Last updated: 26 October 2026. Provider details and coverage are re-checked when this page is revised.
Last Updated on October 26, 2026 by Abhijit Divekar
For Indian companies under 100 employees, outsourcing HR is usually far cheaper than building an in-house team. A full in-house HR setup costs about ₹12.6 to 19.2 lakh a year. An outsourced HR team with payroll and statutory filings costs about ₹1.5 lakh a year for up to 15 employees and about ₹3.6 lakh a year for 50. In-house HR starts to make sense from roughly 150 to 200 employees. Here is the full comparison, with real numbers.
| Criteria | In-house HR | Outsourced HR |
|---|---|---|
| Monthly cost (50 employees) | ₹1 to 1.6 lakh (salary and overhead) | ✓ ₹24,000 to 30,000 + GST |
| Setup time | 45 to 90 days to hire and onboard | ✓ Days |
| Expertise | One generalist | ✓ A manager plus a team of specialists |
| Compliance | Tracked manually by one person | ✓ Multi-state, tracked every month |
| HR software (HRMS) | Bought separately | ✓ Included |
| Scaling up or down | Needs new hires | ✓ Plan adjusts with headcount |
| If your HR person leaves | 2 to 3 month gap, knowledge lost | ✓ No gap, the team continues |
| Culture | Deep from day one | Builds over time with a dedicated manager |
The in-house figures are typical for a mid-level team in a metro city. Outsourced figures are HRTailor’s current plans; GST is extra.
| Cost item | Annual cost |
|---|---|
| HR manager salary (mid-level) | ₹7,20,000 to 10,80,000 |
| HR executive / assistant | ₹3,00,000 to 4,80,000 |
| HRMS software | ₹36,000 to 1,20,000 |
| Training and certification | ₹30,000 to 60,000 |
| Infrastructure (desk, laptop) | ₹50,000 to 80,000 |
| Benefits and PF for HR staff | ₹1,20,000 to 2,00,000 |
| Total | ₹12,56,000 to 19,20,000 |
| Team size | Without compliance | With compliance |
|---|---|---|
| Up to 15 employees | ₹10,000 / month ₹1,20,000 a year | ₹12,500 / month ₹1,50,000 a year |
| 25 employees | ₹14,000 / month ₹1,68,000 a year | ₹17,500 / month ₹2,10,000 a year |
| 50 employees | ₹24,000 / month ₹2,88,000 a year | ₹30,000 / month ₹3,60,000 a year |
“With compliance” adds PF, ESIC, PT challans and statutory filings. Full price list on the pricing page.
For a 50-person team with compliance, ₹3,60,000 a year is roughly 19 to 29% of the in-house cost. For a team of up to 15, it is about 8 to 12%.
The four Labour Codes have applied since 21 November 2025, and states are notifying their own rules one at a time. For a small team, keeping up is the hard part.
Each state has its own Shops and Establishments rules, professional tax slabs and labour welfare fund.
Monthly deadlines on the 15th, with interest and damages for late payment.
Many states revise the dearness allowance twice a year, by zone and skill level.
The Labour Codes changed what counts as wages, which changes the gratuity calculation.
An Internal Committee is mandatory for 10 or more employees, with an annual report.
Registers, payslips and filings kept audit-ready, so an inspection is a routine visit.
The hybrid model: many growing companies keep one internal HR coordinator for day-to-day questions and outsource payroll, compliance, statutory filings, policies and the HRMS. It works well from about 50 to 150 employees, while you build towards your own HR team.
Under ₹5 lakh, outsourcing is the only practical option. Between ₹5 and 15 lakh, it usually gives better value. Above ₹15 lakh, compare both.
Multi-state compliance alone justifies outsourcing for most SMEs.
If headcount doubles in a year, outsourcing scales without hiring delays.
If not, outsourcing fills the gap while you decide the long term.
If a PF notice or labour inspection would be a serious problem, use specialists.
Talk to a real HR Manager and get a tailored cost comparison for your company within one business day, no obligation.
Reviewed by Abhijit Divekar and the HRTailor compliance team. Last updated: 2026-10.
Monthly price by team size, with a calculator.
The same decision, for payroll only.
What a managed HR department includes every month.
