Why building your own team is better than hiring an offshore development partner in India

The global technology landscape is rapidly evolving, making it more difficult than ever to scale critical initiatives as competition for skilled engineers, data scientists, and analytics experts intensifies.

Conventionally, the offshore development center within India has been considered as a low-cost point of entry that the U.S. firms can tap into global talent and speed up digital transformation. However, due to the changes in the business environment due to remote work, increased attention to data security, and the requirement to innovate faster, the strategy of building the global team must also be altered. Whether to opt for offshore development centers (ODC), outsource, or hire directly is no longer merely a question of price; it is a question of control, speed, quality, and sustainable ownership.

This article will show why building your own offshore development team in India is a smart move. Discover, through market data and executive insights, how the Employer of Record (EOR) model allows you to rapidly hire qualified talent in India without setting up a legal entity. The EOR handles payroll, benefits, regulatory compliance, and HR administration—all while you stay in charge of day-to-day management and strategic decisions. This approach gives you full workforce control, reduces setup times, and streamlines operations—so you can act now to lead your industry transformation.

Why leaders seek teams in India

Recent surveys and industry reports highlight a significant challenge: a critical shortage of technology and analytics skills. According to Gartner, 64 percent of CIOs report difficulties in filling software engineering, cloud, AI, and data science positions. The pandemic accelerated the adoption of remote work, rendering geographic boundaries less relevant, yet the demand for top-tier talent soared. American companies are now facing mounting pressure regarding salaries, struggling with employee retention, and experiencing significant talent poaching, particularly in Silicon Valley and other tech hubs.

India provides relief on three fronts:

Massive talent pool:

An annual engineering graduate population of over 1.5 million and a well-established data professional base—an unrivaled source of qualified employees.

Tested quality:

Indian engineers and product managers are driving global powerhouses such as Google, Microsoft, and Amazon, and are leading and innovating out of Hyderabad, Bengaluru, and Pune.

Cost advantage:

A team in India can save up to 50 percent on salaries and up to 80 percent on overhead when compared to the U.S. cost and meet international standards due to high levels of English language and technical skills.

With growth regaining its pace, enterprises of the U.S. have stepped up the onshore-offshore development center in India, but the old models have introduced new challenges and necessitate a strategic rethink.

Traditional approaches to building teams in India

Two traditional models prevail when it comes to expansion in India they are the establishment of an offshore development center and outsourcing.

Offshore development centers: high control, high complexity

An offshore development center (ODC) is a unit comprising a specific group of employees based in India, whose sole job is to work on products and initiatives of the parent company. Most of the time, American companies establish a legal entity, rent an office, and directly run the HR and technology functions—just as they would in the U.S., but in Indian cities such as Bengaluru, Gurugram, or Noida.

Key benefits:

• Direct control: The team, processes, and culture are designed by U.S. companies with IP rights and data integrity remaining in-house.
• Strategic scalability: ODCs can be resized according to business cycles, as required to support longer-term expansion.

Major drawbacks:

• Legal and regulatory overhead: To set up and do business in India means that it has to compete with a multifaceted labor law, registration of the business, and monthly filing of reports on compliance, some statutory requirements like Provident Fund (401k equivalent in the U.S.), Employee State Insurance (ESIC), and Gratuity (severance after 5 years).
• Initial investment: The initial cost of office space, IT infrastructure, recruiters, and lawyers is much higher than straightforward outsourcing. ODCs cannot be used in urgent ramp-ups since it takes 3-6 months to complete the total setup.
• Retention and engagement issues: U.S. HQs in practice find it hard to keep the same level of engagement, career development, and company culture in offshore centers, with the risk of high turnover and ineffective teams.

Outsourcing: speed with limited control

Outsourcing enables U.S. companies to outsource their work to third-party vendors in India to quickly provide resources to specific projects or for the maintenance of their products. Outsourcing companies typically bring their own staff, with minimal input on the part of the customer, to recruitment and management.

Key benefits:

• Quick start: Recruitment can be done within days, which is suitable where workload surges or specialized work are required in the short run.
• Low complexity: No legal entity required; the vendor handles payroll, HR, and compliance.

