How to Expand to India: The Complete Market Entry Playbook for US Companies

India is the most common international expansion destination for US technology companies in 2026. With 5.4 million software engineers, the world's largest English-speaking tech talent pool, and a mature EOR ecosystem that makes employment straightforward before entity establishment, India is the default first international market for US companies expanding for talent.

This playbook covers everything a US company needs to know about expanding to India — from the first hire via EOR to establishing a Pvt Ltd subsidiary, choosing a city, managing local HR, and navigating Indian employment law.

India Expansion: The Three-Phase Journey

Phase 1: First 1–5 India hires via EOR (Year 1)

For the first India hires, use an Employer of Record. The EOR handles: employment contracts under Indian law, payroll in INR, statutory contributions (EPF, ESIC, Professional Tax, Gratuity), and termination compliance. Your role: direct the work, manage the employee day-to-day, pay the EOR monthly. Time to first hire: 2–4 weeks from engagement to onboarded employee.

Phase 2: 5–15 India employees via EOR (Year 1–2)

Continue EOR as you scale to 5–15 employees. During this phase: build the operational infrastructure for India operations (communication tools, payroll reporting, HR processes), identify a local India team lead or HR contact, evaluate city concentration (should hires be in one city or distributed?), and begin assessing whether entity economics favor transitioning from EOR.

Phase 3: Own entity at 15–25 employees (Year 2–3)

At 15–25 employees in India, the economics of a Pvt Ltd subsidiary typically become favorable vs EOR. The entity establishment process: engage an India-based corporate law firm, register the Pvt Ltd (4–8 weeks), obtain PAN and TAN, set up bank accounts, register for GST if applicable, register for statutory compliance (EPF, ESIC, PT, Shops & Establishments Act). Total setup cost: $8,000–$25,000.

Choosing the Right Indian City

Bengaluru: the engineering capital

Bengaluru is the default choice for US companies hiring India engineering talent. Why: deepest product engineering talent pool in India (home to Google, Microsoft, Amazon, Swiggy, Razorpay, Zepto, Meesho, and hundreds of funded startups), the strongest ecosystem for senior engineers who have built and scaled production systems, and the highest English proficiency in technical communication.

Bengaluru tradeoffs: highest salaries in India (senior engineers: $30,000–$52,000/year); highest attrition (22–25% annually in competitive engineering roles); expensive office space relative to other Indian cities; traffic and infrastructure challenges.

Hyderabad: the enterprise tech hub

Hyderabad is Bengaluru's closest competitor for engineering talent. Home to Microsoft's largest campus outside the US, Amazon India, Google Hyderabad, and a strong services company ecosystem (TCS, Infosys, Wipro). Advantages: slightly lower salaries (10–15% below Bengaluru), somewhat lower attrition, newer infrastructure (HITEC City), and a strong senior talent pool in Java, .NET, and cloud engineering.

Pune: the mid-market alternative

Pune offers strong engineering talent at 15–20% below Bengaluru salaries. Well-established IT infrastructure, significant engineering college output (College of Engineering Pune, MIT Pune), and lower attrition than Bengaluru. Preferred by: companies hiring at mid-level (3–6 years experience), companies building QA or DevOps functions, and companies where 20–30% cost saving at each hire is material.

Mumbai: business operations anchor

Mumbai is the right location for India-based business operations roles (finance, legal, business development, sales) rather than engineering. India's financial hub; best for client-facing roles where proximity to Indian enterprise customers matters.

Indian Employment Law: What US Companies Must Know

The Indian employment framework

India's employment law is governed by central legislation and state-level shops and establishments acts. The key central laws: the Code on Wages (2019), Code on Industrial Relations (2020), Code on Social Security (2020), and the Occupational Safety, Health and Working Conditions Code (2020) — collectively the 'Labour Codes' which are being phased into implementation through 2026. For technology companies, the most directly relevant statutes are the state IT/ITES exemptions and the shops and establishments acts.

