Foreign company registration alternatives for companies hiring in India

Every year, thousands of global companies eye India to hire talent, and it's easy to see why. With a population of 1.4 billion and millions of engineers, IT professionals, and MBAs graduating every single year, the country has an A-level workforce. But then comes the tricky part: foreign company registration in India.

The process can take up to 6-12 months of paperwork, cost you tens of thousands of dollars, and involve endless compliance needs.

The traditional system here is slow, expensive, and legally complex. For most companies, especially those just testing the waters or building small teams, full entity setup isn't necessary.

However, it's 2025, and there are smarter alternatives that let you hire top Indian talent immediately without the legal maze. This guide outlines all the methods to employ staff in India without establishing a full legal entity.

Understanding foreign company registration in India

Before discussing specific options, we should first explore the "standard operating procedure" (SOP) for foreign company registration in India:

What does it mean to register a foreign company in India?

Registering a foreign company means creating a legally recognized presence under Indian corporate law. This could potentially also mean:

• A subsidiary (a locally incorporated company) - You establish a subsidiary company in India 100% owned by you. For that, a foreign company may invest up to 100% FDI under the automatic route.
• A branch office - It represents the parent company and conducts business on its behalf. A branch may perform business operations on behalf of the parent company, but cannot manufacture or retail trade without any special permissions. You also need a profitable business to open a branch office.
• A joint venture - This is the partnership between you and the local Indian company. Both of you have ownership, duties, and earn profits. This is commonly used if you want a local partner that understands the local market and regulations.
• A liaison/representative office - Which is approved by the Reserve Bank of India (RBI). This acts as a communication channel between your parent company and Indian parties. By the way, all the expenses must be funded through foreign remittances from the parent (foreign) company.

Each option requires registration with the Ministry of Corporate Affairs (MCA) and, in some cases, approval from the Reserve Bank of India (RBI). After that, you will need:

• Permanent Account Number (PAN) registration to file annual taxes
• GST registration for transactions
• Employees' Provident Fund Organization (EPFO) and Employees' State Insurance Corporation (ESIC) social security programs for employees.
• Regular financial audits and filings under Indian law

It's a legitimate path — but far from simple.

Challenges and costs

Here’s where many companies hit a wall.

Time and administrative overhead

Starting a business in India is not that easy. According to the World Bank’s report on ease of doing business, it should normally take 18–25 days and involve 10+ procedures just to legally register a company.

But in India, expect months to setup the foundation of your foreign company registration. There’s a lot of bureaucracy and red tape in India. So, expect paying more to get things done. Stuff like document preparations, government approvals, bank account setup, and tax registrations will drain your cash and time. During this period, you cannot legally hire or pay employees.

Compliance risks and ongoing legal responsibilities

For the setup obligations, like:

• Legal and consulting fees for incorporation
• Registered office lease and deposit
• Capital requirements
• Business Licensing fees
• Labor law compliance (PFs, Pension, gratuity)

You can expect to keep $70,000 reserved. Then, once established, you'll face ongoing expenses:

• Overhead headcount: For every 25-50 employees, you typically need dedicated roles for HR operations, payroll, finance compliance, and facilities management. This adds 10-20% to your total employee costs.
• Regulatory costs: Annual audits, tax returns, regulatory filings, and company secretary fees account for another 5% of employee costs per year.
• Transfer pricing: If your Indian entity does work for the parent company, then you need to have transfer pricing records and will pay market rates. This can add 20% to project costs.

Impact to budget and operational flexibility

So, all the delays and costs we referred to above may directly affect cash flow, employee hiring, and operational planning, which causes founders to stretch budgets to stay compliant. As a side note, starting a business (foreign company) in India will test your patience and persistence.

When Registration is Required

Although complicated, there are still situations that require you to establish a full legal entity:

• Large-scale work with a physical presence - opening manufacturing businesses (e.g. factories), retail establishments, or a regional headquarters with more than 50 employees, makes sense to establish an entity. At scale, the overhead costs become smaller proportionally.
• Legal or contract obligations - if you are working in a heavily regulated industry (banking, insurance, defence), then a registered Indian entity will likely be required to engage in business. Additionally, many government contracts require a partnership with an Indian corporation, at which will also require an Indian local entity.
• Long-term commitment to strategy - If India is a core market where you plan to build operations over 5-10 years, establishing your own entity gives you maximum control and branding presence.

