Employer of Record vs Professional Employer Organization (PEO) in India
The core difference is simple. An Employer of Record is the sole legal employer and requires no entity of your own in India, while a Professional Employer Organization operates under co-employment and generally requires you to already have a registered Indian entity. Companies without an Indian entity almost always need an EOR rather than a PEO, since a PEO cannot legally co-employ on your behalf without something to co-employ with.
Side-by-Side Comparison
| Factor | Employer of Record | Professional Employer Organization |
|---|---|---|
| Legal employer | The EOR alone | Shared, co-employment with your entity |
| Indian entity required | No | Yes, in almost all cases |
| Typical use case | Hiring without any local presence | HR and payroll support once an entity already exists |
| Speed to first hire | One to three weeks | Depends on your entity already being active |
| Compliance responsibility | Fully with the EOR | Shared between you and the PEO |
| Common in India | Very common for foreign companies without an entity | Less common than in markets like the US, since Indian labour law does not formally recognise co-employment the way US law does |
Why the PEO Model Works Differently in India
PEO arrangements are well established in markets such as the United States, where co-employment is a recognised legal concept with specific statutory protections. Indian labour law does not have a directly equivalent, clearly defined co-employment framework in the same way. Providers who market PEO services in India are often describing an EOR arrangement using PEO terminology, or a staffing arrangement where your entity remains the principal employer for compliance purposes. It is worth asking any provider directly which model they are actually offering, since the terminology gets used loosely across this industry.
Which Model Fits Your Situation
- If you have no Indian entity at all, you need an Employer of Record, not a PEO
- If you already have a registered Indian entity and want payroll and HR support, a PEO-style arrangement or payroll outsourcing may fit better
- If you are unsure whether you will need an entity long-term, starting with an EOR keeps that decision open
- If you are scaling past a few dozen employees, it is worth revisiting whether a subsidiary makes more sense than either model
Frequently Asked Questions
Can a PEO hire employees for us in India if we have no entity?
Generally no. A PEO arrangement assumes you already have an entity to co-employ through. Without one, an EOR is the appropriate structure.
Is EOR more expensive than PEO?
Pricing varies by provider more than by model. Since a PEO assumes you already carry the cost of running an Indian entity, a direct cost comparison usually is not meaningful unless you already have that entity.
Can we switch from EOR to PEO later?
Yes, once you have registered an Indian entity, you can move from an EOR arrangement to a PEO or direct-employment model with support.
Does Spectrum Talent Management offer PEO services in India?
Yes. Alongside our Employer of Record service for companies with no Indian entity, we also support PEO-style arrangements for companies that already have a registered entity and want payroll or HR support. See our Employer of Record in India guide or speak with our team about which structure fits your situation.