You’ve decided to build in India. Now the question is how to do it, and what it’s actually going to take.
There are five paths teams typically consider:
- Setting up your own entity
- Hiring through an Employer of Record (EOR)
- Working with independent contractors
- Building through a BOT
- Or outsourcing to a dev shop
Each model shifts the balance between speed, control, cost, and operational ownership.
This guide breaks down what you’ll spend, what you’ll manage, and what each model tends to leave unscoped – across both direct and indirect costs. Not just payroll and platform fees, but coordination, delivery risk, and what founders end up absorbing when no one’s clearly scoped to own the loop.
Understanding India expansion costs
When teams price out India expansion, they usually account for the obvious line items – salaries, workspace, and what the hiring model charges. But that’s only the surface.
The real cost shows up in what no one tracks directly: post-offer drop-offs, uncoordinated onboarding, follow-ups founders absorb themselves, and gaps between vendors that slow your team down before it ever ramps up.
These fall into two categories: direct and indirect costs. Both affect how fast your team actually gets productive.
Direct costs
These are predictable and usually show up in contracts or vendor quotes:
- Salaries, benchmarked by geography, level, and function
- Employer of Record (EOR) fees, charged monthly for compliant employment without an entity
- Workspace and equipment setup, including IT procurement, delivery, and co-working arrangements, if scoped
- Statutory contributions like Provident Fund (PF) and gratuity
- Recruitment or onboarding tools, including background checks, payroll platforms, and employment documentation
- Security deposits or prepayments, especially for office spaces
- Initial recruitment fees, if you’re working with an agency or retained partner
These vary by provider, but they’re relatively easy to account for up front.
Indirect costs
These aren’t always on the invoice – but they’re what slows down delivery:
- Drop-offs during notice periods
- Workspace or IT delays that force ad hoc workarounds during onboarding
- Retention risk at the 3–6 month mark, especially if benefits or growth paths aren’t designed for sustained engagement
- Founder or leadership involvement in day to day operations (or worse – not being looped in soon enough), when local issues surface and there’s no ownership
- Compliance complexity, especially when hiring across states with different PF and labor rules
- Vendor fragmentation, where hiring, payroll, workspace, and HR are handled by separate teams, increasing coordination overhead
The cost of different expansion models when you’re building a tech team
Each path to building in India comes with a different cost profile. Some look efficient upfront, but might come with gaps in retention or multiple vendor coordination. Others (like setting up an entity) offer full control, but only if you have the internal bandwidth to run local operations.
Here’s how the numbers play out across the five most common paths, based on founders scaling specialized tech teams.
Setting up your own India entity
For founders planning a long-term presence in India, setting up an entity gives you full ownership – over employment structure, compensation, IP, and how your team scales. But that ownership comes with overhead most early-stage companies aren’t resourced to carry.
Direct costs
- ~$20,000+ in setup and legal fees: incorporation, PAN, TAN, GST, PF registration, and local director onboarding
- 25–30% annual overhead on top of salaries: HR, payroll, compliance, bookkeeping, local vendor management
- Recurring costs: director salary, workspace leases, IT setup, and insurance administration
For a 30+ person team, this adds ~$60K–$70K/year just in administrative load – not counting internal HR or ops hires.
Indirect costs
- 6–12 months to get fully operational, even with external consultants
- Labor law variations across states can complicate PF, gratuity, and compliance filings
- No built-in coordination for onboarding – workspace, equipment, insurance, and access setup falls on your team
- Founders or senior engineering leads often handle escalations when local support gaps show up
- Engineers may join, but they won’t stay (unless you invest in retention early) – everything from insurance coverage to culture-building needs to be scoped and managed directly
When it makes sense
- You’re building a 30+ person engineering team and plan to scale across cities
- You already have the time, budget and internal resources like HR, legal, payroll and benefits administrator to handle local complexity
- You want direct control over contracts, benefits, and long-term employment terms
Employer of Record (EOR)
An Employer of Record allows you to legally employ in India without setting up a local entity. The EOR becomes the formal employer, handles payroll, benefits compliance, and statutory filings like PF, taxes, and gratuity. For early-stage teams, it’s often the fastest route to start building in India.
But speed only solves one part of the equation. What matters is how much of the post-offer experience the provider actually owns, and how much you or your team might still need to coordinate.
Direct costs
- $199–700 per engineer per month (flat fee or 10–15% of salary)
- Salaries paid through the EOR, but typically scoped and negotiated by you
- Benefits usually limited to statutory compliance (₹3–5L insurance, PF); you can customize benefits for your employees with some providers
- Hardware/equipment not always included, often handed off to your team or scoped at additional service charge
- Workspace arrangements (if your remote employees are to work from office) are on your team
For a team of five, platform fees alone add ~$20K–$30K annually.
Indirect costs
- Onboarding isn’t always completely hands off.
