Holesh PriyankarEOR or your own entity? The short answer
Start with an Employer of Record (EOR) if you want to hire in Bangalore before you have an Indian company, are testing India with a first team, or want someone else to run payroll and compliance. Set up your own entity when the centre will be large and permanent and you need to hold contracts, intellectual property and premises directly. Many companies do both: EOR first, then move the team into their own entity once it is stable.
A global capability centre (GCC) is a company’s own offshore team – engineering, data, AI, operations or support – that works only for its parent, unlike an outsourcing supplier that serves many clients. India hosts more of them than any other country, and Bangalore is one of its main hubs. The first decision is not where to sit or whom to hire, but who employs the team.
Key takeaways
- An EOR lets you hire before your entity exists: you direct the work, and the EOR is the legal employer.
- Your own entity gives full control, but brings incorporation, registrations and monthly filings.
- The Labour Codes in force since 21 November 2025 change how salaries are structured – build them into every offer.
India’s GCCs by the numbers
- India has 2,117 GCCs with 2.36 million employees and US$98.4 billion in revenue in FY2026, including more than 250,000 AI and machine learning specialists (Nasscom–Zinnov, 2026).
- 72% of employers worldwide report difficulty filling roles, and AI skills are now the hardest to find (ManpowerGroup, 2026).
- India’s four Labour Codes, which replaced 29 older labour laws, have applied since 21 November 2025 (Ministry of Labour and Employment, 2025).
- Karnataka adopted a dedicated GCC policy in 2024, with new innovation districts and a ₹100 crore fund for collaboration between GCCs and universities (Cushman & Wakefield, 2024).
Option 1: start with an Employer of Record
An EOR is the legal employer of your team in India. It issues employment contracts under Indian law, runs payroll, pays statutory contributions and files the returns every month. You decide who joins, what they work on and how they work with your headquarters – day to day, they are part of your team.
An EOR fits when:
- you want to start hiring before an Indian entity exists;
- you are testing India with a first team, or the team will stay small;
- you want to turn long-term contractors into employees with proper contracts and benefits;
- you would rather not build payroll and compliance capability in India yet.
Check in any EOR contract: the legal employer’s name and track record; what the monthly fee covers and what is quoted separately, such as workspace, laptops, recruitment and benefits; how intellectual property created by the team is assigned to you; notice periods on both sides; and how the team can move to your own entity later.
Option 2: set up your own Indian entity
Most foreign companies use a private limited company – a subsidiary – for a long-term centre. The main steps:
- Incorporate. The Ministry of Corporate Affairs’ SPICe+ web form combines name reservation and incorporation with director identification numbers, PAN, TAN, EPFO and ESIC registration and a company bank account.
- Appoint directors. A private company needs at least two directors, and at least one must have stayed in India for 182 days or more in the financial year (Companies Act 2013, section 149).
- Bring in capital. Money the parent invests is foreign direct investment, with its own reporting to the Reserve Bank of India.
- Complete the remaining registrations, such as GST where needed, professional tax and the registration for your office premises.
- Set up payroll and compliance: PF, ESI, professional tax and TDS on salaries, with a monthly calendar of payments and returns.
- Agree transfer pricing. The centre’s services to its parent are cross-border transactions between related companies, so the price has to be set and documented for the tax authorities in both countries.
Your own entity fits when the centre will be large and permanent, when you need to hold contracts, intellectual property and premises directly, or when the centre will sign agreements with local vendors and partners itself.