For everyone else—especially companies hiring small teams (1-20 people) for tech, product, analytics, or support roles, there are faster, cheaper alternatives. We will discuss them in the next section below.

Alternatives to foreign company registration

Setting up a legal entity in India is one path. But it’s not the only one. For many companies, these options are faster, more cost-effective, and reduce risk.
So, let’s look at them:

Employer of Record (EOR) or PEO services

An Employer of Record (EOR) acts as the legal employer for your India-based team while you retain full operational control.

Like, we at Kaamwork have an EOR model that is trusted by companies like Tripadvisor, Thrasio, Ideal Image and more. In this model, we handle compliance, payroll, contracts, and taxes, so that you can focus on building the team and running operations.

Here’s a case story of our client:

Client: TripAdvisor

• Problem: Needed to build a full-time India team fast without opening a local entity. The vacancy was open for months as they couldn’t find the perfect fit.
• Solution: Using Kaamwork’s talent-centric EOR model, they recruited for the position in less than 4 days. (The employee is still working till date with them)
• Results: We helped them go from “we need talent in India” to “we have a working team” in weeks.
• 50% salary savings
• 95% employee retention
• Saved ~80% in overhead,
• Hiring process starts in just 48 hours.

Hiring independent contractors

Another fast-track option is engaging independent contractors, like freelancers, to outsource your work. They provide services under contract rather than as employees.

The pros you get are money savings and flexibility at work. But the work you get is mostly low-quality. All these third-party remote platforms, like Upwork or Fiverr, are very cluttered. Finding a great freelancers here is like digging out a needle from a haystack. Besides, you have zero control over how work is performed.

Partnering with local agencies or startups

Instead of foreign company registration in India, you can work with an Indian HR or staffing agency. These agencies handle sourcing, onboarding, and sometimes even management.

Benefits:

• Faster access to pre-vetted candidates.
• Local market knowledge.

Limitations:

• Indirect control over employees and processes.
• Additional cost layers and potential talent mismatches.

This model works best when you need immediate headcount on local projects but aren’t ready for long-term commitments.

Hybrid approaches

Lastly, you can always mix and match the work models and customize them to your needs. For example, you can hire a full-time content head through an employee of record, and then have freelance writers and editors who work under the content head.

This way, you can optimize for cost, speed, and talent quality. And you can always change things as you scale in the future.

Key considerations when choosing an alternative

Now that we have discussed all the models, you must know that not all solutions are equal. But here's the thing: not all solutions are created equal. The right choice depends on your pain points, your budget, values and future plans.

Hence, companies should give a nice thought to every alternative before choosing one:

Talent quality and access

The problem with a lot of offshore models is that they give you access to bodies, not talent. And Contractor platforms? You're bidding against other companies for freelancers who might be juggling three other gigs.

So, to ensure you get only high-calibre employees, ask these questions:

• Am I getting access to people who are already employed at top companies—engineers at unicorns, analysts at consulting firms, product folks who've shipped real products?
• Or am I getting whoever's available and willing to work as a contractor?

There’s a night and day difference between an ex-Product Manager from Amazon and someone who's been freelancing on Upwork for hardly 2 years.

Control and oversight

Now, instead of setting up a foreign company, you choose outsourcing, then you're a client, not an employer.

You can't promote people. You can't adjust salaries. You don't own the relationship. If someone's crushing it and you want to give them more responsibility? You need to talk to the vendor first and pay the extra fees.

Cost and scalability

Let's talk money. Setting up your own entity in India costs anywhere from $50K–$150K upfront, plus ongoing legal, tax, and HR overhead. That's fine if you're hiring 50 people. But if you're testing the waters with 2–5 hires? That math doesn't work.

Then there's the hidden cost: time. Entity setup takes 6–12 months. You're paying lawyers, accountants, and consultants just to get to the point where you can start hiring.

Meanwhile, EOR models like ours operate at 0% overhead, letting you scale quickly without fixed commitments. All this for a flat fee of $6,000 per employee per year.

Legal and compliance risks

Different models distribute risk differently. India has specific rules around labor laws, termination, benefits, provident fund contributions, and tax withholding. If you mess up, it will cost you big time in penalties, back taxes, and legal fees.

So ask yourself,

• Who's responsible if there's a compliance issue? Am I on the hook, or is the provider?
• How are taxes, benefits, and employment contracts handled?
• What happens if labor laws change? Am I expected to stay on top of that?

