day-to-day work.

The problem with evaluating employer of record services is that every provider quotes a different number, uses different language for what is included, and buries the real cost in components the headline fee does not cover. A $199 per month service and a $699 per month service may look like the same product on the surface. Often they are not.

This guide breaks down what employer of record services actually include, how EOR fees are structured, what the all-in cost looks like in practice, and what to ask before you sign anything.

What Is an Employer of Record?

An employer of record is a third-party company that legally employs your worker in a given country on your behalf. The employer of record signs the employment contract, runs payroll, manages statutory contributions, and keeps the employment relationship compliant with local labor law. You control the work: who you hire, what they do, how they are evaluated, and what they are paid.

Employer of record services exist because most countries require a locally registered legal entity before you can employ someone there. Setting up that entity takes time (three to six months in India), costs money ($20,000 to $150,000 in many markets), and creates ongoing compliance obligations. Employer of record services skip that entirely. You engage the EOR, the EOR employs your hire, and you wire a monthly invoice.

The EOR is not a staffing agency. It does not source candidates or manage your team's work. It is the administrative and legal infrastructure that makes international employment possible without a local entity.

What Employer of Record Services Include

Not every employer of record services package covers the same scope. But any provider worth using should include these core components as standard.

Employment contracts. The EOR drafts and issues a locally compliant employment contract in your hire's name. For India, this means a contract governed by Indian labor law, with notice periods, termination provisions, and statutory entitlements that match the applicable state's requirements.

Payroll processing. Employer of record services include monthly payroll in the local currency. For India hires, that means salary disbursed in INR, with a payslip generated each cycle. The EOR calculates gross-to-net, deducts the employee's statutory contributions, and deposits the net salary on time.

Statutory filings and contributions. This is where employer of record services add the most compliance value. In India, that means PF (Provident Fund) at 12% of basic salary from the employer's side, ESIC contributions at 3.25% of gross wages for eligible employees, Professional Tax by state, TDS deduction and remittance under the correct section, and quarterly Form 24Q filing. Annual Form 16 issuance falls here too.

Statutory leave and entitlements. Employer of record services manage leave accruals, track statutory leave balances, and ensure that leave encashment, maternity leave, and public holidays are handled correctly under local law.

Onboarding. Most employer of record services include the administrative side of onboarding: KYC collection, PAN verification, PF account enrollment, ESIC enrollment where applicable, and issuing the appointment letter.

Termination support. When an employee exits, whether through resignation or termination, employer of record services handle the statutory requirements. In India, that includes notice period management, full and final settlement calculation, gratuity payment for employees with five or more years of service, and issuing the experience letter and Form 16 for the partial year.

Compliance monitoring. Indian labor law changes at the state level regularly. Quality employer of record services monitor these changes and update their processes accordingly, so the employment relationship stays compliant without you needing to track Indian HR law from a US office. This ongoing monitoring is one of the most underrated parts of what employer of record services deliver.

What Employer of Record Services Do Not Include

Understanding what employer of record services exclude is as important as knowing what they cover.

The employee's salary. The EOR fee is additive to the CTC you agree with your hire. If you agree on INR 1,00,000 per month and the EOR fee is $599, you pay both. The fee covers the service. The salary covers the person.

Statutory employer-side contributions. These are also separate from the EOR fee. In India, your employer-side PF (12% of basic), ESIC (3.25% where applicable), and gratuity accrual (~4.81% of basic monthly) all pass through to you as the client. These are not the EOR's cost. They are yours, by law.

Health benefits and insurance. Standard employer of record services in India include statutory benefits. Group health insurance, term life cover, and accidental insurance are add-ons that some providers bundle and others bill separately.

Equipment and setup costs. Laptops, peripherals, and workspace setup are almost universally excluded from employer of record services pricing and fall to you or a separate vendor.

Immigration and visa support. If your India hire needs a work permit or your US employees need an Indian business visa for on-site visits, that sits outside standard employer of record services scope.

How EOR Fees Are Structured

Employer of record pricing in 2026 uses three models.

Flat fee per employee per month. The most common structure. You pay a fixed amount regardless of what your employee earns. Flat fees across the India EOR market range from $99 to $699 per employee per month depending on provider. This model gives finance teams a predictable number that does not move with salary increases.

Percentage of gross payroll. The EOR charges 10% to 25% of the employee's gross salary as the service fee. On paper, this looks cheaper for junior hires. On a senior engineer earning $4,000 per month gross, a 15% fee is $600, higher than most flat-fee providers for the same role.

Custom enterprise pricing. Large providers including Globalization Partners and Papaya Global often withhold pricing until a sales call and custom-quote based on headcount, country mix, and contract length. If a provider will not give you a starting number before understanding your team size, they are pricing-discriminating. Ask for the floor on the first call.

For India-specific hiring, the flat-fee model is almost always the right choice. Salary levels in India vary widely by role and seniority, and a percentage-based fee creates unpredictable costs as your team grows and gets promoted.

Employer of Record Pricing in India: The Market in 2026

India-specific employer of record pricing ranges from $99 to $699 per employee per month in 2026.

The fee gap between $199 and $699 reflects real differences in service depth. At the lower end, you get payroll processing and basic statutory compliance through a partner entity. At the higher end, you get dedicated support, direct India entity ownership, salary structuring expertise, and faster resolution when compliance questions come up.

For India-only hiring, the direct entity question matters most. Providers with a direct Indian entity file PF, ESIC, and TDS under their own registrations. A partner-model provider routes those filings through a third party. Both can work. When something goes wrong, the direct entity resolves it faster.

The Hidden Costs in Employer of Record Services

The EOR fee is the starting point, not the total cost. These are the line items that regularly catch US companies off guard.

