Set Up a Recruitment Company in India

Updated on Sunday 13th October 2019

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Starting a recruitment company in India can be an attractive business idea, considering that the country has one of the largest workforces in the world (it has a population of more than 1,2 billion persons). When entering this business sector, a set of decisions has to be made – for example, deciding on the company type under which the company will operate. 
 
Besides this, it is also necessary to verify the licensing requirements for Indian recruitment companies; investors must also verify the tax system applicable to this type of business. In this sense, our team of consultants in company registration in India can be of help, especially in the case of foreign investors, who are not familiarized with the local legislation. 
 

What are the basic requirements for starting an Indian recruitment company? 
 

In order to open a company in India as a recruitment business (or recruitment agency) it is necessary to select a legal entity. For this purpose, the best options are corporate entities, such as limited liability companies or limited liability partnerships; our team of specialists in company formation in India can offer advice on the main characteristics of these company types, but also on the advantages and obligations applicable to their founders. 
 
As a general rule, a recruitment company is set up with the purpose of assisting other companies which are searching for suitable employees through such agencies. When this happens, the two companies will typically enter binding contracts, which will stipulate the manner in which the recruitment process should take place and the obligations of each party. Other important obligations during the procedure of company formation in India are presented below: 
 
  • the Indian recruitment agency must be registered with the Service Tax Department;
  • it is also necessary to register with the Ministry of Overseas Indian Affairs;
  • considering that the recruitment agency will provide services on the local market, it will be taxed in accordance with the tax system applicable to the provision of services;
  • thus, the company will be charged with the services tax, and for this purpose, the company must obtain a services tax registration;
  • this type of business must also be registered with the Employee’s State Insurance
     

What types of licenses are available for Indian recruitment agencies?
 

A recruitment agency in India can deliver its services to other companies or to natural persons who are seeking for employment on the local market. At the same time, the company can also recruit personnel to work in other countries and the licenses that have to be obtained will depend on the types of recruitment services provided by the company. 
 
Those who are interested in how to form a company in India as a recruitment agency will need to observe the legislation prescribed by the Emigration Act 1983, applicable when recruiting Indian workforce to work on foreign territories. In this particular situation, the following procedures are available: 
 
  • the company recruiting employees for companies operating on foreign territories has to be registered with the Protector General of Emigrates
  • the institution works under the supervision of the Ministry of Overseas Indian Affairs;
  • in this case, the recruitment company has to obtain a Recruiting Agent license;
  • to obtain the license, specific documents have to be submitted with the institution;
  • the documents have to be deposited with a standard application form, through which the company requests the issuance of the license;
  • amongst the documents required, the company’s representatives have to submit certificates which state their skills in the chosen business field. 
     

What are the recruitment trends in India? 
 

For those who want to open a company in India it is of high importance to know the current trends and needs of the recruitment industry. In India, one of the countries with the highest demand of employees trained in the field of IT and related activities, the staffing industry is expected to grow in the following years (currently, it has one of the highest growth rates). At the moment, investors should know the below presented data: 
 
  • India has a staffing industry that is expected to grow by 10% in 2019;
  • in 2018, the unemployment amongst young persons in India stood at 31 million persons (according to the data provided by the Center of Monitoring Indian Economy);
  • at the level of 2015, online professional networks operating in India have become very popular;
  • the hiring volumes also increased in this country, from 57% in 2013 to 78% in 2014;
  • the company’s hiring budgets also increased (the increase reached 50% in 2013 and 71% in 2014). 
     
Companies operating as recruitment agencies should take into consideration that Indian businesses are focused on recruiting highly skilled workforce; it is also observed the need to improve the quality of the hiring procedures. Businessmen are invited to contact our team of consultants in company registration in India for additional information on the incorporation of this type of business.