Six months into a search for a senior data engineer, most UK hiring managers know exactly how this goes: three decent CVs, two no-shows, one offer rejected for a counter. The pipeline is not broken. The market just does not have enough of the people you are looking for. The number of UK companies hiring in India has grown steadily over the past three years, and the reason is not cost: it is access to India engineering talent that UK startups and scaleups simply cannot source at home. Full-stack engineers, data engineers, fintech backend specialists. Add an IST timezone that overlaps with UK mornings, a mature English-speaking tech workforce, and a post-Brexit talent environment that has made European hiring considerably harder, and the case builds itself.
What does not build itself is the setup. According to Multiplier’s Global hiring gap report, 46% of companies have failed to onboard international talent due to compliance issues. India is one of the more complex countries to get right: layered employment law, city-level compliance variations, mandatory payroll contributions that do not exist in UK law, statutory obligations that kick in years after hire.
What’s changed in the UK-India hiring relationship
Brexit tightened the talent pipeline from Europetalent pipeline from Europe. Senior engineers and data professionals who previously came from Germany, Poland, or Romania on free movement now require a Skilled Worker visa, which takes time and money. The IMF has noted that Brexit’s impact on skilled EU labour has been particularly acute for smaller UK firms (IMF, 2024). India has a large, English-speaking technical workforce with a long history of serving UK clients across financial services, technology, and professional services. The cultural familiarity with UK working norms makes the transition smoother than most companies plan for.
Remote work removed the last objection. A hiring manager who would not have considered a permanent remote hire in 2019 is now running a team across four time zones without a second thought.
And India’s own tech sector has matured faster than most UK companies appreciate. According to AICTE data reported by Business Standard, the country produces approximately 1.5 million engineering graduates a year (Business Standard, 2024), many from IITs and specialist technical universities. That pipeline now reaches senior product and infrastructure roles, not just the more junior development work it was associated with a decade ago.
What UK companies hire for in India
Most UK companies hiring in India concentrate around four profiles:
Full-stack engineers: with production experience in Node.js, React, and TypeScript. Senior profiles, 5+ years, who can own a product area end-to-end. UK companies hiring web developers from India consistently find this profile easier to source than at home.
Data engineers: who can build and maintain pipelines at scale. dbt, Spark, Airflow, Snowflake. According to Experis UK’s 2025 Talent Shortage survey, IT and data skills have been the hardest to find in the UK for five consecutive years (Experis UK, 2025). India’s pipeline for these roles is considerably deeper.
Cloud and infrastructure engineers: with real AWS or GCP depth. Platform engineers who can run Kubernetes in production without someone watching over them.
Fintech backend specialists: Payment processing, core banking integrations, regulatory reporting. London fintechs hire heavily here, partly because Indian engineers often come with experience in similarly complex regulatory environments. Beyond Bengaluru and Hyderabad, cities like Chennai, Pune, and the Delhi-Gurgaon-Noida corridor (NCR) are producing strong engineering talent across all four profiles. Several large UK firms have set up Global Capability Centres (GCCs) in these cities specifically to access this depth at scale.
Per Multiplier’s Global hiring gap report, only 9% of companies cite cost savings as the primary driver for global hiring. As Vanesa Cotlar, VP People and Culture at PolicyMe, puts it: “The biggest advantage is access to specialized expertise and international insights that are scarce or don’t yet exist in the home market.” Most UK companies hiring in India are doing exactly that: buying access to skills they cannot build at home in any reasonable timeframe.
How Indian employment law is structured (and why it is more complex than it looks)
India has both central (national) laws and state-level laws. Which ones apply to a specific hire depends on where the employee is located, how many employees the company has in India, and the industry it operates in. The central laws that matter most in practice (the Payment of Gratuity Act, the Employees’ Provident Funds Act) still govern for most employers regardless of the newer consolidated labour codes. Multiplier’s India employment laws guide covers this in detail.
On top of that, every state has its own Shop and Establishment Act, its own Professional Tax rules, and its own interpretation of working hours and leave entitlements. EPF illustrates how the two layers interact. It’s a central law, so the 12% rate applies uniformly across every state.. Professional Tax is not: Karnataka and Maharashtra each set their own slabs, and some states do not levy it at all. Same company, different cities, different obligations. Multiplier’s India four labour codes compliance guide covers how these changes apply state by state. Most UK companies only discover this complexity when already mid-hire.
EPF, ESI, and Professional Tax: the mandatory contributions UK companies miss
These three come up in almost every UK company’s first India hiring conversation, usually when they are already behind.
