How To Hire Contractors in India: A Step-by-Step Guide

Between the great resignation, border shutdowns, flight cancellations and increased business competition, employers across Australia are facing a critical talent shortage for niche skills. An Ai Group survey found that 73% of businesses expect to have difficulty in finding talent in 2022. With a migration shortfall of over 375,000 people in the last year, companies are needing to find alternative sources of talent to continue their business operations.

One innovative solution has been brought on by the rise of remote work. Australian companies are now engaging contractors who live overseas to work for them remotely. Clients are eager to source international contractors as quickly as possible to gain access to sought after skills. CXC assists these clients to engage and onboard contractors efficiently, while also protecting the client from complex global regulations. Check out our case study for more information.

A huge 12.5% of these contractors are based in India. India is the second-largest English speaking country in the world, and therefore is an attractive location for employers to look at outsourcing. Below, we’ve highlighted some considerations that you’ll need to make before engaging this workforce as contractors.

Determine how you’re going to engage contractors

Before getting into the nuances of contractor engagement in India, it’s essential that you work out the best structure for employing and paying the workers. Your main considerations will be:

  • Whether you have an entity, or open up an entity, in India – By far the most expensive and strategically demanding option, but will enable you to hire employees and contractors directly without the need to go through intermediaries.
  • Engage contractors directly – When hiring contractors that work for an Australian company from outside India. You may choose to partner with a company that handles logistics and payroll.
  • Work with a contractor outsourcing company – one that specialises in contractor engagement, management and payroll, like CXC.

For the purposes of this article, we’re primarily talking about the considerations you’d need to make if you decide to engage independent contractors directly from outside of India.

Find contractors to hire in India

Find contractors to hire

There are a number of avenues to explore when looking to hire contractors in India. Some may be already known to you – for instance, when a contractor decides to return to India from Australia and you need to continue their engagement. In other circumstances, you’ll probably be looking at job boards, freelancer websites or recruitment agencies. Some examples include:

  • Go4Customer – Outsourced call centre services.
  • Upwork – Leading job board with the capability to engage freelancers in India.
  • GCS – Providing outsourced security and risk solutions.

Consider your contracts

Generally, there is not a legislative requirement for you to enter into an employment contract with an independent contractor; however, it’s in your best interest to do so to set expectations and the relationship.

You should include, at a minimum, the following in your contract:

  • Project scope of work
  • Start date and end date
  • Remuneration
  • Intellectual property rights
  • Confidentiality
  • Liabilities
  • Deliverables

There are a few specific things to consider that relates to India in particular. For instance, Indian labour law overrules employment contracts. Also, Section 27 of the Indian Contract Act technically prevents the enforcement of non-compete clauses in contracts.

Does the worker have the right to work?

Does the worker have a right to work?

One of the first consideration when engaging a contractor in India is whether they have a right to work. All Indian nationals have a right to work, but if you’re engaging an expatriate, you’ll need to ensure they have a current employment visa.

Is the contractor employed or self employed?

Your approach to onboarding will branch into separate paths depending on the answer to this question. Let’s first talk about the differences in these two engagement types:

Employed contractors

  • A company controls the work that the contractor performs, including their hours and where they work.
  • Submits an hourly, daily, weekly or monthly timesheet.
  • Employed directly by a company or outsourced to a third party, who handle the onboarding, payroll and management of risk.

Self employed

  • An independent contractor, including gig, temporary or fixed-term workers.
  • Is able to work for multiple clients, and actively solicits their work.
  • Usually provides their own equipment and technology.

The type of worker you’re looking for depends on your business requirements and availability of talent.


Independent contractors are responsible for paying their own income tax and having their own insurances.

For independent contractors who handle their own taxes, the Indian government uses a tax deducted at source (TDS) system, allowing for tax to be taken from pay up front. This is currently at 7.5% of the payrate of the contractor.

These contractors need to file their income taxes by July 31, every year.

Contractor benefits


While organisations can opt to provide contractors with additional benefits, this is not a requirement.

Independent contractors are responsible for their own health and life insurance, superannuation/pension plans, holidays, sick leave and childcare.


Employers have the option of paying contractors in Australian dollars or the Indian rupee. As of May 18, $1 AUD equals 54.48 INR, which is relatively high considering the last five years.

Employers can pay independent contractors in a number of ways:

  • Before the project starts – In India, contractors can be paid 33% of their wage up front. This is the riskiest option, as you are not guaranteed that the work will be completed up to standard.
  • After the project is completed – Not the most attractive method of payment for contractors, but may be reasonable if the contract clearly specifies the terms of their payment.
  • Milestone based payments – This involves payment on completion of deliverables. All of which need to be agreed in the contract.
  • Hourly or daily rate – If your relationship with the contractor is an ongoing basis, rather than project oriented, this may be the best solution for you.

If employing contractors directly, employers can use a number of international payment solutions to ensure the worker receives their remuneration.

Engage an employer of record company

The above sounds like a lot for employers who just need to engage workers to fill a temporary skills gap. That’s why many companies are engaging companies that act as the employer on behalf of their client to pay and manage workers in international markets.

For India, CXC’s engagement process is straightforward, and involves:

  1. Getting a referral of the contractor from the hiring manager.
  2. Conducting right to work checks.
  3. Determining the correct engagement type (either employed or self employed).
  4. Working with the client and the contractor to ensure rates, pension and GST rates are captured.
  5. Onboarding, paying and managing the contractor.

As one of the world’s leading providers of contingent worker management solutionsCXC is well positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across five continents and decades of experience, we can assist with every aspect of your program.

If you are interested in discussing our insights on engaging talent in India, and would like to find out more about how we can work together, please contact us.