If you're a US or EU startup hiring remote engineering or support talent in India, here are the three most common (and costly) mistakes we see before founders bring in proper payroll infrastructure:

1. Misclassifying employees as "contractors" long-term.

Paying an India-based hire as a 1099-style contractor works for a few months, but if the relationship looks like employment (fixed hours, exclusivity, managed work), Indian labor authorities can reclassify it — triggering back-pay for PF (Provident Fund), gratuity, and penalties. This is one of the fastest ways to end up in a compliance dispute with no local entity to defend it.

2. Ignoring TDS (Tax Deducted at Source) obligations.

Any India-sourced payment, whether to an employee or contractor, generally has a TDS withholding requirement. Miss this and the liability doesn't disappear — it accrues, with interest, and can block future payments through Indian banking rails.

3. Skipping ESIC/PF registration thresholds.

Once you cross certain headcount or salary thresholds in India, Provident Fund and ESIC (state insurance) contributions become mandatory — not optional. Startups that scale from 2 to 8 India hires often blow past these thresholds without realizing it.

The fix isn't necessarily opening an Indian entity (expensive, slow, requires local directors) — it's routing payroll through a compliant local payroll/EOR structure that handles TDS, PF, and ESIC on your behalf while you keep full control of the hiring relationship.

Happy to answer questions on this thread if you're navigating India hiring right now.