The Ultimate Guide to EOR Service: Best Model to Start a Business Activity in India

1
The Ultimate Guide to EOR Service Best Model to
Start a Business Activity in India
India, a land of rich cultural and lifestyle
diversity, has marked its presence as a growing
economic superpower. About 20 years ago, India
transitioned from a socialist state to a liberal
marketplace. Today, India stands as the 6th
biggest economy globally with a GDP of over 2.6
trillion.
India has a vast talent pool. A recent report of
an assessment of 65,000 graduates states that
40 of Indias youth is job-ready. India offers
extraordinary and digitally skilled talent at
effectively affordable labor costs.
2
Expanding Business to India
India leads an attractive business destination
for global brands owing to its optimistic
spending behavior, business-friendly policies,
and rich talent pool that can be hired at
affordable resource costs. When a business aims
at expanding in India, it focuses on establishing
an overseas territory and growing its strength
to service clients.
Overseas businesses usually promote remote teams
and virtual working environments. This is to
facilitate their need for infrastructure as no
bar. Hiring talent is one part but retaining that
resource remains a challenge.
Also, for any company from across the globe
willing to set up an operation in India, it is
essential to research and navigate local labor
laws to steer clear of employment risks. Keeping
track of these changes requires you to
incorporate finance, HR, and payroll specialists
into your team.
Wouldnt it be easier if you could get away from
this nightmare of adhering to complex Indian
statutory tax and labor law compliances? Hiring
employees in a new country is lengthy,
complicated, and expensive. You have to
establish a local entity or a subsidiary, and
deal with currency conversions and overseas
banking. These tasks are tedious and take time
away from productive work.
3
To avoid this hassle, PEO (Professional
Employment Organization) and EOR (Employer of
Record) concepts were introduced in the early
1970s. For companies operating in a foreign land,
PEO became a useful way of outsourcing
particular HR functions and reducing
costs. Whereas, for businesses looking at hiring
talent in other countries without forming a
legal entity, EOR became the right fit.
The early version of PEO services US-based model
In the US domestic model, the early version of
the co-employment model got recognized by the
legislature. It gained popularity as a way of
cooperating in the administration of employment
contracts between the employing company, an
administrative company, and the employee. On a
formal basis in law, the PEO agencies began
offering more comprehensive services than
employee leasing.
The DIY (do-it-yourself) approach of
incorporating, registering, and running a local
payroll was worthwhile for companies looking at
commitment to a country. But for those willing to
enter new markets in other countries, leveraging
international PEO/ EOR became an ideal
alternative.
The modern structure of International PEO/ EOR
services
There are small differences between the
traditional PEO/EOR model and the International
PEO/EOR. Some firms coined the terms
4
International PEO/EOR to describe the services
offered globally rather than a country-based
model. In short, the difference between the two
can be better understood as in the case of PEO,
you must have a local entity in foreign land
whereas, for an EOR, you dont need a local
presence.
What is International PEO/EOR?
The international PEO (Professional Employment
Organization) Or EOR (Employer of Record)
services equip an international business by
providing human resources services, including
international hiring and employment. It is a
business-to-business arrangement between the
company and the service provider. The latter
handles the defined
5
aspects of the employees on behalf of the
company. The service provider is a registered
employer of your remote team. You can manage the
employees day-to-day work and execution
responsibilities, and decide who you want to hire.
How does an International PEO/EOR work?
International PEO/EOR service providers have
their own legal, registered entities in foreign
countries. They employ your staff, provide
agreed infrastructure, and make them available to
you for exceptional work. International PEO/EOR
service providers then manage their monthly
payroll, taxation, insurance, HR admin, and
related compliance with local laws on your
behalf.
This arrangement gives you access to foreign
markets where you can build your remote team and
onboard local talent. The service provider
becomes the best advisor for laws regarding local
contracts, worker protections, notice periods,
termination rules, and severance pay.
Why use an International PEO/EOR?
Since International PEO/EOR service providers are
the legal employers for your team, it eliminates
your administrative efforts. You get freedom
from handling staffing responsibilities and
keeping up with foreign compliance and tax laws.
Their services and experience offer superior
risk mitigation without forming a business entity
abroad.
6
Competitive advantages