At Kaamwork, we're the Employer of Record. We handle all legal and regulatory needs for you. You just manage the work.

How companies can get started without registering locally

Alright, you're sold on the idea of hiring in India without setting up an entity. Great. Now what?

Here's the step-by-step playbook for registering a foreign company in India:

Step 1: Identify your hiring needs

Before you talk to any provider, get clear on what you actually need.

Ask yourself:

• What roles are we hiring for? (Engineering, analytics, product, operations, customer success?)
• What skill level? (Junior, mid-level, senior, leadership?)
• How many people do we need in the first 6–12 months?
• Do these roles need to be full-time employees, or can they be contractors?

Step 2: Evaluate alternative providers

Compare EORs, managed service providers, and contractor platforms. Prioritize partners that offer transparency in pricing, compliance, and reporting.

Step 3: Set up onboarding and remote work infrastructure

You've hired someone. Great. Now what? This is where most companies drop the ball. You need to ensure new hires are integrated nicely into the team. For that,

• Have an onboarding and management process.
• Set communication channels
• Decide on KPIs for performance review.

Your offshore team shouldn't feel like "the India team." They should feel like your team that happens to be in India.

Kaamwork offers all that with the EOR model. From welcome kits and offer letters to sending laptops, we help you create a sense of belonging.

We communicate your brand story, run engagement programs, and make sure your India team feels connected to your mission. This is why our voluntary attrition rate is under 5% where most of the industry average sits above 30%.

Step 4: Monitor, Adapt, and Scale

Review performance, costs, and compliance quarterly. As your India operations mature, adjust your hiring mix between full-time employees and contractors.

If things are working, scale. If they're not, diagnose why. Is it a talent quality issue? A communication breakdown? A management problem? Fix it before you hire more people.

Advantages of using alternatives to foreign company registration

Let's wrap this up with a clear summary of why skipping entity setup and going with an EOR model (or another alternative) makes sense for most companies.

1. Speed to market

• Entity setup timeline: 6–12 months (and that's if everything goes smoothly).
• Our EOR timeline: Start hiring on Day Zero.

If you're in a competitive market, waiting a year to start hiring isn't an option. Your competitors who figured this out six months ago are already scaling. You need to move fast.

2. Cost efficiency

• Entity setup costs: $50K–$150K upfront + hidden
• EOR costs: Flat $6K/year per employee. No setup fees. No hidden overhead.

And that's before you factor in salary savings. India-based talent often costs 50% less than US equivalents for the same skill level. A senior engineer in the US? $150K. In India? $75K–$90K.

3. Access to top talent

India has more software developers than the entire population of Norway. The talent pool is massive—and it's not just junior devs. There are senior engineers, data scientists, product managers, and analysts who've worked at unicorns, big tech companies, and top consulting firms.

The problem is access. If you're relying on LinkedIn posts and contractor platforms, you're fishing in the wrong pond. An EOR platform like ours can help you better.

4. Flexibility and scalability

The best advantage of EOR is that you can expand or reduce teams quickly based on business needs. Start with 1 hire. Scale to 10 in six months. If business conditions change, you're not stuck with an office lease and a legal entity you don't need.

Here’s a comparison table to give you a clear-cut idea:

Choosing the right path for hiring in India

By now, you must know that foreign company registration in India is a tolling process if you go the long route. And sure, if you're planning to hire 50+ people and you've got the time, budget, and patience to navigate 6–12 months of legal setup—go for it. That route works for some companies.

But for most? It's overkill.

We discussed how EOR and other alternatives can help you test the market, hire immediately, and build your team without the overhead. No visa processing or legal work. You can have your own remote team in India, without the technical mess.

What matters when choosing:

• Talent quality: Are you accessing top-tier professionals or B or C-level contractors?
• Control: Do you own hiring? Or are you stuck with vendor middlemen?
• Cost: Transparent pricing or hidden markups?
• Speed: Hiring this month or waiting a year?
• Compliance: Is someone handling Indian labor law, taxes, and payroll for you?

If you nail those five things, the rest falls into place. And Kaamwork helps you do exactly that. Access to top talent. Full control. Flat $6K/year fee. Start hiring immediately. We handle compliance, payroll, and HR—you focus on building your team.

Want to see how this works in practice? Talk to us.