Major drawbacks:

• Lack of quality control: The U.S. firms are subject to fluctuating production, not aligning with their brand, as well as minimal control over hiring strategies without direct management.
• Churn and disengagement:The vendor employees can be shuffled across different clients or even switched, contributing to high turnover and organizational knowledge loss.
• Invisible markups: Hour rates can seem cost-effective, but other expenses are not always visible, like profit in the hands of vendors and management overhead costs that eat up the real savings.

Outsourcing or ODCs cannot offer the perfect balance in the current global environment. ODCs are expensive and time-consuming to install, whereas outsourcing provides quick implementation at the cost of control and long-term value.

A hybrid approach bridges this gap by enabling organizations to quickly build and directly manage their own fully aligned teams in India, often leveraging the Employer of Record (EOR) model. This method combines the speed and simplicity of outsourcing with the quality, brand alignment, and ownership achieved through in-house teams.

Building your own team in India

With the world in constant need of tech and analytics talent that is still way outpacing supply, the shortcomings of both offshore development centers (ODCs) and outsourcing have become more evident. To address this dilemma, additional U.S. executives are exploring a middle ground: developing their respective teams in India under the Employer of Record (EOR) model. The strategy will enable swift ownership and access to a global talent pool in India, and will help to avoid complexities of setting up a local entity, as well as reduce compliance risks.

What building your own team really means

Unlike traditional overseas development centers (ODCs) or third-party outsourcing, establishing your own team in India allows you to hire full-time employees without needing to set up a legal subsidiary there. In this model, the vendor does not hire employees in the conventional sense; instead, these employees are considered part of your organization. They are branded as your team members and receive company email addresses, participate in regular meetings and integrate into your culture and workflows. The Employer of Record (EOR) model facilitates this by acting as the official local employer while you retain responsibility for defining roles, conducting interviews, setting compensation, managing promotions, and overseeing workflows.

Key features of this approach:

• Staff aligns with your organization, not a third-party vendor.
• U.S. managers control recruitment, onboarding, and appraisals.
• Teams operate on your time, tools, and brand name.

How the Employer of Record (EOR) model enables this

The EOR is an Indian-based specialty service provider formally engaged in the use of a team that conducts all HR services, including payroll, benefits, compliance, and workplace documentation. This allows you to scale at a fast rate without entering the quagmire that is the legal and administrative sector in India.

No local entity needed: The EOR recruits staff on your behalf, and thus you need not be registered with the Indian Ministry of Corporate Affairs or have a system of continuous compliance in place. This eliminates the use of a Permanent Account Number (PAN), monthly governance, and statutory audits.

Fast, compliant onboarding: Because of pre-configured infrastructure, the EOR is able to onboard talent in days, not months, to meet all of the tax, Provident Fund (equivalent to 401k), Employee State Insurance (Indian social healthcare), and gratuity obligations. These are customized processes that are described to global companies.

Full compliance and legal protection: The EOR deals with all the labor laws—such as the Factories Act and the Minimum Wages Act—and eliminates the chances of non-compliance and punishment in case of law violation. The contracts, payroll, and tax filings are continually updated with the evolving regulations at the local and state levels.

Flexible, scalable teams: You can start with one employee or 50, scaling up or down as needed with no lingering liabilities. The EOR handles project-based, permanent, or pilot hiring as your business goals shift.

Advantages over offshore development centers and outsourcing

The EOR method of developing your own team has special advantages for the US decision-makers:

• Quick hiring without setup: There is no registration of any entity or search of the office. Onboarding timeframes are reduced to a mere 1-2 weeks as compared to the 3-6 months required for setting up ODCs. This leads to the accelerated launch of products, pilots, or global transformation projects.
• Economical in terms of cost, no markup by the vendor: EORs are set at flat and transparent monthly charges per employee. This eliminates the hidden markups and overhead costs of traditional outsourcing and does not require a large initial capital investment for the ODCs.
• Access to high-quality talent: Indian professionals, who are accustomed to working in a global environment, are more likely to find employment with organizations that offer direct job opportunities and have a strong employer brand. The most talented candidates prefer long-term commitments that allow for career growth and global exposure, rather than temporary positions.
• Greater employee satisfaction and retention: Employees are actively engaged with your brand, fostering their commitment to your mission and enabling long-term career advancement. This approach reduces churn, knowledge loss, and disengagement—issues commonly associated with outsourcing and poorly managed ODCs.
• Seamless compliance: Delegate the leave HR and government filings to the professionals. Indian EORs monitor the changing labor codes, benefits, leave rights, and tax reforms so that your management in the U.S. can concentrate on business and not on paperwork.
• Less risk, hassle-free exit: The EOR model will take care of all the statutory notices, severance, and final settlements as per the Indian law in case the project is terminated or business priorities change. This reduces the chances of employment conflict or PR problems.

