PEO vs EOR Services in India: What Employers Need to Know

Searching for PEO services in India is a common first step to managing local hiring, payroll, and compliance. But PEOs, by definition, operate under a co-employment model that only exists in the United States.

What they really need is an employer of record (EOR) or administrative services only (ASO).

Deel is trusted by thousands of companies worldwide for global hiring. With legal infrastructure in over 150 countries and deep expertise in Indian labor laws, Deel enables you to hire, pay, and manage talent in India, including through Deel EOR.

This guide explains how the Indian employment model works, how a PEO differs from an EOR, what services EOR and ASO solutions offer in India, and how Deel can simplify compliant hiring and payroll in India.

Understanding local employment models in India

What is PEO?

A professional employer organization (PEO) is a co-employment model used primarily in the US. Under a PEO arrangement, the employer retains control over the day-to-day management of employees but shares HR, payroll, and compliance responsibilities with the PEO. As such, the traditional PEO solution is not available in India.

What is an EOR?

An employer of record (EOR), by contrast, is available in most countries. The EOR becomes the legal employer for your workforce in India, which allows you to hire Indian talent without setting up a local entity. The EOR assumes liability for labor law compliance, payroll, taxes, social contributions, and contracts.

India’s labor framework is complex, with differing requirements at the central and state levels. For example:

• Employees are covered by central labor codes and state-specific Shops and Establishment Acts

• Provident Fund (PF), Employee State Insurance (ESI), and Professional Tax vary in applicability and rates

• Employers must issue payslips, maintain registers, and ensure compliance with gratuity, bonus, and maternity benefit laws

• Payroll tax filing deadlines, audit requirements, and TDS compliance can vary based on employee income and company location

HR service providers exist in India, but unless they operate as an EOR, they cannot act as the legal employer or assume compliance risk.

What services does an employer of record provide in India?

An EOR delivers comprehensive support across the employee lifecycle, making it possible to legally and efficiently hire Indian employees without establishing a local company. Core services include:

Contract drafting and onboarding

An EOR drafts compliant offer letters and employment contracts that meet Indian labor laws, including state-specific regulations. These include salary structures, benefits, termination notice, non-compete clauses, and bonus eligibility. The EOR may also manage identity verification, PAN/Aadhar collection, and onboarding documentation.

You define the job scope and compensation, the EOR ensures contracts reflect both client and Indian legal requirements.

Payroll processing and tax remittance

Indian payroll requires precise calculations to handle income tax (TDS), PF, ESI, gratuity, bonus, and professional tax. An EOR processes compliant payroll and remits taxes to the appropriate government bodies, issuing Form 16 at year-end for employee filings.

EORs also handle Form 24Q, quarterly returns, and maintain statutory registers as required under the Income Tax Act and labor laws.

With Deel Global Payroll, companies can view and manage Indian payroll alongside other global entities for unified reporting, processing, and analysis.

Benefits administration and HR support

An EOR offers statutory and supplemental benefits such as health insurance, life and accident coverage, and retirement plans. Benefits are often administered through local insurers, with group policies tailored for cost-effectiveness.

HR support includes compliance with the Maternity Benefit Act, Shops and Establishments Acts, leave policies, termination procedures, and employee dispute resolution.

Immigration and visa support

For foreign nationals relocating to India or Indians working for overseas companies, EORs can support employment visa applications, FRRO registration, and visa renewals. This is especially useful for technology, finance, and senior leadership roles.

The EOR maintains compliant employer sponsorship and ensures accurate visa tracking and documentation.

Workers’ compensation and insurance

EORs register employees under required insurance schemes and ensure compliance with the Employees' Compensation Act or state-specific requirements. They provide liability coverage, injury claim processing, and coordinate with local insurance authorities for rehabilitation or settlement.

Local benefits benchmarking and plan design

To attract top-tier Indian talent, EORs conduct compensation benchmarking and design localized benefits. These may include tax-optimized components like food allowances, LTA, car leases, and flexible benefit plans (FBP). They also advise on voluntary provident fund (VPF), NPS, and wellness program integration.

Ongoing compliance and liability management

EORs monitor changes in central and state labor laws—including wage code updates, ESI/PF thresholds, and tax changes—and implement necessary contract, payroll, and policy updates. In the event of employee disputes, the EOR handles filings and appears in labor tribunals as the formal employer, protecting your company from legal exposure.

Benefits of using an employer of record in India

No local entity needed

An EOR allows you to hire in India without registering with the Ministry of Corporate Affairs (MCA), obtaining a PAN, or managing ongoing company filings. This reduces time to market and administrative burden.

Faster hiring and onboarding

Indian hiring timelines are accelerated through ready-to-use legal infrastructure. EORs can onboard employees quickly and compliantly, including full tax and compliance setup, so you can deploy teams in days or weeks—not months.

Full compliance coverage

EORs eliminate the need to learn India's complex regulatory environment. They manage all employment-related filings, maintain labor records, and mitigate the risk of penalties under the Shops Act, Payment of Wages Act, or Income Tax Act.

Scalable headcount

You can grow or reduce team size in India flexibly with no long-term entity obligations. EORs support project-based hiring, pilots, and strategic team pivots.

Lower admin costs

Employer costs in India can add up quickly. Using an EOR enables you to reduce legal setup fees, government liaison costs, statutory audit expenses, and HR management overhead. Typically, one flat fee per employee covers the full scope of services.