- Engineers may receive generic benefits or insurance, which can hurt credibility or simply the appeal of the offer, especially in competitive tech roles
- No local admin/HR support means issues often escalate to you when portal-based tickets go unresolved
- Founder or tech lead involvement becomes inevitable when PF activation, reimbursement claims, or payroll concerns aren’t tracked closely
- Retention can suffer if employees don’t get a well-aligned experience of your brand, especially when employee engagement or competitive benefits aren’t built into the model
When it makes sense
- You’re building a 1–30 engineering team and want to move fast
- You don’t have local ops or compliance coverage yet
- You’re testing India as a market, or plan to shift to an entity once scale or funding supports it
See more: Hiring in India through an EOR? Here’s what founders miss without local support
Contractors
Working with independent contractors is often the fastest way to get someone in the loop. There’s no formal employment relationship, no payroll setup, and no statutory compliance overhead. You align on scope, rate, and start date, and the engineer begins work.
This flexibility works when the goal is short-term execution. But it breaks down fast when you’re trying to build a real team.
Contractors operate without institutional support, and the burden of coordination, retention, and infrastructure stays entirely with you.
Direct costs
- $2K–$5K per engineer per month, depending on seniority and role
- No statutory benefits: PF, gratuity, and insurance are excluded unless added manually
- Optional support: some founders provide insurance or stipends to help retention
Contractors can appear 15–25% cheaper than formal employment, but the cost of churn usually erodes that advantage quickly.
Indirect costs
- High risk of churn. Many contractors accept full-time offers elsewhere while still engaged with your team
- One drop-off can reset the hiring cycle. For deep-tech roles, that can mean 30–60 days of search, onboarding, and handover
- Classification risk exists. If the relationship looks like full-time employment (fixed hours, reporting lines, tools), it may trigger compliance exposure under Indian labor law
- No built-in infrastructure. You’ll need to handle payroll, IT support, and tax documentation yourself
- Limited or no IP protection unless your contract is airtight. You must include clauses covering assignment of IP, confidentiality, and non-solicitation
- Difficult to scale. Beyond a few hires, contracts start to diverge – and your operational lift grows
When it makes sense
- You’re hiring for a short project, consulting role, or trial engagement
- You already have someone local managing logistics, contracts, and escalations
- You’re not trying to scale a product team; you’re solving for speed or short-term output
See more: Setting up your own India entity vs partnering with TeemGenie
Build-Operate-Transfer (BOT)
BOT structures are meant to offer a middle path, where you build a team through a vendor, let them run it in the early stages, and take it over once you’re ready. The vendor owns the legal infrastructure, handles hiring, payroll, and administrative support, and manages the team day to day until handover.
It can work well, if you’re involved throughout. But when founders stay hands-off, the result is often a team they didn’t shape, operating under standards they didn’t set, and requiring rework post-handover.
Direct costs
- Workspace, payroll, onboarding tools, and HR ops are included – but not always customizable
- 15–30% markup over internal cost per engineer, bundled monthly
- Transfer premium: 15–20% of annual salary cost at the point of handover
For a 15–20 person team, BOTs can add $100K–$150K/year in overhead compared to in-house.
Indirect costs
- Quality depends on how involved you are – otherwise, the bar drops
- Engineers are employed by the vendor, and may not feel culturally connected to your team
- Transition rarely runs clean: contracts, systems, and policies often need to be rebuilt
- Default engagement and retention policies are generic, unless re-scoped from day one
- Without active oversight, the team you inherit might not reflect your technical bar
When it makes sense
- You want to scale a 10–30 person engineering team quickly
- You’re not ready to own an entity today, but plan to in the next 12–24 months
- You or a senior teammate has bandwidth to stay involved during the build phase
Services model (Outsourced development)
Outsourcing to a dev shop is often the quickest way to ship software, especially if the scope is tight and the timeline is fixed. You work with a third-party agency that owns hiring, payroll, infrastructure, and delivery. Engineers are technically on their payroll. You review outputs, not individual contributors.
This works when you need output without ownership. But if you’re trying to build internal knowledge/IP, continuity, or team culture, especially across deep-tech domains, this model hits its limits fast.
Direct costs
- Typically priced as a flat retainer or -driven contract
- $2K–$3.5K/month per engineer, often including a 30–50% margin
- No employment, equipment, or benefits overhead – vendor handles it all
Indirect costs
- No visibility into individual engineers. Team members rotate frequently, and top performers are often reassigned
- No employer brand presence in India. Engineers see themselves as vendor employees, not part of your company
- Hard to carry forward product context. Teams rarely maintain long-term ownership of infrastructure or architectural decisions. Even if you extend the contract, you rarely get the same team back
- Difficult to transition out of. Transitioning out of a dev shop often means restarting core team setup, because little of the original structure ports over
- Zero retention leverage. Engineers leave and are replaced silently, and you’re often not told why
When it makes sense
- You need to ship a scoped build quickly without scaling a team
- You have strong in-house tech leads who can drive delivery through a vendor
- You’re bridging a gap while building a real team through another path
At a glance: What you’ll spend, own, and coordinate across models
| Model | Setup Time | Setup Cost | Ongoing Overhead | Talent Support | Compliance | Best For |
| Own Entity | 6–12 months | $20K+ | 25–30% of team cost | In-house or agency | Founder-owned | Long-term control, 30+ team |
| Employer of Record (EOR) | 1–3 weeks | $0–$2K | 10–15% of salary | Limited sourcing; add-on via partner | Fully managed | 1–10 hires, fast start |
| Contractors | Immediate | $0 | Lower upfront, but higher churn risk | None unless founder-led | Not included | Short-term or trial hires |
| Build-Operate-Transfer (BOT) | 2–6 weeks | $5K–$10K | 15–30% premium + 15–20% transfer fee | Vendor-managed | Vendor-managed until transfer | 10–30 hires, with future transition |
| Services Model | Immediate | $0 | 30–50% vendor margin | None (vendor-assigned) | Vendor-owned | Shipping scoped output quickly |
What founders often overlook when choosing a model
The models are easy to compare on paper – setup time, monthly cost, legal coverage. But what actually makes or breaks your team’s experience in India is rarely visible in the quote.
