In today's global economy, organizations are facing a significant challenge: a shortage of skilled talent. 4 in 5 employers globally struggle to find skilled talent, according to a report by ManpowerGroup.  

According to the Global Talent Crunch report by Korn Ferry, the demand for skilled talent will easily surpass supply, with a global talent shortage of more than 85 million workers.

Amidst this global talent crunch, India stands out as a promising talent market, with its large and diverse talent pool, rapidly expanding economy, and competitive labor costs. The same Korn Ferry study predicts India will have a talent surplus by 2030, with 245 million workers available.

This article will explore the benefits of hiring employees from India, highlighting six compelling reasons.

7 Benefits of Hiring Employees from India

India has a vast pool of skilled workers eager to contribute their expertise to global enterprises. Some compelling reasons why you should hire employees from India are listed below:

1. Abundance of talent
2. Cost-effective labor
3. Employer-friendly labor laws
4. Technical expertise
5. Strong English proficiency and cultural adaptability
6. Effective government initiatives to upskill talent and promote entrepreneurship
7. Robust infrastructure and internet connectivity

1. Abundance of talent

With a vast population and a thriving education system, the country produces top-notch graduates across various fields, such as IT, finance, and healthcare. For example, approximately 1.5 million engineering graduates join the tech talent pipeline annually. 

Moreover, this rich talent pool offers a wealth of innovative thinking, problem-solving abilities, and a strong work ethic, which can significantly enhance your organization’s capabilities, drive innovation, and boost your competitiveness.

With a broad array of candidates to choose from, you can easily fill skill gaps in your organization and build a high-performing team. 

2. Cost-effective labor

Hiring talent in India can significantly reduce labor costs compared to hiring in many Western countries. For example: 

• Senior-level developers in India earn an average annual salary of around $38,000, while their counterparts in the US earn more than $109,000 every year. 
• Indian human resource managers earn between ₹5L - ₹15L/yr ($6000 - $17900), significantly lower than the average salary of $81,249 in the US.

One common concern about hiring in India is that lower labor costs might imply a lower quality of skill. 

However, this is a misconception. India is home to a robust and highly skilled workforce, particularly in the technology sector. Currently,  over 1,600 GCCs, including Fortune 500 companies, employ millions of professionals in advanced technology roles. This is a testament to the high quality of talent in India.

3. Employer-friendly labor laws

India's labor laws strike a delicate balance between facilitating business operations and protecting workers' rights.

While these laws don’t offer flexibility in employment contracts or sufficient leeway for trade unions to claim collective bargaining agreements, they maintain high standards regarding employment security, fair wages, and working hours. This ensures workers are protected from exploitation and discrimination, promoting a fair and conducive work environment.

Businesses can also operate in Special Economic Zones (SEZs), which offer various incentives, including simplified regulatory procedures and tax benefits. This makes it easier to establish and operate businesses while remaining compliant with labor laws.

4. Technical expertise 

India's workforce stands out globally for its technical expertise, driven by the country’s exceptional education system in science, technology, engineering, and mathematics (STEM) fields. For example, there are 5 million software developers in India, and the country ranks first in AI skill penetration, possessing expertise in cutting-edge technologies like machine learning and natural language processing.

This abundance of technical expertise positions India as a valuable source of skilled labor for companies seeking to build or augment their technological capabilities, whether in software development, data science, engineering, or scientific research.

5. Strong English proficiency and cultural adaptability

Despite being multicultural and multilingual, India is the world's second-largest English-speaking country, with approximately 10% of the population speaking English. 

Since English is widely spoken and used as a medium of instruction in many educational institutions, this enables seamless communication with international teams.

Furthermore, the presence of many global corporations in the country exposes Indian talent to cross-cultural work environments, enabling them to adapt and thrive in international settings. 

6. Effective government initiatives to upskill talent and promote entrepreneurship

The Indian government has implemented various policies and initiatives to encourage foreign investment and promote entrepreneurship, including incentives for setting up operations and favorable tax regimes.

Since 2016, the Indian government has enacted 53 regulatory reforms to boost the startup ecosystem. As a result, India's startup ecosystem boasts a record of 114 unicorns as of March 2024, with a combined valuation of $350 billion.

Recently, the government also relaxed FDI (foreign direct investment) to allow 100% foreign direct investment in the procurement and manufacture of satellite systems.  These measures have improved India’s Ease of Doing Business (EoDB) rank—from 142nd in 2014 to 63rd rank in 2020—and made it the world’s seventh-largest FDI recipient in 2022. 

7. Robust infrastructure and internet connectivity

India has made significant strides in providing stable power supply and reliable internet infrastructure across the country, including tier 2 and tier 3 cities. This widespread availability of power and high-speed internet connectivity ensures uninterrupted operations and seamless remote collaboration, regardless of location. Indian employees can work efficiently without facing connectivity issues, which translates to increased productivity and reliable service delivery.