Learn more about how to reduce payroll costs in India.

Smooth off-boarding

EORs handle statutory termination notices, final settlement (F&F), gratuity payments, and experience letters. They ensure compliance with Indian termination laws, minimizing the risk of labor complaints or legal disputes.

Can I use global PEO services in India?

Global PEO is a popular term, but it can be misleading outside the US. Most of the time, the term global PEO (or international PEO) actually refers to employer of record services.

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To hire employees compliantly in India, you need to set up your own entity and hire directly. Or, you can use an EOR, which becomes the legal employer and assumes responsibility for payroll, taxes, and labor law compliance.

Using ASO solutions in India

An administrative services only (ASO) arrangement helps companies that already have a legal entity in India streamline operations. An ASO does not employ workers but provides back-office support for:

• Payroll processing and payslip issuance

• TDS filings and statutory tax remittances

• Benefits administration (e.g., group medical insurance, PF compliance)

• Compliance with Shops Act, PF Act, and ESI Act

• Maintenance of statutory registers and audit support

The client remains the legal employer and bears all employment-related responsibilities.

Benefits of using an ASO in India

Cost savings

An ASO can significantly reduce the costs associated with maintaining a full-scale, in-house HR or payroll department. For Indian businesses with a registered local entity, an ASO helps offload time-consuming administrative functions such as payroll processing, statutory reporting, and benefits administration.

This means fewer internal resources are needed to handle compliance or filings across multiple jurisdictions. Employers only pay for the services rendered, helping keep overhead predictable and scalable, especially valuable for companies in growth mode or operating across multiple states with varying labor laws.

Plan design flexibility

ASO arrangements empower Indian employers to retain full decision-making authority over their HR and benefits policies, while delegating the back-end execution to the ASO provider. This means businesses can create and implement compensation plans that match their workforce’s needs, including flexible benefit plans (FBP), performance bonuses, or location-based allowances.

Employers can also select or switch insurance carriers based on competitive market rates or employee preferences, while the ASO handles the administrative burden of enrollment, communication, and claims management.

Transparency and data access

A key advantage of ASO models is enhanced visibility into HR and payroll operations. ASO platforms typically provide employers with access to real-time dashboards and analytics, enabling them to track payroll disbursements, tax withholdings, benefit claims, and compliance status.

In the Indian context, where statutory deadlines, contribution rates, and filing rules differ across states, this level of transparency helps HR and finance leaders spot anomalies early, avoid compliance gaps, and make data-driven decisions about workforce planning and cost control.

Improved employee experience

With ASO support, employees benefit from clear, consistent, and professional service delivery. Most ASO providers offer digital portals or mobile apps where employees can access payslips, tax forms (like Form 16), leave balances, and benefit summaries at any time.

These self-service tools reduce dependency on internal HR teams and empower employees to manage their own information. Combined with dedicated help desks and localized support, this leads to higher levels of employee satisfaction, better benefit utilization, and greater trust in HR processes, especially important in a large and diverse labor market like India.

PEO vs EOR vs ASO

Choosing the right partner

When evaluating providers, check for:

• Proof of owned Indian legal entity and relevant licences
• Service-level agreements on payroll delivery and response times
• Transparent cost breakdowns—payroll passes, statutory charges, and service fees—to avoid hidden risks in transfer pricing
• Local HR expertise for state-specific labour-law nuances: minimum-wage updates, working-hours caps under the Factories Act, industry-specific regulations

How Deel supports workforce expansion in India

Deel empowers you to hire, pay, and manage talent in India with unmatched speed, compliance, and peace of mind.

We operate as a licensed EOR through our local Indian entity, allowing you to bypass entity setup and focus on growing your business. Our platform delivers contract generation, payroll, benefits, and statutory compliance—all under one roof—so you never have to chase paperwork or risk a compliance misstep.

We combine deep Indian HR expertise with global standards, ensuring your team gets best-in-class support and your business stays risk-free.

Here’s how Deel stands out for Indian hiring:

• Unified dashboard: Manage contracts, payroll, time-off, and compliance across India on one platform
• Real-time payroll: Instant G2N calculations for increased visibility, accuracy, and reliability
• In-house Indian HR experts: Local team ensures contracts, payroll, and benefits always meet the latest regulations
• Flat, transparent pricing: One monthly fee covers everything—no hidden costs or transfer-pricing surprises
• Rapid onboarding: Start work in record time—ideal for pilot projects, urgent hires, or market tests
• Comprehensive statutory coverage: Deel handles PF, ESI, gratuity, bonus, and all local filings
• Visa sponsorship: We handle work permits, renewals, and compliance for foreign nationals
• Proactive risk management: Automated alerts keep you ahead of regulatory changes and data privacy rules

Ready to unlock India’s talent pool without the headaches of entity setup or regulatory red tape? See how fast, compliant, and cost-effective global hiring can be. Our team will walk you through how you can onboard your first hire quickly and compliantly, with every statutory and HR detail handled start-to-finish.

Don’t let complex labor laws slow your expansion. With Deel, you gain instant access to local expertise, transparent pricing, and total peace of mind, no matter how ambitious your hiring goals. See why the world’s fastest-growing companies trust Deel for Indian market entry.

Book a demo to see how Deel can support your India hiring and expansion strategy.