The gaps aren’t always about cost; they’re about coordination.
One vendor runs payroll. Another handles hiring. Workspace setup and equipment delivery often get passed off to the engineer.
There’s no central owner for the experience. You don’t see the issue until something drops and your PM gets pinged to help.
Founders often carry more of the loop than they realize.
When teams are small, that burden gets disguised as “just checking in.” But over time, founders end up managing follow-ups, re-onboarding, or even explaining offer details – because no one else was scoped to do it.
Retention isn’t part of the model, unless you ask for it.
Most vendors offer base-level benefits that may work for freshers or new developers. But they’re rarely structured to signal investment or reduce attrition or reflect the seniority of the roles. If insurance coverage is ₹3L when peers are offering ₹15–30L, you’ll never hear it as a complaint, but it still drives quiet drop-off.
Delivery gets delayed by things no one priced in.
The cost isn’t always money; it’s momentum.
Most vendors handle their piece. Few manage the full loop. So the delays land back on your desk, and your roadmap starts slipping before the team’s even at full speed.
See more: Why hiring deeptech engineers in India often fails (and how founders can get it right)
What’s the right choice for your stage?
By now, the cost breakdown is clear – what you’ll spend upfront, what you’ll carry operationally, and where support often falls short. But the right model still depends on one thing: the shape and pace of your team.
Here’s how the decision plays out based on where you are and what your team actually needs.
1. If you’re still hiring your first few engineers
At this stage, every hire moves the roadmap. These roles are high-impact and high-context – and there’s rarely a second layer to catch issues if something slips.
Founders often use EORs or contractors here for speed. But unless someone owns onboarding and support across those notice periods, drop-offs and silent delays start to show.
What to prioritize: low-lift setup with built-in visibility between offer and Day 1.
2. If you’re scaling across roles and timelines
Once you’ve hired beyond 5–10 engineers, complexity kicks in. People are joining in parallel, across functions and cities. That’s when you stop feeling bandwidth strain, and start seeing delivery gaps caused by lack of coordination.
Both EOR and BOT can work here, but only if someone is holding the onboarding setup, workspace readiness, and benefits mapping across engineers.
What to prioritize: consistent experience across team members, with less follow-up falling back on leads or founders.
3. If India is becoming a core hub for your team
At 30+ engineers, you’re no longer exploring India – you’re operating in it. Engineers expect clarity, stability, and structure. And you’re likely looking for ways to align your global team norms with what’s happening locally.
This is where setting up your own entity starts to make sense, if you’re ready to run compliance, HR, payroll, and workspace planning in-house. If you’re not, continuing under a well-scoped EOR partner may still be more efficient.
What to prioritize: long-term control and alignment, without breaking momentum during the transition.
See more: How global startups can attract senior talent in India
Closing thoughts
The hard costs are easy to compare. But the actual operational load of onboarding, workspace, payroll escalations, or retention rarely shows up until it slows your growth down.
That’s the gap TeemGenie was built to carry.
We partner with global tech teams that want to build seriously in India, without taking on the full operational overhead. That means we don’t just handle payroll or compliance. We stay accountable for onboarding, workspace, equipment, and retention signals that most providers don’t scope, but your engineers still experience.
Here’s what that looks like:
- End-to-end deep-tech hiring support: Techies helping you hire techies, for roles across AI, backend, cloud, and distributed systems
- Full compliance and payroll coverage: No need to manage PF, payroll, or tax filings yourself
- Workspaces and equipment setup: From Tier 1 to Tier 3 cities, we coordinate infrastructure so engineers start right
- On-ground HR and engagement support: A dedicated point of contact for employee concerns, team engagement, and localized support
- Retention-first benefits: Not checkboxes, but signals that you’re investing in your team. 30L+ health insurance, term and accidental insurance.
- Complete flexibility: Start with TeemGenie, transition to your own entity later without disrupting payroll, contracts, or teams
If you want to build a team in India without splitting your focus between tools, vendors, and logistics, we can help.
Book a call with our India expansion team to see how we work, and whether we’re the right fit for what you’re building.