Hring Contractors in India vs Hiring Employees in India

Hiring Contractors

Hiring Employees on 3^rd party payroll (employer of record)

Hiring employees by registering a company

If you want resources for a specific short term project then this is the best way forward.

If you want to test the waters and hire a team only up to 5 employees then this is the best way forward.

If you already were working with a third party for more than 6 months and if you want to have a team of more than 5 employees then registering a company is most advantageous

Cost

Initial Setup – Nil ( as no setup is required)

Initial Setup Cost – Nil (but a deposit of 2 months’ salary may be required)

Initial Setup Cost – USD 2000 (this includes company registration, bank account and all the registrations)

Monthly Compliance Cost – Nil

Monthly cost – USD 150 per employee per month. So for a team of 10 employees, it will be 1500 USD

Monthly cost for Upto 10 employees – USD 500/month

Up to 50 employees – USD 1500/month

Advantages

• Best suited for short term project
• No setup and compliance cost
• Can be terminated as per the agreement

• Best suited for team up to 5 people
• No initial setup cost
• Can be terminated anytime by giving 2 months’ notice

• Very easy to hire employees if you have your own setup
• You control the policies and full control over the employees
• Cost effective if you have more than 5 employees and you want to have long term setup in India

Disadvantages

• Not suited if you want dedicated employees to your company

• As employees do not work for your company directly its difficult to attract talent.
• Very expensive if you have more than 5 employees
• You do not have full control over the employees

• Initial Setup cost involved
• Not suited if it’s for a temporary project
• Closing a company is a long process in-case you decide to close it