India stands out as a premier destination for recruiting remote IT professionals globally, boasting a workforce of over 4.5 million individuals in the sector among its 1.3 billion population. While this constitutes a fraction of the country's total populace, projections indicate a potential surge of 40-45 million workers, with 60-65 million retrained for the Information Technology sector by 2025—a staggering 1000% increase in digital sector labor within five years.

A key advantage of hiring from India is the population's proficient command of the English language, making it the world's second-largest English-speaking country with around 125 million English speakers. This linguistic competency has attracted numerous global companies to tap into India's talent pool.

Despite India's economic growth and population expansion, the challenge lies in creating sufficient opportunities for the workforce. With an unemployment rate of 19.4% for university graduates and higher in the IT field, the need to generate five to ten million jobs annually becomes evident. Consequently, this has led to an increasing number of Indian professionals working as expatriates and remote employees for global companies.

This guide explores the compliance, trends, and compensations associated with hiring remote employees from India.

1. Remote Work Trends in India

The Covid-19-triggered recession in 2020 led to a rise in unemployment in India. However, the increased focus on digitalization created a demand for advanced skills in artificial intelligence, machine learning, and data science. Both Indian and international companies are adapting to trends such as hybrid working, remote hiring, and continual upskilling, especially in the technology sectors.

2. Remote Employees in India

Indian remote workers are highly beneficial to companies due to their strong education and English language proficiency. The last decade has seen India emerge as a hub for skilled professionals in various IT domains. Statistics reveal a surplus of talent, including over 5 million Java and Python developers, 1.3 million Android developers, 873,000 iOS developers, and 170,000 focusing on AI, robotics, data analytics, and cybersecurity.

3. Educational Background of Remote Talent from India

Before hiring from India, it's crucial to assess candidates' educational backgrounds. The country's top institutions for computer and technology sciences include the Indian Institute of Science (IISCs), Indian Institute of Technology (IITs), and National Institute of Technology (NITs).

4. Where to Find Remote Talent from India

Job platforms like Naukri, Fresherslive, Indeed, Flexjobs, Toptal, and LinkedIn offer avenues to connect with Indian talent.

5. Pay and Compensation In India

Compensation packages in India often include non-salary benefits, with prestigious job titles being attractive to candidates. Statutory bonuses, pay raises, and promotions after annual reviews are common practices.

6. Employee Benefits in India

Indian employees typically receive 15–24 days of annual paid leave, 12 days of sick leave, and maternity leave entitlements. Employers may offer stipends for insurance, cover additional work-related expenses, and provide relocation assistance.

7. Payroll Contributions and Taxes in India

Navigating payroll contributions and taxes in India involves compliance with three main schemes: Employees' Provident Fund, Employees' Pension Scheme, and Employees' Deposit Linked Insurance Scheme.

8. The Cost of Hiring an Employee in India

Understanding the complexities of India's labor code and recruiting costs is vital for companies. Retaining employees is a priority to avoid repeating recruitment processes.

9. What to Take Note Before Hiring Your First Indian Worker

Ensuring the right job fit, excellent communication skills, and familiarity with remote tools are essential when hiring remote workers from India. Understanding local labor laws and business culture is crucial to navigate potential risks.

10. Hire Employees from India with Remoly

Consider working with an Employer of Record (EOR) like Remoly to streamline payroll, benefits, taxes, and compliance when hiring employees in India.

FAQs

1. Can a foreign company hire employees in India?

No, a foreign company must establish a legal entity or use an EOR to hire employees in India.

2. Is a probation period mandatory in India?

Yes, the probationary period in India can be up to 6 months.

3. How do I pay an Indian employee?

Options include establishing a local legal entity, hiring a PEO/EOR, or hiring contractual employees.

4. Can I hire someone in India from the USA?

Yes, but compliance with India's labor code and tax regulations is crucial.

5. How can I find a worker in India?

Job boards like Naukri, Indeed, Workindia, and FreshersLive, as well as recruitment offices, are viable options.

6. Can I hire an independent contractor in India?

Yes, independent contractors in India are subject to different compliances, with the contractor responsible for payments.