A guide to hiring employees in India's tech sector

With the largest population of any nation on Earth, India boasts a rapidly growing economy and booming tech sector. India has the largest and youngest workforce in the world. However, the country faces a serious skills gap.

At present, less than half of working-aged people in India hold jobs. The gap is impacting India’s tech sector, in particular.

India’s tech sector

India is Asia Pacific’s largest tech hub. Experts value the country’s tech sector at $250 billion and it employs approximately 5.4 million people. Tech services comprise roughly 7.5% of the country's $3 trillion GDP.

India's tech sector has grown quickly, thanks to government programs like the Digital India campaign from 2015. According to Prime Minister Narendra Modi, this campaign aimed to bridge the digital gap and benefit society with tech-led solutions in sectors such as healthcare and education. Collectively, India’s wealthiest business leaders committed Rs 4.5 lakh crores (approximately £43 trillion) to this campaign.

The government is committed to improving internet access. Silicon Valley companies like Meta are also investing in this effort. As a result, the country now has 800 million active internet users.

However, despite this tech boom, India’s tech sector is experiencing a serious skills gap.

India produces 1.5 million engineering graduates each year. However, it is estimated that just over 60% are employable.

Business Standard reports that Indian IT frontrunner Tata Consultancy Services Ltd. is having difficulty filling 80,000 positions due to this gap. Similarly, India’s largest engineering and construction firm, Larsen & Toubro Ltd., has stated that 20,000 engineers are required for its IT services unit.

Benefits of expanding into India’s tech sector

Global tech hub

India is a leader in the global tech space. A recent survey by Nasscom CXO Outlook highlights how India’s tech industry is moving towards cybersecurity, cloud computing, AI, and analytics.

The Nasscom survey highlights a positive outlook on the future of India’s tech sector. It states that 60,000 new employees joined the sector in 2023. This brings the total number of tech workers in India to 5.43 million.

Potential opportunities to leverage skills gap

The tech sector continues to grow and expand in India. However, the gap between supply and demand is set to increase from 25% to 30% by 2028. Analysts predict that the rise of AI, electric vehicles, and the expanding electronics industry will fuel this increase.

India’s tech skills gap presents great opportunity for foreign investment. According to Business Standard, Nasscom has predicted that over the next three years, India’s tech sector will require upwards of one million engineers with advanced skills in AI and other cutting-edge technologies.

There is potential for foreign companies to leverage these gaps by expanding into India, bringing with them a certain number of specifically skilled workers.

In doing so, these companies can hire workers in-country and invest in upskilling and knowledge sharing. This will help to address the employment issues and skills gaps in India, while also building their businesses in one of the biggest markets and the fifth largest economy in the world.

A haven for tech start-ups

Business Insider notes that India reported over 140,800 recognized start-ups at the end of June 2024. This is almost 50,000 more start-ups than last year. India is home to the world’s third highest number of businesses worth $1 billion or more – otherwise, known as ‘unicorns'.

A number of Silicone Valley tech leaders are leaving the U.S. in favour of moving their operations to India.

Hiring in India’s tech sector

Compliance

When hiring in another country, it is imperative to comply with all local laws. If authorities find your business to be non-compliant, they may impose severe penalties. In serious cases, this can mean closure and legal proceedings.

When hiring workers in India’s tech sector, you need to ensure that you employ your workers 100% compliantly. This applies whether they are staff whom you have relocated from your home country, or staff you have hired in-country in India.

Laws that must be complied with include the Payment of Wages Act, 1936, Gratuity Act, 1972, Maternity Benefit Act, 1961, and the Equal Remuneration Act, 1976.

All employees must comply with local tax law, under the Income Tax Act, 1961. Tech companies in India are required to comply with a number of tax laws. These include laws relating to corporate income tax, indirect taxes such as Goods and Services Tax (GST), and laws regarding employee stock options.

Using a global employment solutions provider like Mauve Group can help to reduce the risks of accidental non-compliance. A global employment solutions provider will also assist your company to navigate what can be complex laws around employment in India.

Diversity and inclusion

Studies show that India's IT sector employs the highest proportion of women - 30% - compared with other sectors. As an employer in India's tech sector, you must focus on fairness in your hiring practices. Researchers have proven that ensuring diversity in the workplace drives innovation and economic growth. It does so by ensuring greater opportunities for workers, valuing diverse insights, and improving morale; therefore, boosting retention levels.

Cultural sensitivity

When hiring in a new country, it is important to understand the cultural differences. These variations can affect how you work and communicate. If you are moving staff from your home country abroad, you will need to prepare them for the differences they will encounter.

Local cultural standards and expectations will vary from place to place. If you are hiring local talent in India's tech sector, then you will need to ensure that you as the employer are sensitive to the local culture and societal norms. This is necessary to ensure smooth communication between you and your team.

For example, in corporate India, there is great emphasis placed on authority. Whereas in the UK, corporate culture tends to be less hierarchical.

How Mauve Group can help your business

Mauve Group has extensive experience supporting tech companies around the world. Mauve Group is an award-winning global employment solutions provider, with over 28 years of experience. Mauve Group has a number of strong relationships with leading tech organisations globally.

Mauve’s suite of global employment services is available in India. From our pioneering Employer of Record service to Independent Contractor Solutions, Global Business Expansion, Global Payroll, and more, Mauve can support your organisation with compliantly hiring workers in India's technology sector.

Contact our team today, to find out which of our global employment solutions are right for your tech company's global expansion plans.