Why India is the ideal location for building your team

Offshoring decisions should not only focus on cost; they must also consider access to high-quality talent, business flexibility, and strong infrastructure. This is one reason why India stands out, especially for companies utilizing the Employer of Record (EOR) approach.

• Unparalleled Talent Base: India boasts an incredible talent base, producing over 1.5 million engineering graduates each year, along with more than 3 million professionals in IT and analytics. No other English-speaking country has such a vast and continually updated talent pool.
• Cost competitiveness: Savings on salaries and operations consistently exceed 50% compared to U.S. standards, and overhead costs can be reduced by up to 80%, especially when expensive entity structures and compliance costs are avoided through the use of EORs.
• Enabling Clarity in Governance and Regulation: India continues to liberalize its regulations for foreign businesses. Recent policies have simplified labor, taxation, and compliance standards, including the Code on Wages. Additionally, local providers are well-informed about developments, so U.S. executives do not need to become experts in Indian regulations.
• Technology and innovation centers: Bengaluru, Pune, and Hyderabad are cities recognized globally for software development, analytics, and product leadership. Indian professionals are well-acquainted with international brands such as Google, Amazon, and major FinTech companies.

By selecting EOR-enabled team building in India, firms access this strong ecosystem without the familiar obstacles and blind spots of vendor-based outsourcing.

Steps to build your team in India (EOR model)

The creation of a compliant, high-performance offshore team has never been easier, as long as decision-makers adhere to an implementation plan, structured and driven by best practices. This is the way international firms succeed in forming their own branded teams in India:

Step 1: Define roles and requirements

Indicate the required skills, functional areas, and experience. Break down the job descriptions and culture-fit to U.S. standards and localize them in terms of titles and pay policies.

Step 2: Choose the right EOR partner

Research, compare, and select an established EOR with a proven track record in your industry. Take into account their compliance capabilities, payroll efficiency, customer support and ability to recruit high-quality, passive candidates from leading competitors.

Step 3: Source and evaluate candidates

Collaborate with your EOR to discuss candidates, platforms, work arrangements, and recruitment strategies. Go through the resumes directly, conduct interviews, and have them take tests, just as you would with U.S. hires.

Step 4: Conduct direct interviews and select talent

The U.S.-based managers conduct final-round interviews, reference checks, and offer discussions in liaison with local recruiters. This maintains brand exposure and consistency.

Step 5: Onboard seamlessly with full compliance

The EOR drafts locally compliant employment agreements that are specific to your assignments and cover Indian statutory provisions such as Provident Fund (mandatory long-term savings), ESIC (state-run health insurance), Gratuity (long-service severance), and minimum notice and leave requirements. They enroll workers in all benefits and submit paperwork with the authorities in India, with zero compliance gaps.

Step 6: Scale from a single hire to a high-performing team

Having all onboarding and payroll done, you are able to increase the number of people as you wish or reduce it at any rate you want as business requirements change. Modify positions, wages, and compensations on the fly without sacrificing worldwide management and data security.

Best practices of successful EOR implementation:

1. Have clear internal communication.
2. Have global payroll and data using secure, integrated HR technology.
3. Parallel run of plans and cross-checking compliance to ease the transition.
4. Keep up with local changes in the law with your EOR.

The step-by-step model is a simple avenue that will ease in and out of the Indian talent market and safeguard against taking risks with a high level of operational agility and ROI.

Comparing offshore models: ODCs, outsourcing, and building your own team

The competition on how to create productive global teams has led to the emergence of a number of models to tap into international technological and analytical talent. The realization of their own strengths and weaknesses is paramount to the U.S. executives outlining offshore strategies.

