How do startups manage operations for India office?

Question

I'm trying to understand how do startups in US normally run operations in India office when both founders are in US?- Do you hire them as contractor or employee? I imagine hiring as contractor is probably easier but some people may have preference to become employee instead?- If you hire them as employee, how do you take care of running payroll in indian rupees with all the tax deduction and local compliance taken care of?- have you explored hiring through PEO ( Professional employer organization) kind of setup to avoid having to register for indian entity at all?Any other pain points you faced with remote office in India assuming you hired good quality talent?

thekhatribharat · Accepted Answer

Before taking any of the steps you will have to finalise the approach i.e whether you are looking for a longer term solution or a shorter term solution.
Most of the startups start with short term plan i.e hire folks as consultants with US registered entity. And then as per the long term roadmap, hire a site lead who can start the process of registering india entity and setup all the payroll and other stuff. After a certain number of people things like PF and all become necessary. There are a few consultancy firms who handle all of these things.
Consultant approach works well for initial hires. Also, the india entity registration process takes atleast 3 months, so in the starting most of the firms start with consultants.