The question comes up at a predictable point in every growing company's India journey: we now have 12 engineers on EOR — should we set up our own entity? It's the right question to be asking, but the answer isn't simple. It depends on headcount trajectory, cost sensitivity, compliance appetite, and whether India is a long-term strategic bet or a flexible option you want to preserve.
Side-by-Side Comparison
| Factor | EOR | Own Entity (Pvt Ltd) |
|---|---|---|
| Time to first hire | 48–72 hours | 6–9 months |
| Setup cost | None | ₹2–5 lakh+ |
| Monthly overhead | EOR fee (10–15% of payroll) | Company secretary, auditor, compliance |
| Compliance ownership | EOR handles all statutory filings | Your responsibility (or outsourced) |
| IP ownership | Assignable via contract | Direct ownership in Indian entity |
| Reversibility | Can wind down with notice period | Strike-off process takes 6–12 months |
| Optimal headcount | 1–20 employees | 20+ employees |
When EOR Wins
EOR is the right choice when you're testing the India market, when headcount is under 20, when you need speed (a critical hire with a competing offer on the table), or when you want flexibility — the ability to scale up or down without the overhead of winding down a legal entity.
For companies that are growing fast but uncertain about the long-term trajectory of their India team, EOR removes the downside risk while preserving the upside of fast hiring.
When Your Own Entity Makes Sense
The crossover point is typically 15–25 employees, though it's not purely a headcount calculation. An own entity makes sense when:
- You have 20+ employees and the EOR fee exceeds the annualised cost of company secretary + payroll compliance + audit
- You're building an India leadership team that needs to sign contracts, have bank accounts, or operate with local legal authority
- You're planning a GCC and the entity is part of a long-term India strategy
- IP created in India needs to reside in a local entity for specific legal or regulatory reasons
Transitioning from EOR to Entity
The transition doesn't have to be abrupt. Most companies keep the EOR for new hires while the entity is being set up, then transfer existing EOR employees to the new entity in a phased way. Employees need to be consulted and offered equivalent or better terms — Indian employment law protects employees against adverse changes to employment conditions in a transfer.
Decision rule of thumb
- 0–15 employees: EOR almost always wins on total cost of compliance
- 15–25 employees: model both options for your specific state mix and payroll
- 25+ employees: entity typically makes economic sense; begin setup planning now
- EOR-to-entity transition: start entity setup at month 12 for a month 18 transfer