Top Sectors to Hire Employees from India  

Understanding the top sectors for hiring employees from India can help businesses tap into this rich talent pool and drive growth and innovation. Here are some of the key sectors worth considering:

1. Tech

India is renowned for its IT industry, with a wealth of skilled professionals in software development, cybersecurity, cloud computing, data analytics, and more. This expertise has fueled growth in the Indian software product industry, which is expected to reach US$ 100 billion by 2025. For example, Accenture's workforce in India exceeds 90,000, more than double its workforce in the US.

The country's strong education system, IT infrastructure, English proficiency, and cost-effectiveness make it an attractive destination for IT outsourcing and talent acquisition.

2. Healthcare

India's healthcare sector is expanding rapidly, with significant advancements in pharmaceuticals, medical research, and healthcare services.

This country is easily becoming a major source of healthcare talent for Europe and the Gulf region. Also, there is a growing demand for Indian nurses in countries like Malaysia, Italy, Portugal, Poland, and Germany. The nursing talent pool in India is expected to increase dramatically, with projections indicating 100-fold growth in the next five years.

3. Telecommunications

India's telecommunications sector is one of the fastest-growing industries, driven by a massive and tech-savvy population. The rapid expansion of 4G and 5G networks, coupled with the government's Digital India initiative, has further spurred growth in this sector. According to a Canaly report, The Indian Cellular Association expects the Government of India's boost to battery charger production to result in 365 new factories and create 800,000 jobs by 2025.

This creates job opportunities for network engineers, telecommunications technicians, software developers, and data analysts, among others.

4. E-commerce and retail

India’s e-commerce and retail sectors are booming, driven by increased internet penetration, rising disposable incomes, and a growing middle class.

E-commerce is experiencing exponential growth and is projected to reach Rs 26 trillion by 2030 from its current market size of Rs 8.2 trillion.

Retailers continue to open more stores, with many well-known organizations actively expanding their presence. Also, significant growth and expansion are expected to occur in tier-2 and tier-3 cities, highlighting the ongoing potential in these markets. Plus, this industry offers diverse career opportunities for professionals with varying skills and expertise, including website designers, SEO analysts, copywriters, marketing specialists, and IT technicians.

How to Compliantly Hire Employees from India

Follow these steps to compliantly hire employees in India:

1. Understand Indian labor laws

Indian employment and labor laws are complex, with unique state regulations in addition to national laws.  For example, in India, it's customary for new hires to sign an employment contract. While federal labor law doesn't mandate written contracts, states like Karnataka and Delhi have legal requirements for employees to have written contracts.     

Familiarize yourselves with these laws and stay updated on any changes to ensure global compliance.

2. Establish a legal entity

Setting up a legal entity from scratch typically involves registering with local authorities, opening a local bank account, and consulting with local experts to ensure compliance with tax and labor laws. 

If you decide to establish a legal entity, you need to register your company with the Ministry of Corporate Affairs (MCA). This includes obtaining a Director Identification Number (DIN), a Digital Signature Certificate (DSC), and filing the necessary incorporation forms. Also, register for Goods and Services Tax (GST), Employee State Insurance (ESI), and Provident Fund (PF) as applicable.

However, establishing a legal entity in India can be time-consuming and complex. Using an Employer of Record in India can simplify this process. An EOR acts as the legal employer on your behalf, handling HR, payroll, compliance, and other administrative tasks.

3. Draft employment contracts

Ensure that employment contracts comply with Indian labor laws. Contracts should include a job description, compensation details, working hours, leave entitlements, termination conditions, and other relevant terms.

4. Ensure fair employment practices

Avoid discrimination based on gender, religion, caste, or any other protected characteristic, and ensure that your hiring process is merit-based and transparent.

5. Determine appropriate compensation

Research and determine competitive compensation packages based on industry standards and local market conditions in India. Take into account factors such as cost of living, skills required, and level of experience.

Use the Gloroots Salary Calculator to estimate salaries for hiring Indian employees across various sectors and plan your budget accordingly.

6. Hire contractors to test the labor market

Before committing to hiring full-time employees, you can hire international contractors or freelancers to test the labor market in India. This allows you to assess the quality of talent available and the suitability of your business model in the Indian market before making long-term commitments.

7. Partner with an EOR

Partnering with an Employer of Record (EOR) to onboard professionals from India can help you navigate the complexities of Indian employment laws. An EOR handles payroll, taxes, and benefits administration, ensuring compliance with local regulations. This option is especially beneficial if you are not familiar with the Indian legal and business environment or lack the resources to manage a global payroll efficiently.

Hire employees from India using Gloroots

Navigating the complexity of hiring employees from India can be daunting. But you don't have to struggle when you have an Employer of Record that can streamline the process of hiring global talent. Partner with Gloroots, a leading Employer of Record (EOR) service provider, to access skilled professionals while ensuring compliance and efficiency in the hiring process. From onboarding tech talent from India to payroll processing, Gloroots can help make global workforce management simple. Contact us today to learn more.