Employees’ Provident Fund (EPF): Mandatory for employers with 20 or more employees, per the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPFO). Both employer and employee contribute 12% of basic salary, with a portion of the employer’s share going to the Employees’ Pension Scheme. The key detail: the calculation base is basic salary, not CTC. That distinction catches most UK teams out.
Employees’ State Insurance (ESI): Applies to employees earning up to INR 21,000 per month, per the Employees’ State Insurance Act, 1948 (ESIC India). Employer contributes 3.25% of gross wages; employee contributes 0.75%, covering health insurance and sickness benefits. Once an employee earns above that threshold, private health cover needs to be built into the package instead.
Professional Tax: State-level, not national. Karnataka caps it at an estimated INR 2,400 per year; Maharashtra at an estimated INR 2,500, with different monthly slabs. Rates are set by individual state governments and subject to revision. Some states do not levy it at all. Employers deduct and remit it on the employee’s behalf each month.
Most UK companies underestimate the payroll complexity until they see the numbers. CTC includes all these contributions, but the employee’s take-home is notably lower. Multiplier’s India payroll guide and India employee benefits page cover both in detail. Getting this wrong at the offer stage causes real problems.
Why Bengaluru, Hyderabad, and Mumbai are not the same employer
Each state has its own Shop and Establishment Act registration that any business must hold to employ people there. It governs working hours, overtime, leave entitlements, and notice requirements, and these vary meaningfully between Karnataka, Telangana, and Maharashtra.
Here is what that looks like in practice. Hire one engineer in Bengaluru and one in Hyderabad: that is two Shop and Establishment registrations, two Professional Tax accounts with different slabs, two remittance obligations to two different state authorities, and two compliance calendars. Miss a filing in one state and you are non-compliant there regardless of what you have done correctly in the other. Double the cities, double the admin. And that is before you factor in different notice period norms if one of them resigns. An EOR absorbs all of that, but understanding what is happening in the background matters when you are making hiring decisions.
Employment contracts in India: what must be included
Indian employment contracts carry obligations that simply do not exist in UK employment law. The ones that most often catch UK HR teams off guard:
Gratuity: Employees who complete 5 continuous years of service are entitled to a statutory payout on exit: 15 days’ last drawn salary per completed year, under the Payment of Gratuity Act, 1972 (Ministry of Labour and Employment, India). Non-negotiable. It needs to be in your cost model before you make an offer, not after.
Notice periods: 60 to 90 days is standard for mid-to-senior tech roles. Serving notice is taken seriously in India in a way that differs from UK norms, and garden leave arrangements are far less common.
Full and final settlement: All dues (gratuity where applicable, leave encashment, outstanding salary) must be settled within a legally defined period after exit. Missing that deadline is a compliance failure, not an admin oversight.
Non-compete clauses: UK employment contracts routinely include post-employment non-competes. In India, they are not enforceable. Courts have consistently treated them as void restraints of trade. If you are relying on one to protect IP or client relationships, it will not hold. IP assignment clauses and non-solicitation provisions carry more legal weight and are worth drafting carefully from the start.
Setting up an Indian entity vs using an EOR
The two paths have different trade-offs, and the right one depends on how committed you are to the market:
Criteria | Private Limited Company (Entity) | EOR (via Multiplier) |
Setup Time | 4-6 weeks for MCA registration, PAN/TAN, GST, EPFO/ESIC registrations | 5-7 business days per employee |
Compliance Burden | Multiple monthly/annual filings: EPF, ESI, TDS, Professional Tax, ROC, GST | Multiplier handles all monthly filings and registrations |
State Registrations | Separate Shop and Establishment registration per state of operation | Covered under Multiplier’s pan-India registrations |
Control | Full employer control. Employees work directly for your Indian entity | Day-to-day control retained. Employment relationship with Multiplier |
When to Choose | 15+ employees in India, Indian revenue generation, long-term strategic commitment to India | First 1-15 hires, market validation, fast start, or avoiding entity setup costs and ongoing compliance overhead |
Setting up your own Indian entity makes sense if you are generating Indian revenue, planning to scale significantly, or need full employer control. Below that threshold, the overhead is hard to justify: monthly filings for EPF, ESI, TDS, and Professional Tax, state-by-state Shop and Establishment registrations, and a local CA on retainer. It is a meaningful operational commitment, not just a paperwork exercise. If you are evaluating that path seriously, Multiplier’s guide to setting up a subsidiary in India and the EOR vs local entity comparison are useful reference points.
