Overview
- What an EOR fee in India actually pays for
- The statutory costs that sit on top of the fee
- The pricing models providers use, and where each one pinches
- Hidden charges worth asking about before you sign
- A worked example of the real monthly cost of one hire
- How the 2026 Labour Codes affect the numbers
Ask three Employer of Record providers for a quote, and you’ll get three answers that don’t line up. One says $199 a month, another quotes 8% of salary, and the third sends a table with six line items. EOR pricing India looks messy because the fee is only one part of what you pay. The rest is salary, statutory contributions, and a few extras that don’t always appear on the first page of a proposal.
This guide separates those layers so you can compare quotes properly. If you’re still deciding whether an EOR is the right route at all, start with our guide on how to hire employees in India without a legal entity.
The Three Layers of Your Monthly EOR Bill
Every EOR invoice in India comes down to three parts.
1. The employee’s salary. This is what the person takes home before tax, and you decide it.
2. Employer statutory costs. Indian law requires the employer to pay these on top of the salary, whoever the employer is. An EOR doesn’t remove them. It files and pays them correctly on your behalf, then passes the cost through to you.
3. The EOR service fee. This is what the provider charges to act as the legal employer: contracts, payroll, compliance filings, and HR support.
Most confusion comes from comparing a quote that includes layer 2 with one that doesn’t.
What Employer Statutory Costs Look Like in India
These are the usual components. The exact amounts depend on salary structure and state.
| Component | Typical employer cost |
|---|---|
| Provident Fund (PF) | 12% of PF wages |
| EPF admin and EDLI charges | Small additional percentage on PF wages |
| Gratuity provision | About 4.81% of basic pay |
| ESI | 3.25% of wages, only for employees under the wage ceiling |
| Professional tax | Fixed state-wise amount, usually modest |
| Group health insurance | Optional but common, priced per employee |
For a mid-to-senior hire earning well above the ESI ceiling, ESI won’t apply. Statutory costs generally land at roughly 8% to 14% on top of gross salary, depending on how PF wages are calculated and what benefits you add.
How EOR Providers Price Their Service
There are three common models, and each has a trade-off.
Flat monthly fee per employee. You pay a fixed amount per head, whatever the salary. It’s the easiest to budget. It also tends to favour higher-salary hires, since the fee doesn’t grow with pay. In India, flat fees commonly fall somewhere between about $100 and $500 per employee per month, depending on the provider, the scope of services, and how many people you hire.
Percentage of salary. The fee scales with compensation. This can work out cheaper for junior roles and expensive for senior ones. Watch for a minimum fee hiding in the fine print.
Tiered or volume pricing. The per-head fee drops as your team grows. If you plan to scale in India, ask where the thresholds sit and whether the lower rate applies to existing employees or only new ones.
None of these is automatically better. What matters is which one matches your salary mix and your hiring plan over the next 12 to 24 months.
Charges That Don’t Always Appear in the First Quote
A low headline fee can come with extras. Before you sign, ask directly about:
- Onboarding or setup fees. Some providers charge once per employee, others waive it.
- Offboarding and settlement fees. Exits involve final settlement, gratuity, and paperwork, and some providers bill for it separately.
- GST on the service fee. At 18%, this can matter more than people expect. Many quotes leave it out.
- Benefits administration. Health insurance premiums are a pass-through, but the admin on top may not be.
- Currency conversion. If you pay in USD, ask which exchange rate applies and whether there’s a markup.
- Contract minimums. Some agreements lock you into a minimum term or minimum headcount.
A fair provider answers these without hesitation. If you get vague answers, treat that as information.
A Worked Example: One Hire, One Month
Take a software engineer with a gross monthly salary of ₹1,00,000, with basic pay at 50% of that (₹50,000). The numbers below are illustrative. Your actual figures depend on salary structure and state.
- Employer PF at 12% of basic: ₹6,000
- EPF admin and EDLI charges: roughly ₹300
- Gratuity provision at about 4.81% of basic: ₹2,405
- ESI: not applicable at this salary
- Professional tax: a small fixed amount, depending on state
That puts employer statutory costs at roughly ₹8,700 to ₹9,000 a month, before any health insurance. Add the EOR service fee and GST on that fee, and you have the true cost of this one hire: salary plus statutory costs plus fee plus GST.
When a quote only shows you the fee, you’re seeing about a third of the picture.
How the 2026 Labour Codes Change the Math
India’s four Labour Codes took effect on 21 November 2025, with full operational rollout targeted for April 2026. For pricing, the most important change is the uniform definition of “wages.” Basic pay plus dearness allowance must now make up at least 50% of total compensation. That raises the base on which PF and gratuity are calculated.
In practice, a salary structure that kept basic pay low to hold down employer contributions may now need restructuring, and your employer cost per hire may rise even if the gross salary doesn’t change. Fixed-term employees can also qualify for pro-rata gratuity after one year instead of five, which adds another cost to plan for.
When you compare EOR pricing in India this year, check that each provider’s quote reflects the new wage definition. A quote built on the old structure will look cheaper than it is.
EOR vs Setting Up Your Own Entity: When the Numbers Cross
An EOR is usually the cheaper option in the early stages. You avoid incorporation costs, a local compliance team, statutory registrations, and the time it takes to get a legal entity operating. The service fee is the price of that convenience. It also helps with structural risk: because the EOR is the registered employer in India, permanent establishment and tax exposure are handled at the EOR level rather than landing on your foreign entity.
As headcount grows, the maths shifts. At some point, the cumulative EOR fees exceed what it would cost to run your own entity with payroll and compliance support. There’s no universal number for when that happens. It depends on your team size, salary levels, and how long you plan to stay in India. A reasonable habit is to revisit the question once you pass a meaningful team size or when you start thinking about long-term investment in the market.
How to Compare EOR Quotes Properly
Put each provider’s quote into the same structure:
- Salary and benefits assumptions (use identical ones for every quote)
- Employer statutory costs, itemised
- Service fee and pricing model
- GST and any pass-through charges
- Setup, offboarding, and minimum-term terms
- Total monthly cost per employee, and total cost over 12 months
If a provider won’t break it down this way, you can’t compare it fairly.
Where Vandey Global Fits
Vandey Global has been the registered legal employer for foreign companies’ India teams since 2017. We’re an ISO-certified, India-first EOR that has onboarded 600+ employees across 50+ international clients. Our employer of record and employment services cover contracts, payroll, statutory filings, and employee management, and we price in plain terms: what you pay, what it covers, and what sits on top.
If you’d like a quote built around your actual roles and salary bands, talk to our team and we’ll walk you through the full cost per hire before you commit to anything.
FAQs
How much does an EOR cost in India?
The service fee commonly runs from about $100 to $500 per employee per month, depending on the provider and the scope. On top of that you pay the employee’s salary, employer statutory contributions, and GST on the fee.
Is the EOR fee the only cost on top of salary?
No. Employer contributions such as PF, gratuity, and EPF admin charges apply to every employee in India, whether you use an EOR or your own entity. The EOR handles them but doesn’t remove them.
Does GST apply to EOR fees in India?
Yes, GST is generally charged on the service fee. Confirm whether your quote includes it, since many leave it out of the headline number.
Are EOR fees fixed or percentage-based?
Both models exist. Some providers charge a flat monthly fee per employee, others take a percentage of salary, and some use tiered pricing that drops as your team grows.
Do the new Labour Codes make EOR more expensive in India?
They can raise employer costs, because the 50% wage definition increases the base for PF and gratuity. That cost applies to any employer, not just those using an EOR. For a deeper look at how EOR works in practice, read our guide to hiring in India without a legal entity.
