Entity vs EOR: Full cost breakdown to build a team in India

When you’re expanding into India, your biggest cost decisions aren’t just about salaries or benefits; they’re about structure.

Do you open a local entity and build your own team from the ground up?

Or do you use an Employer of Record (EOR) to get the best engineers on board compliantly and without setting up a company?

This post breaks down what each model actually costs – across legal setup, payroll, compliance, infrastructure, onboarding, and admin support.

We’ve modeled the full annual overhead of both paths for a 30-member engineering team, using real-world India cost data and TeemGenie’s execution benchmarks.

If you’re actively evaluating how to structure your India presence, this is the detailed comparison founders don’t usually get upfront.

Table of Contents

What it costs to set up and run a local Entity in India

Setting up your own entity in India means taking on full legal and operational responsibility for your local team. Here’s what that actually involves if you’re a foreign founder opening an India entity for the first time.

Company setup & compliance registration

To legally hire employees in India, you’ll first need to:

Incorporate a private limited company with India’s Ministry of Corporate Affairs
Register for labor licenses and state-level employer compliances (required before you can issue valid offer letters)
Appoint a Resident Director – this is a mandatory Indian-resident board member required for any foreign-owned company operating in India. This is a recurring cost unless you have a qualified in-house person in India.
Retain a Company Secretary (CS) and legal counsel to handle ongoing government filings and compliance

Estimated cost: ~$29,500

Includes:

MCA filings, labor license, CS/legal retainer: $15,000
Resident Director: $4,500 (recurring)
Statutory audit + transfer pricing compliance: $10,000

Without completing these tasks, you can’t compliantly employ or pay a team in India. You also need local professionals to handle filings and audits, there’s no self-serve model like in some US startup setups.

Monthly payroll & statutory filings

India has its own employer tax and payroll obligations. Each month, you’ll need to:

Run compliant payroll
File contributions for:
- Provident Fund (EPF) – India’s equivalent of 401(k)
- Professional Tax (PT) – a small state-level payroll tax
- Tax Deducted at Source (TDS) – similar to federal withholding
- Generate and issue Form 16 (the annual employee tax form)

Estimated cost: Included in the ~$25,000/year accounting and payroll oversight (see below), typically handled by a local CA or internal admin/HR.

Note: With an EOR, statutory filings are part of the service. If you run your own entity, you’ll need to ensure these filings are handled each month, either through an in‑house payroll/HR manager or by retaining a Chartered Accountant (CA) locally.

Accounting, bookkeeping & financial reporting

You’ll also need to maintain local financials, including:

Monthly ledgers and statutory registers
Cash flow statements and bank coordination
Goods & Services Tax (GST) reconciliation – India’s sales tax system, which applies even if you’re not billing Indian customers

Estimated cost: ~$25,000/year (accounting, finance, and payroll oversight, including a fractional CFO), plus ~$4,000/year for accounting and payroll software licenses.

Insurance & employee benefits

Employer-sponsored insurance isn’t legally required in India, but it’s a standard expectation for mid- to senior-level engineering hires. You’ll also need to account for mandatory benefit provisioning like gratuity (a severance-style payout applicable after 5 years).

Most India teams opt for:

Group medical insurance (IPD/OPD coverage)
Term life and accidental death coverage
Gratuity accruals, which are mandatory under Indian law, must be recorded even though the payment itself is only due after an employee completes five years of service

Estimated cost: $36,000/year

(For a 30-member team, assuming ₹30 lakh ($36,000 USD) insured value across medical, life, and accident policies.)

Note: These costs scale with coverage and team size. Brokers or third-party platforms are typically required unless you manage this in-house.

Workspace, laptops & setup logistics

You’ll need to plan how your team will be equipped to work, whether they’re remote, hybrid, or office-based. This layer includes:

Coworking space rental and security deposits
Laptop procurement, delivery, and replacement cycles
Home-office setup (desks, chairs, monitors, where applicable)
Warranty handling and tracking for employer-owned devices

Estimated cost: $100,800/year

Breakdown:

Coworking rental: $64,800 (₹15,300/month × 12 × 30 people)
Laptops: $36,000 (18 laptops @ $2,000 each)

These setup costs are also taxed, and if you’re not GST-registered, they become even more expensive.

Goods & Services Tax (GST)

In India, most employer purchases, including coworking space, laptops, shipping, and furniture, are taxed at 18% GST.

To claim GST credits, you’d need:

An active GST registration
Monthly GST filings, even if you’re not billing customers in India

Estimated cost: ~$8,500/year (CA retainer for GST filings and the GST burden on infra if credits are not claimed).

Includes:

Chartered Accountant retainer for GST return filings and monthly input reconciliation
Workspace and hardware costs in India are typically subject to 18% GST. With an active GST registration, you can claim input credits against that tax; without it, the GST portion becomes part of your overall spend.

For founders: There’s no automatic “sales tax refund.” GST has its own registration and filing process, separate from payroll or corporate tax.