• Increased employee retention A PEO helps you
  offer your employees attractive benefit plans.
  This boosts the employee retention rate.
• Experienced management team You get access to
  experienced professionals in HR, benefits,
  payroll, taxation, and other employee management
  functions.
• Better control You get better control over
  employment-related regulatory compliance and
  employee-related disciplinary issues.
• Increased access to employee life-cycle You can
  provide effective management and access
  employees online with a self-service portal.
  This eases the monitoring of employee records,
  pay sheets, leave tracking, tax deductions, and
  full tracking of employees wherever required.

For growth-minded companies, international
expansion is not an end goal but a start to a
challenging new venture. There are many
considerations for your business on the eve of
international expansion. Companies expanding to
India find it relatively easy to form
collaborative partnerships with local EOR service
providers. How exactly does an international PEO
support your business throughout this exciting
transition?
Start your business journey in India with EOR
7
Formality Pty Ltd., an Australia-based company,
willing to expand overseas was in search of an
India-based partner that would have a smooth and
cost-effective operational process. Initially,
they had three contractors working for them and
this cost them to lose a lot of productive time.
In addition, despite support from the local
partners, they had to manage logistical issues,
expense reimbursements, and individual
compliances.
To address these pain points, they were in search
of a local service provider and decided to
partner with Remunance for EOR services.
Remunance created a formal business plan that
addressed relevant business, employment, and tax
laws. This in itself made for a smoother and
more cost-effective operational process.
8
Most companies fundamentally choose this option
of engaging with a local partner who can employ
individuals on their infrastructure. It also has
a great potential for reward as they do not have
to manage HR, benefits, and payroll. However,
for businesses moving internationally, costs and
risks are involved. Let us understand how setting
up a subsidiary becomes a seamless journey when
you partner with the right PEO.
As one of the oldest providers of employer of
record (EOR) services in India, Remunance has
the resource depth, knowledge base, and network
to help you. For over 15 years, we have helped
clients from North America, Europe, and Asia with
360-degree support services.
Remunance has earned credibility by providing
on-the-ground support necessary to thrive In
India. As EOR, Remunance helps hire best-fit
employees, onboard them smoothly, keeps a check
on compliance, and manages their performance and
payments. But above all, they focus majorly on
improving talent retention. For companies that
have a remote team, freelancers, or contractors
working for them, Remunance provides customized
services and a self-serve platform that helps
you take control over the IT, infrastructure, and
logistics support.
Connect with our experts
Remunance helps you explore the option that best
suits your needs
9
Though most companies prefer our EOR services,
Remunance also extends support in the
incorporation of offices for businesses that wish
to form subsidiaries in India. Let us have a
glance at why a selected few businesses chose to
extend their business operations in India
Waltham, a USA-based RTOS-Platform company
IntervalZero was seeking developers for
Windows-based RTOS. They were on the lookout for
a reliable and experienced employer of record to
make it the right attempt. After screening
through outsourcing partners, joint ventures,
vendor consultants, and other types of alliances,
they found Remunance.
After the initial discussion with their CTO
Brian, Remunance took charge and planned a
strategy to locate resources with potential, and
trained them as per the job requirement to make
them productive. As we built a core team, the
operations achieved every milestone that was set
out.
For two long years, Remunance handled legal
compliance, benefits, payroll, and other HR
functions of IntervalZero. With the seamless
functioning and credibility added to their brand
identity, Jeff (CEO) took a decisive step to
form a subsidiary in India using Remunance
services. To help them establish a business
presence in India, Remunance set up a unique
separate office infrastructure. Finally, we
smoothly transitioned the core functions to the
IntervalZero team.
To learn more about subsidiary formation, check
our latest blog.