Statutory contributions (employer obligations)

• Employees' Provident Fund (EPF): 12% of basic salary employer contribution for employees earning up to INR 15,000/month basic (contributions are voluntary but standard for higher earners)
• Employees' State Insurance (ESIC): 3.25% employer contribution for employees earning up to INR 21,000/month gross; provides health and disability insurance
• Professional Tax: state-level tax deducted from employee salary; amounts vary by state (Karnataka: up to INR 200/month)
• Gratuity: payable to employees with 5+ years of continuous service at 15 days salary per year of service; typically funded via insurance policy
• Maternity Benefit Act: 26 weeks paid maternity leave for establishments with 10+ employees; employer-funded

Notice and termination

Indian employment law provides stronger termination protections than US at-will employment. For technology companies (typically classified as shops and establishments or IT/ITES): notice periods are generally 30–90 days as specified in the employment contract or company policy. Gratuity is payable after 5 years. For establishments with 100+ employees, retrenchment of workers requires government approval under the Industrial Disputes Act — a critical constraint for larger India operations.

Non-compete and IP protection

Indian law does not enforce post-employment non-compete agreements — they are considered in restraint of trade and therefore void under the Indian Contract Act. IP assignment clauses and non-disclosure agreements are enforceable. Ensure employment contracts include explicit IP assignment language (all work product created during employment is company IP) and confidentiality obligations that survive termination.

India HR Operations: Running the Function

The India HR lead: a critical early hire

At 10+ India employees, hire a dedicated India HR lead or HR Business Partner. This person: manages statutory compliance, processes payroll, coordinates with the EOR or local payroll provider, handles employee relations issues, conducts onboarding and offboarding, and serves as the first point of contact for employee HR questions. For a 10–30 person India team, this is typically one person (Senior HR Executive or HR Manager level) compensated at $12,000–$20,000/year.

India payroll processing

India payroll is processed monthly (salary is paid monthly, not bi-weekly as in the US). Payroll components: basic salary (40–50% of CTC), HRA (house rent allowance — tax-advantaged for employees in rented accommodation), special allowance, performance bonus, and statutory deductions (EPF, ESIC, PT, TDS income tax). CTC (Cost to Company) is the total employer cost including statutory contributions; take-home is significantly lower than CTC due to deductions.

Benefits competitive in India (2026)

• Health insurance: family floater policy covering employee + spouse + 2 children; INR 5–10 lakh sum insured; employer-paid; non-negotiable for competitive hiring
• Provident Fund: EPF contributions are statutory; some companies offer a voluntary PF top-up
• Annual bonus: 15–20% of annual CTC as performance bonus is standard in tech companies
• Stock options (USD-denominated): ESOP under the Foreign Exchange Management Act (FEMA); companies offering USD stock options to India employees see 31% lower attrition
• Flexible work: fully remote or hybrid is standard in India tech; requiring 5-day in-office is a strong negative signal in hiring
• Learning and development stipend: INR 30,000–50,000/year ($360–$600) for certifications and online courses

India Office: Do You Need One?

EOR with no office: fully viable for 1–20 employees

India employees can work fully remotely under an EOR arrangement without any India office. This is the standard operating model for US companies with small India teams. The EOR provides a registered address for statutory compliance purposes; employees work from home or from co-working spaces.

Co-working space: flexible option for 5–30 employees

For companies that want a physical presence without the fixed cost of a dedicated office: co-working spaces in Bengaluru (WeWork, Awfis, Regus, Innov8) provide per-seat arrangements from $100–$200 per employee per month. Benefits: in-person collaboration for the India team, a professional address, and meeting rooms available for visiting US leadership.

Dedicated office: when to invest

A dedicated office makes economic sense at 25+ India employees when per-seat co-working costs exceed the all-in cost of leased office space. Bengaluru Grade A office space (HITEC area equivalent: Electronic City, Whitefield, Koramangala): $8–$15 per square foot per month; for 25 employees at 100 sq ft per person: $20,000–$37,500/month. Typically requires 3-year lease commitment; factor in fit-out costs ($50,000–$150,000 for a well-equipped office).