An Employer of record India works differently. The EOR holds the legal employment relationship; you manage the work. EOR and PEO are not the same thing. A PEO requires you to have your own entity in-country. An EOR does not.
One thing to settle before either decision: employee or contractor. Many UK companies start with contractors to move fast, but misclassification in India carries real risk. Tax authorities apply TDS differently to contractors vs employees, and getting it wrong can trigger back-payments for EPF, ESI, and statutory benefits. If the working relationship looks like employment, structure it as one. Multiplier’s India hiring contractors vs employees guide covers both paths.
What UK-India hiring looks like in practice: timeline and checklist
Everything covered above (state registrations, EPF calculations, Professional Tax slabs, gratuity modelling) sits inside the EOR’s scope, not yours. For a UK HR leader using an Employer of record for the first time, the practical experience looks quite different from the compliance picture. Multiplier employs the person under a locally compliant Indian employment contract. PF, ESI, gratuity, and TDS are all handled. You manage the work. Employment contract ready in under 5 minutes. Onboarding in under 48 hours. No MCA registration, no CA on retainer, no state-by-state research. Multiplier operates through its own India entity rather than a local partner, which removes intermediary risk.
Via EOR (typical path):
- Day 1-2: Agree employment terms, confirm city, Multiplier generates compliant Indian contract
- Week 1: Background checks, offer signed, onboarding documents collected
- Week 1-2: Payroll set up, EPF/ESI registration handled, first payroll run scheduled
- Month 1: Employee starts, probation period begins (typically 3 to 6 months)
Key decisions to make before you start:
- Which city is the employee based in? (Determines state law, Professional Tax, Shop and Establishment Act)
- What is the basic salary vs total CTC split? (Affects EPF calculation)
- Is the role eligible for ESI or will you provide private health cover?
- What notice period will you specify?
- Have you modelled gratuity into your 5-year employment cost?
The UK-India Free Trade Agreement was signed in May 2025 and formally concluded in July 2025, though it is not yet in force (GOV.UK). When it does come into effect, it will be the biggest opening of the UK-India trade relationship in a generation. UK companies that already have compliant employment infrastructure in India will be better placed to move quickly as market access opens up.
How Multiplier handles employment in India for UK companies
India is a strong hiring market for UK companies when the employment foundations are in place. The talent depth is real, the timezone works, and the compliance infrastructure (once sorted) runs quietly in the background. Where companies tend to stumble is getting that infrastructure right from the start: EPF calculated on the correct base, Professional Tax filed to the right state authority, gratuity factored into the cost model before the first offer goes out.
Multiplier acts as the Employer of Record for UK companies hiring in India, handling contracts, payroll, EPF, ESI, Professional Tax, and state-level registrations through its own India entity. You manage the work; the employment layer is taken care of. If you are still weighing up markets, the India vs Eastern Europe remote developer breakdown is worth a read.
If you are ready to start, book a demo with a Multiplier hiring expert.
FAQ
Can a UK company hire someone in India without setting up an Indian entity?
Yes. An Employer of Record is the standard route. The EOR employs the worker legally in India on your behalf, so you do not need your own entity to get started.
Do UK companies need to register in each Indian state where they have employees?
If you are using an EOR, they handle state-level registrations (Shop and Establishment Act, Professional Tax) as part of the service. Running your own entity means separate registrations per state, yes.
What are EPF and ESI and does my UK company need to provide them?
How long does it take to set up an Indian Private Limited Company?
Typically 4 to 6 weeks, covering MCA registration, PAN/TAN, GST, and EPFO/ESIC registrations, assuming clean documentation. Add time if directors need to obtain an Indian DIN (Director Identification Number) for the first time.
What is gratuity in India and when does it apply?
Gratuity is a statutory lump sum paid to employees who complete 5 or more years of continuous service, under the Payment of Gratuity Act, 1972 (Ministry of Labour and Employment). It is calculated as 15 days of last drawn salary per year of service. Not discretionary.
Will a UK non-compete clause be enforceable for Indian employees?
No. Post-employment non-competes are consistently held to be unenforceable by Indian courts. IP assignment clauses and non-solicitation provisions are the more reliable tools and worth investing in at the contract stage.
What does CTC mean and how is it different from what the employee takes home?
CTC is Cost to Company: gross salary plus all employer contributions (EPF, ESI where applicable, gratuity provision). Take-home is considerably lower once statutory deductions and income tax are applied. Always clarify upfront whether a candidate's expectation is CTC or in-hand, as the gap is often larger than UK hiring managers expect.