Offer rollout & pre-onboarding

After a candidate is finalized, you’ll need to issue a compliant India offer letter, track notice period engagement, and coordinate pre-onboarding documentation. This process includes:

Drafting salary structures that align with India’s Cost to Company (CTC) model (all-in salary model, which includes employer contributions like Provident Fund, bonuses, and benefits)
Preparing ID verification documents and signed agreements (IP, NDA) before onboarding
Running background checks, usually through local vendors, to validate education, past employment, and legal history
Staying in touch with the candidate through their notice period to prevent drop-off (a common risk in India without local engagement)

Each of these steps requires coordination between vendors, candidates, and internal systems, often handled by HR or local admin.

Estimated cost: ~$8,000/year

Covers ongoing admin or HR support to run offer and onboarding prep for a 30-person team.

Issue resolution & local follow-through

Even with processes in place, real-world issues arise that must be handled locally:

Laptop delivery failures or warranty pickups, especially in smaller cities
Background check follow-ups, due to inflated credentials or missing certificates
Internet, power, or workspace instability during onboarding
Bank account delays or tax ID (PAN/TAN) mismatches
Insurance registrations, claim delays, and employee reimbursements

Without a local point of contact, such issues get delayed, bounce back to your US team, or cause attrition.

Estimated cost: $3,500/year (Covers part-time on-the-ground coordination for device setup, documentation resolution, benefits follow-through, and living-issue escalations)

What the same team looks Like with TeemGenie EOR

All of the following execution layers are included in TeemGenie’s standard EOR service. No third-party vendor handoffs and no internal coordination from your side.

This is what the same 30-member team setup would look like under TeemGenie:

Category	Entity Cost	TeemGenie EOR Cost	Notes
Manpower (30 engineers)	$1,500,000	$1,500,000	Base salary cost
One‑time setup fee		$10,000	Covers incorporation support and compliance registrations
Legal setup & compliance	$29,500	Included	MCA, labor licenses, resident director
Payroll & monthly filings	~$6,000	Included	EPF, PT, TDS, Form 16
Accounting & audit	$25,000	Included	No local CA or GST filings needed
Insurance & benefits	$36,000	Included	₹30L per employee – medical, accident, term life
Workspace & laptops	$100,800	$100,800	Hardware and workspace costs remain your expense; 18% GST absorbed by TeemGenie
Offer rollout & onboarding	$8,000	Included	Salary structuring, notice period engagement, Background checks (education, employment, criminal verification) – initiated and tracked by TeemGenie.
Issue resolution & local support	$3,500	Included	Day-to-day escalations, device handoffs, benefits claims

Total (Entity): $1,995,201/year
Total (TeemGenie): $1,773,240/year
Savings: $221,961/year (~11.1%) with full execution ownership

What these costs don’t capture

The numbers above show the direct spend.

What they don’t show is the internal load that running an India entity puts back on your own team, especially your most senior resource on the ground.

When you set up a local entity, there isn’t a single vendor or system keeping every moving part aligned. That coordination often falls on the India lead.

Here’s what that looks like:

Your India Site Lead or Tech Head ends up spending hours every week chasing compliance and execution issues instead of building product. If their salary is about ₹2 Cr ($240K USD) and even 30% of their time is pulled into entity operations, that’s another $72K a year of hidden cost.
Someone on your team has to stay warm with the candidate during notice period, coordinate background checks, collect documentation, and make sure onboarding doesn’t stall.
Workspace setup, device delivery, internet access, tax ID issues, and insurance claims need local follow-up, which means either your admin/HR hire runs point, or things bounce back to your US team.
Payroll filings, GST, audit prep, and statutory compliance all sit across different service providers, and still require internal oversight to stay error-free and audit-ready.

You can hire vendors for each part, but they don’t coordinate across each other. When something breaks (and it oftent does), it usually comes back to you

With TeemGenie: Everything from offer to onboarding to monthly payroll runs in one track, with local support and direct ownership.

You’re not chasing down vendors or digging through portals to figure out what’s missing.

Workspace delays, background check failures, tax mismatches, and insurance follow-ups are tracked and resolved without founder involvement.

Your team builds product. Ours handles the execution behind it.

So, when does an entity setup start to make sense?

Setting up a local entity is a valid path once your internal team is equipped to manage the full compliance and operational workload that comes with it.

For most companies, this becomes relevant when:

You’re planning to scale to 100+ employees in India
You already have in-house HR, finance, and legal teams familiar with India-specific filings
You’re prepared to manage local audits, multi-state labor registrations, and ongoing compliance across payroll, taxes, and benefits
You want direct control over cash flow, contracts, and employee benefits from within India

An entity also allows you to handle:

Local billing or cost center structures
Intercompany payments and transfer pricing
ESOPs and equity plans under Indian regulations
GST registration if you plan to generate revenue from Indian customers

These are strategic needs, but they require local infrastructure to support them.

If that infrastructure doesn’t exist yet, using an EOR like TeemGenie gives you compliant employment and full operational ownership without layering in internal complexity too early.

If you’re comparing costs or trying to scope what your India setup will actually require — we can help.

Book a 15-minute call with our India expansion team.

Entity vs EOR: What It Costs to Build a 30-Person Tech Team in India