EOR vs Own Entity: The Real Cost Comparison for International Expansion

The EOR vs own entity decision is one of the most consequential cost decisions for a company expanding internationally. The answer is not universal — it depends on headcount, intended permanence, and the degree of HR operational control required. This guide provides the full cost comparison to inform that decision.

EOR Cost Structure

What you pay with an EOR

• EOR service fee: $400–$700 per employee per month (varies by provider, country, and contract structure); premium EORs with stronger India operations (Remvix, Deel, Remote) are at the $450–$650 range for India
• Payroll: typically included in the EOR fee (no separate payroll processing charge)
• Benefits administration: typically included; EOR provides group health insurance and statutory benefits on its own policy
• Statutory contributions: EOR calculates and remits statutory contributions (EPF, ESI, etc.) — included in fee
• Contract labor compliance: EOR assumes employer-of-record responsibility for labor law compliance
• Total EOR cost per India employee per year: EOR fee $5,400–$8,400 + employee compensation

What you don't pay with an EOR (vs own entity)

• No entity incorporation cost ($5,000–$12,000 one-time)
• No local director/registered agent ($1,500–$3,000/year)
• No annual audit and ROC filing ($3,000–$5,000/year)
• No payroll software or payroll processing setup
• No HR manager until team scale warrants it
• No transfer pricing or inter-company agreement setup ($3,000–$8,000 legal)

Own Entity Cost Structure

Entity setup costs (India)

• Company incorporation (Private Limited Company): INR 8,000–15,000 MCA filing fees + $1,500–$3,000 legal fees
• Director identification numbers (DIN) for directors: $200–$500
• GST registration: $300–$600
• PE/Professional Tax registration (state-specific): $200–$400
• Bank account setup: minimal cost but 4–8 weeks timeline
• Registered office (virtual or shared): $1,000–$3,000/year
• Nominee/local director (if US founders cannot serve as India directors): $1,500–$2,500/year
• Total one-time setup: $8,000–$20,000; total Year 1 recurring overhead: $8,000–$15,000

Entity ongoing costs

• Annual company secretary services (ROC filings, board resolutions): $2,000–$4,000/year
• Annual statutory audit (mandatory for all Indian companies): $3,000–$6,000/year
• Monthly TDS filing and compliance: included in accounting retainer
• GST monthly filing: included in accounting retainer
• Accounting and bookkeeping: $1,500–$3,500/year for a small team (<15 employees)
• Payroll processing: $200–$500/month for a local payroll provider
• HR manager (dedicated India HR required above ~15 employees): $18,000–$30,000/year
• Total annual entity maintenance: $28,000–$55,000/year (covering compliance, accounting, payroll, and local HR)

Break-Even Analysis

• EOR cost for 10 employees: $54,000–$84,000/year (EOR fees alone)
• Entity maintenance cost: $28,000–$55,000/year
• Entity setup amortized over 5 years: $1,600–$4,000/year
• Total entity cost for 10 employees: $29,600–$59,000/year — slightly cheaper than EOR at 10 employees, but the difference is small
• EOR cost for 6 employees: $32,400–$50,400/year vs entity at $28,000–$55,000 — EOR is cheaper at 6 employees due to fixed entity overhead
• Break-even headcount (EOR fee savings vs entity fixed overhead): typically 8–12 employees in India
• Clear EOR advantage: 1–7 employees in a country
• Entity advantage becomes clear: 15+ employees in a country
• Ambiguous range: 8–14 employees — decision should be driven by factors beyond pure cost (IP control, HR flexibility, employer brand in the local market)

Non-Cost Factors in the EOR vs Entity Decision

• IP ownership: with an EOR, the IP assignment chain (EOR employee → US company) is contractual but involves a third party; own entity provides cleaner IP ownership — important for companies with significant trade secret or patent portfolios
• Employer brand: recruiting for a company's own named India subsidiary ('Remvix India Private Limited') lands differently than recruiting for an EOR platform — own entity improves employer brand in the Indian market
• HR control: own entity gives full control over HR policies, benefits design, and employer practices; EOR constrains to the EOR's policy framework and benefit options
• Flexibility to terminate: EOR termination is administratively simpler but more expensive (EOR charges for the full notice period regardless of the reason for termination); own entity termination requires following Indian labor law termination procedures but with full control over the process
• Speed to hire: EOR can onboard new India employees in 1–2 weeks; setting up a new entity takes 6–10 weeks