Employer of Record Guide for Swedish Firms Looking to Hire Employees and Manage Payroll and Compliance Services in India

In Sweden Employer of Record arrangements are gaining traction among Nordic corporates with ambitions in Asia’s most populous economy. Swedish boardrooms increasingly view Employer of Record models as a credible channel for India expansion, Indian GDP growth has outpaced many global peers in recent years, and its labour force, now shaped by consolidated labour codes, presents opportunities and regulatory complexity in equal measure. For Swedish firms looking to hire employees and manage payroll and compliance services in India, the choice between traditional entry and third‑party solutions can be decisive for both cost and risk.

India’s labor reforms, completed in 2025, replaced a patchwork of 29 central laws with four comprehensive codes that govern wages, social security, industrial relations and occupational safety. This regulatory reset has drawn attention from Scandinavian firms, notably those in tech, manufacturing and services sectors, which are wrestling with multi‑state tax regimes, mandatory contributions like Provident Fund and Employee State Insurance, and a raft of statutory reporting requirements.

Sweden’s Labor Law and compliance Rules allows Swedish businesses to engage talent in India without establishing a legal entity. The EOR assumes legal responsibility for employment, payroll processing, statutory benefits and compliance filings, while the client retains operational control. In practice, this means a chief financial officer based in Stockholm can expand into Hyderabad or Pune with less administrative friction.

Why Swedish Corporates Are Rethinking India Entry Routes

Compared to Western Europe, India’s regulatory environment demands granular attention to compliance. Minimum wage rates differ by state and by worker category, and statutory contributions such as provident fund and professional tax require accurate monthly calculations. For a Swedish firm with fragmented HR capacity in India, the administrative burden can quickly eclipse operational priorities.

Swedish manufacturers and software houses alike report that payroll complexity is one of the top non‑commercial challenges when establishing teams in India. A Nordic advisory firm working with an industrial exporter noted that manual payroll runs created errors and delayed filings, leading the company to reconsider its hiring infrastructure.

A Employer of Record firm provide centralized payroll execution, statutory reporting and contract management under Indian employment law. Importantly, they also embed compliance controls that adjust to regulatory updates, a critical factor as authorities roll out digital reporting frameworks such as the Labour Identification Number (LIN) and the Shram Suvidha Portal.

Data collected by industry analysts shows that EOR usage by foreign firms in India rose nearly 50% between 2023 and 2025. This uptick coincides with an increased appetite for hybrid remote models and the demand for local hires that possess market‑specific skills. For Swedish businesses reliant on niche technical talent, the ability to employ workers without setting up a legal entity can reduce time‑to‑hire from months to weeks.

Swedish Multinationals with Established Operations in India

• ABB
• Atlas Copco
• AstraZeneca
• Electrolux
• Ericsson
• Hennes & Mauritz (H&M)
• IKEA
• Sandvik
• Scania
• SAAB
• SKF
• Tetra Pak
• Volvo Group

Employer of Record: Payroll and Labor Law Compliance in Practice

Payroll Realities in India

Managing payroll in India involves far more than issuing salaries on time. Employers must comply with statutory frameworks covering provident fund (PF), Employee State Insurance (ESI), gratuity, professional tax and withholdings for income tax. In addition to these obligations, minimum wages are set at state level, and periodic updates mean that payroll systems must adapt frequently.

Below is an indicative range of monthly minimum wages across categories, reflecting state variation:

These figures illustrate how labour costs vary and the importance of accurate categorization when calculating payroll components and statutory contributions.

A Swedish SaaS firm encountered compliance challenges when hiring graduates in Bengaluru and Pune. Lack of familiarity with PF thresholds and filing deadlines meant that statutory contributions were sometimes delayed. Once the firm partnered with an Employer of Record provider, monthly payroll processes were standardized, statutory filings became automated, and HR administrators could devote time to strategic workforce planning rather than manual reconciliation. Payroll accuracy improved, and internal compliance reviews reported zero discrepancies over three consecutive quarters.

Compliance Under New Labour Codes

The Indian labour reform agenda consolidated complex statutes into unified codes that took effect in 2025. Wage definitions now influence benefit calculations more directly, and industrial relations norms have shifted. These changes affect collective bargaining, contract terms and termination processes.

An EOR provider operating in India will manage employment contracts in line with these unified codes, ensure proper documentation for audit purposes and handle statutory reporting, including social security registrations. For Swedish entities accustomed to consistent Nordic frameworks, these services provide a layer of reassurance when navigating a system that still varies across states.

Operational and Strategic Considerations for Swedish Firms

Nordic corporate strategists often highlight the disconnect between India’s perceived potential and the operational effort required to hire locally. One executive in Stockholm noted that market projections suggested double‑digit growth potential in India for its industrial products. However, legal and payroll onboarding challenges initially diverted the company’s focus from commercial development.

By outsourcing statutory compliance and employment obligations, the firm redistributed internal HR resources to strategic account management. This shift, according to the executive, was instrumental in aligning India operations with broader European expansion goals.

Such insights are consistent with recent industry surveys which reveal that global firms increasingly rate compliance burden as a primary barrier to profitable international expansion.

EOR Demand and Adoption Among Global Firms in India

EOR Adoption Growth: Approximately 50% increase in usage by foreign firms in India between 2023 and 2025.

Regulatory Compliance: Over 20,000 statutory requirements in India, with labour regulations representing more than half of these obligations.

Labour Reforms: Four unified codes now govern wages, social security, industrial relations and workplace safety.

These indicators point to a compliance environment that requires constant attention and operational discipline. Swedish firms aiming for long‑term presence in India would benefit from workforce solutions that absorb this complexity.

Practical Steps to Engage with Employer of Record Services

Swedish firms considering EOR arrangements should approach provider selection with clear criteria:

Regulatory Expertise – The provider must demonstrate breadth in Indian labour law and payroll regulations.

Technology Integration – Digital payroll systems that align with Indian statutory platforms reduce manual risk.

Reporting Frameworks – Transparent reporting on deductions, contributions and compliance filings is essential for audit readiness.

Contract Management – Contracts must reflect unified labour codes and offer clarity on terms such as termination, benefits and dispute resolution.

Well‑structured Employer of Record Sweden arrangements provide these capabilities while allowing clients to maintain operational control over local teams.

Employment Compliance, Staffing and Payroll Clarity

The decision to hire employees in India and manage payroll and compliance services presents both opportunity and operational complexity for Swedish firms. Employer of Record solutions offer a structured mechanism to bridge Nordic strategy with Indian execution, reducing administrative burden while upholding legal obligations. As India’s labour codes continue to mature and corporate interest grows, solutions that combine local compliance with global HR strategy will remain central to successful expansion.