EOR vs. PEO: understanding the difference when hiring in India

When a US or European company decides to hire in India, the first practical question is: who is the legal employer? Two models dominate the answer. Both get described as "we handle HR for you," but they sit on opposite sides of one important line: whether or not you own an Indian entity.

What an Employer of Record does

An Employer of Record (EOR) is a company that legally employs people on your behalf in a country where you have no entity. The EOR signs the employment contract, registers the employee with the statutory bodies, runs compliant payroll and benefits, and carries the employment liability. You direct the day-to-day work exactly as you would with a local hire.

• Entity required: No. This is the whole point.
• Time to first hire: Weeks, not months.
• Who carries compliance risk: The EOR.
• Best for: Companies building their first team in India, or any team under roughly 50 people where an entity does not yet pay for itself.

What a PEO does

A Professional Employer Organization (PEO) enters a co-employment arrangement. You remain the legal employer through your own local entity, and the PEO takes over HR administration, benefits and payroll processing. In India, this model only works once you have incorporated a subsidiary and completed the registrations that come with it.

• Entity required: Yes.
• Time to first hire: After incorporation, typically 3 to 6 months from decision to first payroll.
• Who carries compliance risk: Shared, but ultimately you.
• Best for: Companies that already have an Indian entity and want to offload administration.

Side by side

	Employer of Record	PEO
Legal employer	The EOR	Your Indian entity
Entity needed	No	Yes
Setup time	2 to 6 weeks	3 to 6 months plus
Labor law liability	EOR	You
IP assignment	Contracted to you	Direct
Exit	Transition employees to your entity any time	Wind down entity

Where Pods fit

Growth Pods runs the EOR model, but with one addition: we do not just employ the person you found, we recruit the team. A Pod is a dedicated group of engineers, marketers or support staff we source, you interview, and we employ and manage compliantly. When your team reaches the size where owning an entity makes sense, we help you transition them across without disruption.

How to decide

1. If you have no Indian entity and want to hire this quarter, use an EOR.
2. If you already have an entity and just need administration, a PEO is cheaper at scale.
3. If you are under 50 people in India, an EOR almost always costs less than the fixed overhead of an entity once you count accounting, secretarial, audit and compliance retainers.

Still unsure? Talk to us and we will map your situation to the right model in a 30-minute call.