EOR vs India Entity Setup | Which Is Right for You

The Core Question

If you want to employ someone in India legally, you need a legal entity in India to be the employer of record. You have two options: use an existing EOR provider's entity, or set up your own. The right answer depends almost entirely on three factors: how many people you're hiring, how long-term your India presence is, and how much operational overhead you're willing to carry.

📋 Employer of Record

Ready in 72 hours
No setup cost
No minimum headcount
All compliance managed for you
Monthly per-employee fee
Exit easily — no wind-down process
No local directors required

🏢 Your Own India Entity

Takes 2–4 months to set up
₹1–3 lakh in setup costs
Ongoing compliance burden
Full control over employment
No per-employee EOR fee at scale
Requires local directors
Winding up takes 12–18 months

Cost Comparison

EOR Costs

An EOR charges a monthly per-employee fee. At Davzon, this starts at $199/month per employee. For a team of 10, that's $1,990/month (~₹1.65 lakh). This fee covers all employment administration, payroll, compliance, and statutory filings — there's no additional HR or payroll headcount required.

Entity Setup & Running Costs

Cost Item	One-Time	Ongoing (Annual)
Company registration (Pvt Ltd)	₹15,000–40,000	—
Legal & professional fees	₹50,000–1,50,000	₹50,000–1,20,000
Registered office address	₹20,000–50,000	₹20,000–50,000
Payroll software / HR system	₹20,000–80,000	₹20,000–80,000
HR/payroll executive hire	—	₹5–12 LPA per person
CA/compliance filings	—	₹1,20,000–3,00,000

💡 The break-even point

A rough break-even analysis: a fully-managed entity typically costs ₹15–25 lakh per year in overhead (people + systems + compliance). At $199/month EOR per employee, the break-even is typically around 15–25 employees — at which point entity setup starts to pencil out, assuming you have a long-term India commitment.

Timeline Comparison

Milestone	EOR	Own Entity
First employee onboarded	72 hours	10–16 weeks
Full compliance operational	Day 1	12–16 weeks
Payroll running	First month	3–4 months
Exit / wind down	1 month notice	12–18 months

When to Choose EOR

You're hiring fewer than 15–20 people in India
You want to start quickly — within days, not months
Your India plans may change (testing a market, early-stage hiring)
You don't want to manage India payroll and compliance internally
You're hiring across multiple countries and want one consistent approach
You want to avoid the overhead of local directors and registered offices

When to Set Up Your Own Entity

You have 25+ employees and a long-term committed India presence
You want to build a significant India brand or recruit heavily in local markets
You need to enter into India contracts directly (some enterprise procurement requirements)
You have specific IP or data localisation requirements that require a local entity
You're building an India-facing product or service (not just a remote team)

✓ Practical approach

Many companies start with EOR, validate their India hiring, then transition to their own entity once the team grows large enough. Davzon supports this journey — we can help manage the payroll transition when you're ready to move.

Start Hiring in India Today

No entity needed. Davzon acts as the employer — you direct the work. Your first hire onboarded in 72 hours.

Book a Demo → Explore EOR India

EOR vs Setting Up an India Entity: Which Is Right for You?