FX markup. Providers that fund INR payroll from USD accounts apply a conversion margin on every payroll run. Rates range from 0.5% to 2% above mid-market. On a $30,000 monthly payroll for a 10-person India team, that is $150 to $600 per month in conversion costs that never appears in the employer of record pricing quote.

Setup fees. Some providers charge a one-time setup or onboarding fee per employee, ranging from $200 to $500. Remote does not charge setup fees. Deel does not for standard engagements. Ask explicitly before signing.

Security deposits. Certain providers require a refundable salary deposit of one to three months' gross salary per employee before onboarding. This is not a cost that disappears, but it is a cash flow impact. Confirm before you start.

Termination fees. Some employer of record services charge a separate fee for processing terminations, ranging from $200 to $500 per exit. On top of the full-and-final settlement calculations and gratuity payments the exit triggers, this adds up.

Off-cycle payroll. If you need to run a bonus, commission, or advance salary outside the regular payroll cycle, some providers charge $30 to $100 per off-cycle run. High-frequency bonus structures make this a meaningful line item.

Benefits surcharges. If group health insurance is included in your employer of record services package, confirm whether the premium is bundled into the fee or billed at cost plus a markup.

The only way to compare employer of record services accurately is to request a line-by-line cost worksheet for a specific employee profile, salary, and state. A quote that shows only the EOR fee is not a quote. It is a starting point for what employer of record services will actually cost you.

Employer of Record Services vs. Setting Up an India Entity

For US companies hiring fewer than 15 to 20 employees in India, employer of record services win on cost at almost every salary level.

Setting up a private limited company in India costs $20,000 to $150,000 upfront and takes three to six months. Ongoing costs include a local director, a registered office, a company secretary, a chartered accountant for monthly compliance, and legal counsel when labor law questions arise. These recurring costs run $15,000 to $40,000 per year before a single salary is paid.

At $599 per employee per month, employer of record services cost $7,188 per employee per year. For a five-person India team, that is $35,940 per year in EOR fees against $35,000 to $40,000 per year in entity running costs, with the entity requiring six months and $20,000 to $150,000 to set up in the first place.

At 20 to 25 employees in India, the math shifts. Entity costs spread across a larger headcount and the per-employee cost of running your own operations drops below the EOR fee. Quality employer of record services support this transition and help you migrate your team to your own entity when the time comes.

→ See how Kaamwork handles the EOR-to-entity transition: kaam.work/why-kaamwork/talent-centric-model

Frequently Asked Questions

1. What is an employer of record and what do employer of record services include?
   An employer of record is a company that legally employs your worker in another country on your behalf. Employer of record services include employment contracts, payroll processing in local currency, statutory contribution filings (PF, ESIC, TDS in India), statutory leave management, onboarding, termination support, and compliance monitoring. The employee's salary and employer-side statutory contributions are separate costs billed in addition to the EOR service fee.
2. How much do employer of record services cost for India hiring? Employer of record pricing for India ranges from $99 to $699 per employee per month in service fees. India-specialist providers tend to price in the $99 to $400 range. Global platforms like Deel, Remote, and Kaamwork typically sit at $599 per month. The fee covers employer of record services only. Statutory contributions, FX markups, and optional benefits are additional costs on top.
3. What are EOR fees and what do they cover?
   EOR fees are the monthly service charge a provider bills for managing the employment relationship. Standard EOR fees cover payroll processing, statutory filings, employment contract administration, onboarding, and termination support. EOR fees do not cover the employee's gross salary, employer-side PF and ESIC contributions, group health insurance, or equipment.
4. What is the difference between employer of record services and a staffing agency?
   Employer of record services make the EOR the legal employer of your hire. You source and select the candidate. The EOR employs them. A staffing agency sources candidates and may or may not be the legal employer. The distinction matters for compliance: employer of record services create a clear statutory employer for payroll, tax, and labor law purposes. Staffing relationships often do not.
5. Does employer of record pricing include statutory contributions in India?
   Standard employer of record pricing covers the EOR's service fee. Statutory employer-side contributions in India, including PF at 12% of basic salary, ESIC at 3.25% of gross wages for eligible employees, and gratuity accrual, are separate costs passed through to the client. These are fixed by Indian law and are the same regardless of which EOR you use. A quote that shows only the service fee understates the total cost by 15 to 20% of the employee's gross salary.
6. How do I compare employer of record services across providers? Request a line-by-line cost worksheet for a specific employee profile, salary level, and state. The worksheet should show the EOR fee, employer-side statutory contributions, any FX markup, setup fees, and optional benefits costs. A provider who refuses to give this breakdown before you sign is hiding something.
7. Are employer of record services the same as PEO services in India? No. PEO (Professional Employer Organization) is a US-centric co-employment model that does not translate to India's legal framework. Indian labor law does not recognize co-employment the way US PEO arrangements work. Companies looking for PEO services in India typically need either employer of record services (if they have no India entity) or payroll outsourcing (if they already have an entity and need compliance support).

The Bottom Line

Employer of record services solve a specific problem: legal employment in a country where you have no entity, without the time and cost of building that entity yourself. For India hiring at seed to Series B stage, employer of record services consistently win on cost, speed, and simplicity against entity setup.

The pricing spread across the employer of record services market in India is real, and it reflects genuine differences in service depth, entity ownership, support quality, and compliance expertise. A $199 provider and a $599 provider are not the same product priced differently.

Ask every employer of record services provider the same three questions before signing: Do you own a direct India entity? What is the all-in monthly cost for my specific employee profile, including statutory contributions and FX? And are setup, termination, and off-cycle payroll fees included in your employer of record services fee or billed separately?

The answers tell you more than any published employer of record pricing page.

For US and UK companies looking for employer of record services in India with transparent, all-in pricing from day one: kaam.work