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How to Start an HR Consultancy/ Outsourcing Business in India?

Every business requires an efficient and talented workforce. However, it may not be possible for a business whether it is a young start-up or a multi-chain company to recruit all its employees on its own.
Written by:
Abhishek Sahoo
Published on

Every business requires an efficient and talented workforce. However, it may not be possible for a business whether it is a young start-up or a multi-chain company to recruit all its employees on its own. The number of people looking for jobs is unimaginable and finding the most suitable candidates out of that pool is like finding a needle in the haystack! This is where an HR consultancy business comes into play.

What is an HR Consultancy or Workforce Outsourcing Business?

An HR Consultancy or Workforce Outsourcing business is involved in bringing potential employees to other companies. It is a third- party placement agency that recruits people for the vacancies available with companies that register with it to hire a new workforce.

HR consultancy business industry is still in its developing phase in India as with the growing competition, companies are focussing and investing more on branding and marketing, and want to reduce the time and cost related to hiring workforce. If you wish to become a part of this booming industry and start an HR consultancy business in India, you are required to adhere to different legal requirements involved.


Legal Requirements to Start an HR Consultancy Business

The basic requirements to start any business in India include having a PAN card, current bank account, and Identification Proof. To start an HR consultancy business, you need to comply with the following additional legal requirements:

I. Register your Business:

An HR consultancy business must have a separate legal identity from its owners by incorporation of the business. You have the option of registering as any of the following legal structures for your HR consultancy business:

  • Sole Proprietorship

  • Partnership Firm

  • One Person Company

  • Limited Liability Partnership

  • Private Limited Company

Registration of an HR consultancy business also includes registering the partnership deed if you choose to register as a partnership firm or LLP, Memorandum of Association, company’s Incorporation certificate, registering the name and address of the business, obtaining the Director Identification Number (DIN), Digital Signature Certificate (DSC), etc.

II. Register with the Ministry of Overseas Indian Affairs:

If you plan to recruit Indians for overseas or foreign jobs, then you also need to register your HR consultancy business as a Recruitment Agent with the Ministry of Overseas Indian Affairs. Under Section 10 of the Emigration Act, 1983, the application for registration is accompanied by a fee of Rs. 25,000 and a guarantee deposit worth Rs. 50 lakhs in a bank.

III. Register for Goods and Services Tax (GST):

Being a service provider, your HR consultancy business must be registered for Goods and Services Tax (GST). Any business that provides some service in India is liable to pay GST, which it collects from its customers. A business that has an annual turnover of more than Rs. 20 lakhs has to register under the GST regime.

IV. Purchase a Domain Name and Website:

Buying a domain name is mandatory if you wish to set up your HR consultancy business online. A website is easily accessible and helps in building a large database of companies and candidates. It also creates credibility and accountability of the business toward its clients and increases client's’ interest.

V. Purchase Logins for Online Job Search Engines:

To get a steady and wide-spread clientele, you need to buy logins for various online job search engines. These websites charge a periodic fee for the HR consultancy business and registered user information.

VI. Get your Intellectual Property Rights ( IPR):

You must obtain your Intellectual Property Rights like Trademark or Copyright as soon as you register your HR consultancy business. IPR protects the identity and goodwill of the business and 

VII. Get Requisite Legal Documents:

Other business tools include the various external and internal documents like Employment Agreement, Vendor Agreement, IP Licensing Agreement, MoU, Software Agreement, HR policies and procedures, etc. 

VIII. EPF and ESI Registration:

If you hire candidates as your employees first and eventually send them to the final employer, then you need to get your HR consultancy business registered for Employee Provident Fund and Employees’ State Insurance. The only condition imposed on EPF and ESI registration is that the business must have at least 10 employees working the time of registration.

Employers are constantly looking to hire additional or new employee force and there is a large section of talented-unemployed individuals looking for a job. Starting an HR consultancy/ outsourcing business can be difficult if you are unaware of all the legal requirements.

Hiring a startup lawyer who can assist you in completing all the legal formalities is the first step in building a successful HR consultancy business. If you want to start an HR consultancy business in India, you can consult the best startup lawyers in India at MyAdvo! Email us at or call now at 9811782573.