Each model is developed to suit the requirements of the business in the rapidly developing global environment:

• Offshore development centers (ODCs) are subsidiaries where companies operate a team in India with complete operational authority.
• Outsourcing offered an expedient method of hiring third parties to perform projects or recruit staff compliance without any formidable presence.
• Forming your own team through EOR offers key benefits: significantly reduces setup time, maintains direct brand ownership and employee involvement, and ensures regulatory compliance without legal complications.

This is a summary of why they exist, when they perform best, and some of the challenges:

1. ODCs provide ownership and complete legal control, but they require a substantial upfront investment, adherence to legal compliance, and ample management capacity.
2. Outsourcing speeds up project launch with little legal and human resource overhead at the expense of talent management, culture, and intellectual property management.
3. Creating your own team through EOR reduces setup time significantly and retains direct brand ownership and employee participation, and it meets regulations without legal hassles.

Comparing ownership and offshore development center vs outsourcing vs building your own team

Which companies benefit most from building their own team in India?

Since the U.S. companies are struggling to innovate and scale in response to shortages of talent and an increase in costs, the Employer of Record (EOR) model of direct team building in India presents some distinct benefits. A number of company profiles are outstanding suitors to this hybrid model, which is fast, controlled, and economical with no legal complications.

High-growth startups and scale-ups

Startups and scale-ups are under pressure to recruit vigorously for technology and information positions. They often require:

• Quick hiring process without the long delays that are experienced when registering an entity or having to organize various vendors.
• Talent of high quality in line with their brand and culture, which is essential in innovation and retention.
• Scalability of scale-out and scale-down with changing funding and business requirements.

Mid-to-large enterprises with ongoing digital transformation

Retail, finance, healthcare, and others are digitalizing on a massive scale and need specific offshore teams as part of an extensive change initiative. The advantages of such enterprises are:

• Cultural and operational fit through direct employment of candidates who are reflective of corporate values and business priorities.
• Retention of key employees in the long term, as compared to the high rate of outsourcing.
• Reduce risk by ensuring compliance and data security by using local trusted partners who handle regulatory complexities.

The EOR model enables such firms to develop an in-house approach to offshore presence within days or weeks, rather than months, to aid in quickening digital pipelines and innovation projects without legal distractions.

Global companies are under cost and quality pressure

Most CFOs and strategic leaders aim to minimize costs without compromising the quality of talent. For them:

• By recruiting full-time Indian workers through an EOR, they can reduce their salary expenses by 50% or more and overhead expenses by up to 80%, compared to U.S. salaries or agency fees.
• Up-to-date employment terms maintain culture and performance standards.
• The compliance and payroll services offered by the EOR minimize risk exposure due to labor legislation and local taxation.

This model offers a long-term and strategic alternative to the unpredictable costs and turnover associated with outsourcing, forming stable global teams that drive business value.

Real-world case studies demonstrating success with EOR

Case study 1: Tech startup rapid expansion

An American SaaS startup was in a dire situation and required a team of 10 to serve APAC customers as customer support representatives. Establishing a local organization would have required 5-6 months and expenses of 20,000 or more in legal fees. They instead took on their whole team within three weeks through an EOR partner. The EOR managed the Provident Fund, ESIC, payroll, and compliance, and the startup retained control over training and KPIs. This meant that there was a quick market reach and legality without huge capital investment.

Case study 2: Financial services market entry

An American financial services firm had to set up a back office in India. Working with a PEO/EOR allowed us to quickly find talent with minimal risk. The EOR also ensured adherence to security standards and labor laws, enabling easy and scalable hiring, as well as continued operation, without incurring the expenses and complexities associated with a subsidiary.

Case study 3: Manufacturing firm compliance and scalability

The Indian supply chain, an exploration of a small procurement team built by an EOR, was created by a mid-sized U.S. manufacturer. This strategy enabled the ability to scale the team flexibly, comply with labor laws in India, onboard quickly, improve relations with suppliers, and minimize operational risk.

Why is this model superior to outsourcing

Outsourcing has been considered a fast and cost-effective method of accessing talent in India's technology sector. Nevertheless, there are a number of serious disadvantages that tend to hamper the efficiency of U.S.-based companies aiming to achieve agility, quality, and long-term growth.

Conversely, the Employer of Record (EOR) model has some radically different benefits that provide solutions to the pitfalls of outsourcing and establish a more transparent, controlled, and interactive employment relationship.

