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A Guide to Hiring Remote Employee from India

Tuesday, February 16, 2021

With more than 1.3 billion people living in India, the country is one of the top hubs for remote workers, especially in the IT sector. Moreover, India has a rapidly growing population and a high literacy rate. India is the world’s second-largest English-speaking country, with around 125 million people, second only to the US. It is no wonder that many global companies tend to hire remotely from India.

India is one of the fastest growing economies in the world, however it needs to generate five to ten million jobs a year to keep up with the growth rate. Therefore, the unemployment rate for university graduates is high and many Indians are often forced to look overseas for a job. This has led to a surge of Indian professionals working as expatriates in the United States, United Kingdom, Singapore, Indonesia and also remotely.

This surplus in talent is an advantage for companies that are looking to hire highly skilled IT workers for their startups and global corporations.

There are various ways to hire employees in India: the first is to establish a legal entity in India to handle payroll and taxes, the second is to use third-party services, and the third is to hire directly from websites and job platforms on the internet, which is risky.

Remote Work Trends in India

Due to the recession triggered by the Covid-19 virus in 2020, the rate of unemployment in an already job scarce market has naturally gone up in India. However, with the increased shift towards digitalisation, there has also been a rising demand for advanced skills in areas of artificial intelligence, machine learning, and data scientists.

In this push for remote work, even Indian companies are riding on the trend for hiring of gig and contract workers. Hybrid working, remote hiring and continual upskilling will continue to be a trend, especially in the technology sectors.

Remote Employee in India

Indian workers are well-educated and use English as one of their official languages in the country. In the last decade, India has become a stronghold of well-skilled workers such as full stack developers, UI/web developers, QA testers and Software Design Engineers in Test (SDETs). Indian talent is also strong in cybersecurity, data analytics, DevOps and cloud infrastructure.

Here are just some statistics about the wide range of IT workers in India:

  • More than 5 million Java and Python Developers
  • 1.3 million Android Developers
  • 873,000 iOS developers
  • 170,000 focused on AI, robotics, Data Analytics and Cybersecurity

The greatest advantage to hiring remote workers in India is the cost of wages and the depth of their skill sets. Furthermore, with the expansion of the technology industry in the past few decades, the demand for more highly trained IT developers and engineers will only continue to increase.

Educational Background of Remote Talent from India

Before hiring from India, it’s important to take a look at your candidate’s educational background. The top universities are extremely competitive and students score the highest 1 to 2% to be eligible for admission.

Some of the best universities in the country are known for computer and technology sciences:

  • Indian Institute of Science (IISCs)
  • Indian Institute of Technology (IITs)
  • National Institute of Technology (NITs)

Where to Find Remote Talent from India

When it comes to finding these remote workers, some of the sites such as NaukriFresherslive and Indeed list job positions for the Indian market. Other sites like Flexjobs and Toptal are also great resources for job listings. Alternatively, LinkedIn is also a valuable database of around 65,090,000 people (as per 2019 data) to actively recruit from India.

Pay and Compensation In India

In India, when it comes to compensation, beyond the basic salary, companies also include non-salary benefits which are highly valued. Having a prestigious job title is also sought after and can be just as important as negotiating a salary.

By law, according to the Payment of Bonus Act 1965, employers are also required to pay statutory bonuses, if they are companies with at least 20 employees and the employee earns less than 10,000 rupees per month. The amount ranges from 8.33% to 20% of the salary earned by the employee or INR 100, whichever is higher. These statutory bonuses are in place to take care of the lower wage workers and often included in the compensation package.

In addition, employees can also expect substantial pay raises and promotions after their annual reviews, with raises of 15–20% or more.

Employee Benefits in India

It is common to offer 15–24 days of annual paid leave for workers in India. However, the laws for paid time off (PTO) vary from state to state and employers should clearly define PTO earning rates and rollover benefits in their employee contracts.

Employees also receive a minimum of 12 days of sick leave annually. For maternity leave, each female employee is entitled to 26 weeks of paid leave if they have one child. If they have 2 children or more, they are entitled to 12 weeks.

Varying from state to state, employers typically offer their employees a stipend to purchase a private insurance plan or directly access benefits through the company.

Optionally, employers may also offer to cover additional expenses for work, such as internet access, work equipment and transportation.

Payroll Contributions and Taxes in India

Employers are required to cover three payroll deductions in India — Employees’ Provident Fund, Employees’ Pension Scheme, and Employees’ Deposit Linked Insurance Scheme. Companies who fail to make sufficient contributions toward the EPF and EPS are subject to fines and penalties.

The Employee’s Provident Fund (EPF) is set up for employees who receive less than Rs 15,000 per month in salary. Both the employee and employer contribute an equal amount into the fund, usually 12% of their salary, which serves as a pension for the employee upon retirement.

On the employer’s side of contributions of 12%, only 3.67% of their contributions go to the EPF, the remaining 8.33% goes into funding the Employees’ Pension Scheme (EPS). Employers also contribute 0.5% of employee salary to the Employees’ Deposit Linked Insurance Scheme( EDLI) on behalf of the employee.

What to Take Note Of Before Hiring Your First Remote Workers

When it comes to hiring your first few remote workers, it’s also important to understand the right employee-to-job fit. Due to the nature of remote work, employees should have great communication skills, the ability to follow instructions well, but also work independently. Experience in working with various types of people across the world and familiarity with remote tools and platforms is also beneficial.

Not only is it important to find suitable remote workers for your organisation, but it also pays to understand the local labour laws and business culture and err on the correct side of corporate compliance. Employing workers from an unfamiliar country like India can be tricky to navigate, especially with the risk of non-compliance of employment and tax laws.

Hire Employees from India with Multiplier

One way to get around that is to work with a third-party company, such as an Employer of Record (EOR) which hires employees in India on your behalf. Instead of setting up your own legal entity, you can start hiring internationally immediately.

Using an Employer of Record like Multiplier can take care of payroll services, benefits, taxes, and local compliance for all your employees in India. We can also help with freelancers or contractors that can eventually be converted into full-time employees with better job security and benefits.

Learn more about how you can Use Multiplier to overcome some of the challenges you may encounter when hiring an international team in India. You can visit our website or contact us.

 

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