TL;DR
Use the misclassification checklist below, then convert onto Varimo EOR. Published fee $95/employee/month. Pass-through salary and statutory costs separate.
Misclassification risk checklist
Tick what applies to each India contractor. Three or more flags usually means plan EOR conversion with counsel.
Misclassification risk flags: 0 / 5
Still document scope
Lower - still document project scope.
Conversion path: align job description → EOR employment agreement → PF/ESI enrolment.
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Contact us with this scenarioWhy this comes up
- Misclassification exposure. Full-time control on company tools looks like employment to tax authorities - regardless of the contract title. Back assessments and penalties show up years later.
- Diligence friction. Fundraising and M&A schedules flag India contractor carve-outs, IP gaps, and missing Form 16. Buyers price that risk into terms.
- Talent expectations. Senior hires expect PF, gratuity path, insurance, and payslips banks accept. Invoice-only pay blocks housing loans and visas.
Before and after EOR conversion
Today, on contractor invoices
What is hard or blocked for full-time patterns
- Form 16 and salary slips banks and embassies expect
- Statutory PF, gratuity accrual, and insurable employment record
- Clean IP assignment chain preferred in Series B+ diligence
- ESOP and benefits tied to employment, not invoices
- M&A reps without India contractor carve-outs or escrows
After conversion on Varimo EOR
What employment unlocks
- Form 16 and monthly payslips from Varimo payroll
- PF/ESI enrolment and compliant employment contracts
- Backward-looking IP assignment with your counsel
- ESOP-eligible employment where your plan allows
- Diligence schedules that list employees, not invoice vendors
What employment unlocks
- Form 16 and monthly salary slips from Varimo payroll.
- PF and ESI registrations with compliant contracts.
- Backward-looking IP assignment drafted with your counsel.
- ESOP and benefits packages employees can actually use.
- Cleaner diligence schedules without contractor indemnity escrows.
ESOPs and equity after you convert
Most India ESOP and SAR plans assume an employment relationship. Contractors receive fees, not wages - so equity letters tied to “employee” status often do not vest cleanly, and banks ask for employment proof when people pledge shares.
After conversion on Varimo EOR, the person is a statutory employee with Form 16, PF, and payslips. Your counsel can align grant letters, exercise windows, and FMV rules with that status. Varimo does not replace your cap-table platform - we supply the employment layer payroll and diligence teams expect.
- We model take-home before conversion so cash comp plus your equity story still wins the hire.
- We confirm your plan allows grants to EOR employees in India (most US-style plans do with India addenda).
- We issue employment agreements with IP assignment and confidentiality - not invoice-only MSAs.
Which state (and city) they work from
Buyers often ask “which states can we hire from?” In India the operative question is work location: professional tax, labour registrations, and some benefits rules follow the state where the employee actually works - not where your US entity sits.
Varimo employs across major hubs (Karnataka, Telangana, Maharashtra, Tamil Nadu, Delhi NCR, and others) and supports remote India hires when role and compliance allow. Capture city and state on every offer so CTC, PT, and filings match payroll from day one.
| Work location | Typical use | Payroll note |
|---|---|---|
| Karnataka (Bengaluru) | Product engineering, startups, GCC HQs | Bengaluru PT slabs; deep senior bench |
| Telangana (Hyderabad) | Enterprise engineering, GCC scale | State PT; strong mid-senior supply |
| Maharashtra (Mumbai / Pune) | Finance, leadership, enterprise IT | Maharashtra PT; Pune often lower living cost than Mumbai |
| Tamil Nadu (Chennai) | Automotive, enterprise IT, manufacturing tech | Tamil Nadu PT; moderate cost vs Bengaluru |
| Delhi NCR | GTM, sales, consulting, finance ops | Delhi PT rules; overlap-friendly for US East |
| Remote (India) | Distributed teams, cost-sensitive roles | PT and registrations follow home work state - must be declared upfront |
Work state vs what changes in payroll
How it works with Varimo
Scope → employ → pay → scale
- 1
Audit & map
- Review each contractor role, rate, and control factors. Map to employment bands with equal or better take-home.
- 2
Offer & contract
- Varimo issues India employment agreements. Employees sign digitally; you keep day-to-day management.
- 3
Statutory & payroll
- PF/ESI, background checks, insurance, and first compliant payrun. Contractor invoices wind down.
- 4
Operate
- Monthly agentic payrun checks, USD invoice, and filings - same as any other EOR hire.
Related resources
Frequently asked questions
- Do all contractors have to convert?
- Genuine project-based contractors with scope, duration, and independence may stay contractors. Full-time product and engineering patterns rarely qualify.
- Can we grant ESOP to someone on Varimo EOR?
- Usually yes when your plan and India counsel approve EOR employees. Conversion from contractor to employee is often required first so grant language matches payroll records.
- Will take-home drop after conversion?
- Often no - tax-efficient CTC structure can match or beat a flat contractor invoice while adding statutory benefits. We model per person before anyone signs.
- Do we need an Indian entity?
- No. Varimo is the legal employer until you choose to form a subsidiary and migrate.
- What if someone refuses to convert?
- That is rare. Options include structured offboarding, a genuine contractor-of-record scope with counsel, or role redesign. We model take-home before anyone signs so surprises are caught early.
Think it through with an operator
30 minutes on city, CTC, contractors vs EOR, and timeline - no deck required.
Talk to Varimo