Key challenges of outsourcing

1. Lack of control and authority Recruitment, evaluation, and employee engagement are handled by outsourcing vendors. This limits your ability to influence team culture, performance and alignment with your strategic goals. The vendor also adds layers of separation and communication barriers which may stifle innovation.
2. Communication gaps and unfair negotiation Outsourcing arrangements often suffer from misaligned expectations, slow response times, and complex negotiations. When outsourced employees are not contractually linked to your company, conflict resolution and work adjustments become cumbersome.
3. Risks of choosing an inappropriate team You have limited control over staff assigned to your projects. Without direct hiring, team composition and turnover can be inconsistent, leading to quality gaps and poor knowledge retention.
4. Security and privacy issues Outsourcing presents the risk of IP violations or data breaches that could happen because of the involvement of multiple stakeholders in accessing core assets. Your stringent security practices or compliance policy may not be compatible with outsourcing vendors.
5. Hidden fees and overhead Salaries, management fees, and other overheads are inflated by vendor markups, making the cost more than the estimates at the start of the contract. Indirect costs may also be incurred in your business in the process of dealing with the vendor.

How the Employer of Record model overcomes outsourcing limitations

In contrast to outsourcing, an EOR employs the workers on its Indian legal basis and provides your company with complete transparency and control over the daily operations. This is a hybrid practice combining speed and simplicity with ownership and quality.

Direct control of the team

Under EOR, your managers in the U.S. choose, recruit, and manage talent as though they were part of the company staff so that they fit in the company culture and corporate objectives at the outset.

Clear communication and fair employee benefits

EOR employees are provided with official employee ESIC agreements (insurance benefits sponsored by the government), Provident Fund (compulsory retirement savings), and leave. This organization encourages equality, incentives, and retention, which the outsourcing fails to deliver.

Minimal risk when selecting the team

Hiring occurs in a transparent manner and through your direct participation, and the EOR is the legal employer; therefore, there is a better quality of employees and lower turnover. This also allows for developing a leadership pipeline that matches your long-term requirements.

Zero risk of IP infringement and data breach

Since employees are under contract to work on your team and you have NDAs and IP agreements, exposure to risks is reduced. The EOR gives assurances of adhering to all the Indian data protection laws as well as labor laws, and provides better protection of your company assets than the vendor-controlled processes.

Building the team around chosen leaders

EOR enables you to establish cohesive teams that are anchored by your selected leaders and managers, which enhances the cohesion and productivity of the team compared to the outsourced teams, which work independently.

Why top-tier professionals prefer the EOR employment model

The most talented people in India, particularly the ones who have global experience, are pursuing direct employment avenues as opposed to subcontracting by vendors. The EOR model offers them:

• Definitive progression and stability in an established international brand.
• International benefits and equity programs.
• Participation in organizational culture, developmental systems, and global mobility.
• Salary transparency, compliance, and legal protections.

This increases involvement, reduces attrition, and enhances morale within the team—essential success factors in the creation of distributed teams.

KaamWork has also been the first to implement the Employer of Record model in India, using a talent-driven and fully compliant service that allows a U.S. company to hire instantly and remain in control. Their platform combines contemporary HR management, strong local market intuition, and compliance guarantees to allow simple individual hires to all-distributed teams.

Clients benefit from:

• Recruitment of Google, Amazon, Microsoft, and other leaders and professionals.
• Full compliance with the legal and tax requirements of the Provident Fund, ESIC, and other regulations of India is taken care of.
• Onboarding and payroll support to provide a smooth experience to employees.
• Performance management and direct interviews for clients and

Most of the top firms attribute their success to increasing their operations in India much faster and avoiding legal liability without sacrificing the in-house culture and employee experience at Kaam. Work.

The smarter way to scale your workforce

The future of offshore recruitment in India is obvious—employers who adopt direct employment with well-established EOR networks will enjoy the following advantages:

• Direct entry to a talent pool across the country without the establishment of entities.
• Complete managerial authority over the hiring, performance evaluation, and culture development.
• No hidden outsourcing fees and predictable costs.
• Well-developed compliance and risk management in line with intricate Indian regulations.

Say goodbye to outdated offshore models. Kaamwork helps you build a fully compliant, branded India team using its EOR expertise.

Connect with our experts now and start building your India team today!