If you want to hire developers in India but have no office there, the quick route is a contractor agreement. It is fast, but if the person works like an employee, the paperwork may not match reality. This guide explains the difference, the risks, and the options, so you can choose with your eyes open.
This is the brand's practical view, not legal advice. Check your own situation with a qualified adviser in India.
What is the difference between a contractor and an employee?
A contractor runs their own work. They choose how and when to do it, handle their own taxes, and usually serve more than one client. You pay for an outcome or a block of time.
An employee works inside your team. They follow your schedule, use your tools, take direction from your managers, and receive salary and benefits that someone must administer.
The label on the contract does not decide which one they are. The way the work actually happens matters more.
Why does the mismatch create risk?
The risk appears when the day-to-day looks like a job but the paperwork says contractor. That gap is where problems start.
The kinds of trouble to think about:
- Tax: who owes what, and whether it was paid correctly.
- Benefits: the person may be missing protections an employee would normally have.
- Contract terms: a contractor agreement may not cover notice, leave or ending the role properly.
- Your own exposure: a company with no India presence can end up with obligations it did not plan for.
We will not tell you what the law says in your case. We will tell you that if you feel uneasy, the instinct deserves a proper check.
How do I tell which one my developer really is?
Ask these questions about the real working pattern, not the contract:
- Do they work only for you, or for several clients?
- Do you set their hours and expect them in your standups?
- Do they use your tools, your accounts and your processes?
- Does your manager direct their daily tasks?
- Is the role ongoing rather than a defined piece of work?
If most answers are yes, you are describing an employee. A contractor label on that arrangement is the mismatch to fix.
What are your options without an Indian office?
There are three common routes:
- Contractor: quick, but only suits people who truly run their own work.
- Your own Indian entity: full control, but you must set up and maintain a legal company in another country.
- Employer of record: another company employs the person legally in India on your behalf, while you direct their work.
For a plain explanation of the third route, read what an employer of record is.
How does Talent Navigator handle this?
Employer of record is available on request. You pick the person. We employ them legally in India and run salary, tax, benefits and contracts for a flat monthly fee.
We are not a recruitment agency, so there is no recruiter in the middle and no percentage of salary. Every visible profile has passed a supervised technical test, a separate communication score, a video introduction and verified education and work history. You can see how to read those results in how to pick a developer from profiles.
New placements also come with a 2 weeks risk-free trial.
What should you do this week?
- List the developers you have in India or plan to hire, and answer the five questions above for each.
- Mark any role that looks like a job but is papered as a contract.
- Write a short brief for the role you need next. This role brief guide helps.
- Decide whether you want a contractor, an entity or an employer of record.
- Take your plan to a qualified adviser before you sign anything.
Frequently asked questions
Do I need an Indian company to hire an employee there?
Not always. An employer of record can employ the person legally in India for you, so you do not open your own entity. You still choose the person and direct their work.
Is a contractor always the wrong choice?
No. A contractor suits someone who truly runs their own work and taxes. The concern is when the daily reality looks like a job but the paperwork says otherwise.
What does the employer of record fee cover?
It is a flat monthly fee, and it covers salary, tax, benefits and contracts run on your behalf. It is not a percentage of first-year salary and there is no retainer.
Ready to hire without the guesswork? Post your first job free and ask for employer of record when you pick your person.