EOR or your own entity: side by side
| Question | Employer of Record | Your own entity |
|---|---|---|
| Who is the legal employer? | The EOR | Your Indian company |
| What comes before the first hire? | A service agreement | Incorporation, registrations, a bank account and payroll set-up |
| Who runs payroll and monthly filings? | The EOR | Your team or advisers |
| Who handles Labour Codes compliance? | Built into the EOR’s offers and payroll | You |
| How do costs work? | Salaries plus a monthly fee per employee | Set-up costs, then salaries plus the people and advisers who run payroll and compliance |
| How much control do you have? | You direct the work; the EOR holds the employment contract | Full control of contracts, IP and premises |
| Best for | First hires, small teams, testing the market | Large, permanent centres |
| Changing course | Move the team to your entity when ready | Closing a company takes time and formal filings |
The Labour Codes: what changed for GCC employers
India’s four Labour Codes – on wages, industrial relations, social security, and occupational safety and working conditions – replaced 29 older laws on 21 November 2025. For a new centre, four changes matter most (Ministry of Labour and Employment):
- Salary structure. Under the Code on Wages, allowances excluded from “wages” cannot exceed half of total pay; anything above that counts as wages. In practice basic pay must be at least 50% of the total, which can raise PF and gratuity costs.
- Appointment letters are now mandatory for all workers.
- Fixed-term employees become eligible for gratuity after one year of continuous service, instead of five.
- Salary dates. IT and IT-enabled services employers must pay salaries by the 7th of each month.
Whichever route you choose, build these rules into offers from day one: changing a salary structure later is harder than getting it right at the start.
When to move from an EOR to your own entity
There is no fixed headcount at which an entity becomes the better choice. Move when most of these are true: the team is large and stable, you plan to stay for years, you need to sign local contracts or lease your own office, and the monthly EOR fees outweigh what it would cost you to run payroll and compliance yourself. Plan the transfer with your EOR: new employment contracts with your entity, continuity of service and benefits, and a clean handover of payroll and records.
The legal structure is only half of it
A centre succeeds on how the team works with headquarters: clear ownership, overlapping hours, and the same tools and standards. Our engineers in Bangalore have worked inside clients’ own teams – designing the React architecture for Cileria’s platform in Germany and building components that Imory’s team dropped straight into its media platform. For more on working with teams in India, see Building strong relationships with Indian IT teams.
Frequently asked questions
What is a global capability centre (GCC)?
A GCC is a company’s own offshore unit – for engineering, data, AI, operations or support – that works only for its parent company, unlike an outsourcing supplier that serves many clients.
Can we start a GCC with an Employer of Record?
Yes. The EOR employs the team while you direct their work. When the centre is large and stable, the team can move to your own Indian entity.
How quickly can we hire through an EOR?
It depends mostly on each person’s notice period with their current employer, which is usually the longest step. The EOR can issue offers and employment contracts once the service agreement is signed.
What does the 50% wage rule mean for salaries?
Under the Labour Codes, allowances excluded from wages cannot exceed half of total pay, so basic pay is effectively at least 50% of the total. That affects PF and gratuity, so build it into every offer.
Do fixed-term employees get gratuity?
Yes. Under the Labour Codes, fixed-term employees become eligible for gratuity after one year of continuous service, instead of five.
When should we set up our own entity?
When the centre will be large and permanent, when you need to hold contracts, IP and premises directly, or when EOR fees outweigh the cost of running payroll and compliance yourself.
How Assystant can help
Assystant is the Employer of Record for teams in Bangalore: employment contracts under Indian law, payroll and payslips, PF, ESI, gratuity, professional tax and TDS, and HR admin, from US$99 per employee per month. Workspace, laptops and IT, recruitment and benefits are quoted separately, and your team can move to your own entity later. See GCC enablement and EOR in India or, if you need engineers rather than an employer, staff augmentation.
Sources
- Nasscom–Zinnov – GCC Landscape in India 2026
- ManpowerGroup – 2026 Global Talent Shortage Survey
- Press Information Bureau – Four Labour Codes effective from 21 November 2025
- Ministry of Labour and Employment – Labour Codes press note, 21 November 2025
- Cushman & Wakefield – Karnataka’s GCC policy (October 2024)
- Ministry of Corporate Affairs – SPICe+ integrated incorporation (PIB, 2020)