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peo outsourcing
By PAYROLL12 1,834 views

Benefits of PEO Outsourcing in India

PEO outsourcing in India is set to increase as the Indian business scenario after the outbreak of the pandemic has become all the more challenging, uncertain, and dynamic. As a result, foreign companies and MNCs who wish to make a foray into India are finding it difficult to set up a legal entity, and thus, enter the Indian market. However, all their concerns are easily addressed if they happen to hire the services of a PEO. Yes, you heard it correctly! With the Indian economy slowly coming back to normalcy, it is advisable for foreign companies to hire a PEO.

In fact, small and medium-sized enterprises are also set to benefit from the services of a PEO. They are able to provide cost-effective medical, insurance facilities to their employees reducing employer liability. Further, they can also expand in foreign countries with the least risk exposure. In addition, a PEO through its data analysis and benchmarking practices provides meaningful insight into the client’s workforce. This insight goes a long way in identifying and retaining talent at work.

What is a PEO?

PEO stands for Professional Employer Organization. It is a company that takes care of all your responsibilities pertaining to HR and payroll, risk management, compliance, employment compensation management, and other vital issues. In other words, you get ample time to focus on your business goals and expand your horizons.

How Does PEO Outsourcing Work in India?

It is essential to understand how PEO outsourcing functions in India. Once you enter into a contract with a PEO, it will take care of all HR-related and administrative functions on behalf of your company. This implies that your employee will be legally employed by the PEO as the Employer of Record (EOR). And, a PEO will handle the functions related to recruitment, training, development, termination of employees as well as salary disbursal, tax deduction, and all compliance-related issues as per the laws of the country.

Advantages of PEO Outsourcing in India

You would be surprised to know that you do not just save time and money but also gain peace of mind. The other perks which come with PEO outsourcing in India are:

1. Compliance:

India is one of the best-known destinations in the world for outsourcing whether it is BPO or KPO. Moreover, the Indian government also keeps updating its labor laws from time to time to be in tune with the changing global environment. Hence, foreign companies wishing to establish their setup in India have to first familiarize themselves with the labor laws and then implement them stringently.

This might prove to be a big obstacle in the setting up of their company unit in India. However, this problem can be easily resolved by hiring a PEO in India.

PEO outsourcing in India handles all compliance matters very efficiently. A PEO keeps itself updated with the labor laws of the country. It also recruits and terminates the employees as per the laws. It comes extremely handy in resolving a dispute or a conflict arising between the employer and the employee. In other words, a PEO functions in a compliant manner mitigating all kinds of risks for your company.

2. Cost-effective:

Another significant benefit of PEO outsourcing in India is that your company can begin operating in India without establishing its legal entity in this country. A PEO will look after all your vital business functions as per the laws of the country. In this manner, your company can save time and money and focus on vital areas of business growth. Another advantage is that you can offer medical benefits at an economical rate to your employees via a PEO.

3. Focus on expansion:

PEO outsourcing in India will facilitate your global expansion goals as well since a PEO will take care of your payroll management, compliance, employee benefits, performance management, the HR function, and so forth. Your company will not have to set up a branch office in India and spend time and money in understanding the intricacies of India’s employment laws and regulations. Thus, making space for ample growth of your company in India as well as abroad with minimal risk and limited time period.

How to Select a PEO for Your Organization?

Once you have grasped the essential benefits of working with a PEO, it is now time to look at the numerous options available in the market and select one of your choices. The parameters to look for include the following:

  • Capable of fulfilling your specific business goals and meeting your budget
  • Should possess a decent track record in the market
  • Check for validation from client testimonials
  • Should provide proficient expertise and all-inclusive support
  • Exceeding your expectations in your business vertical

How much Does a PEO Cost?

Finally, the question comes up: How much does a PEO cost? It is vital to understand that several factors combine together in the calculation of the cost; for instance, the size of your organization and the number of salaried employees and contractual workers.

Generally, these two pricing methods are used while deciding the cost of a PEO.

  1. A percentage of payroll: In this method, the cost of a PEO is calculated on the basis of your annual payroll.
  2. Employee-based: In this method, the cost of a PEO is calculated per employee working for your organization.

However, before signing the contract, you must be clear about which services will be billed to you and which services will come with additional charges.


To conclude, PEO outsourcing in India has become all the more in demand especially after the outbreak of Covid-19. Companies are looking to collaborate with efficient PEOs who can handle their HR and administrative functions so that they can focus on achieving their goals and expansion. Certainly, PEO outsourcing in India holds a bright future in the years coming ahead. By availing of PEO outsourcing in India, your company can easily devise its strategy for growth in India with rapid business expansion.