“India is cheap” is true in relative terms and misleading as a planning assumption. Indian developer rates are significantly lower than Western European equivalents, but the total cost of building a team there — done properly — includes a range of components that first-time founders consistently underestimate.
Here’s a realistic picture of what you’re actually budgeting for.
Developer Salary Ranges by Role (2025)
These are gross annual salary benchmarks for developers in India’s main tech markets (Bengaluru, Pune, Hyderabad, Chennai). Rates in tier-2 cities run 15–25% lower.
| Role | Junior (0–2 yrs) | Mid-level (3–5 yrs) | Senior (6+ yrs) |
|---|---|---|---|
| Backend (PHP/Laravel, Node, Python) | €4,500–€7,500 | €8,500–€16,000 | €16,000–€26,000 |
| Frontend (React, Vue) | €4,000–€7,000 | €8,000–€15,000 | €15,000–€25,000 |
| Full-stack | €5,000–€8,500 | €9,500–€17,500 | €17,500–€28,000 |
| Mobile (Flutter, React Native) | €5,000–€8,000 | €9,000–€17,000 | €17,000–€27,000 |
| QA / Test engineer | €3,500–€6,000 | €6,500–€12,000 | €12,000–€20,000 |
| DevOps / Cloud | €5,500–€9,000 | €10,000–€18,000 | €18,000–€30,000 |
Employment Overhead on Top of Salary
If you’re employing developers (rather than using contractors), you’ll pay statutory employer contributions on top of gross salary. The main ones:
- Provident Fund (employer share): 12% of basic salary
- Employee State Insurance (ESI): 3.25% of gross salary (applies below a certain salary threshold)
- Gratuity provision: Approximately 4.81% of basic salary, accrued annually
As a rough rule: add 18–22% to gross salary for employer-side statutory costs.
EOR or Payrolling Fees
If you’re using an Employer of Record or payrolling service (which most European startups should be for their first few hires), factor in a monthly service fee per employee. Current market rates from reputable providers run €300–€700 per person per month, depending on seniority and provider.
This covers the EOR’s legal employer liability, payroll processing, local compliance, and HR support. It’s not cheap, but it replaces the cost of local legal and accounting infrastructure that would cost significantly more to set up yourself.
Recruitment and Platform Fees
If you’re recruiting yourself, expect to spend time and potentially platform fees. LinkedIn Recruiter access, paid job board listings (Naukri, Instahyre), or recruiter commissions (typically 8–15% of first-year salary for placed candidates) all add to the cost of the first hire.
Working with a partner who provides both talent and payrolling typically bundles these costs in a way that’s easier to plan around.
Onboarding Time Cost
This one rarely appears in budgets and is consistently underestimated. A new developer — however good — typically reaches full productivity after four to six weeks. During that time, you’re paying full cost for partial output, and your existing team is spending time on onboarding rather than shipping.
For budgeting purposes, assume two to three weeks of reduced productivity per new hire and factor in roughly 10–15% of a senior developer’s time for the first month on onboarding support.
Tools, Licences, and Equipment
Seat licences for your tools (Jira, GitLab, Figma, whatever your stack requires) add up. For remote developers, a hardware stipend or equipment budget is increasingly standard and helps with retention. A one-time setup allowance of €300–€600 is common.
Currency and Transfer Costs
If you’re paying contractors directly rather than through a payrolling service, factor in FX conversion costs. EUR to INR through a traditional bank can cost 1.5–3% per transfer. Services like Wise Business or Deel typically reduce this to 0.3–0.8%. On €2,000/month payments, that difference is €24–€44/month — not huge per person, but it adds up.
The Real Total: A 3-Person India Team Example
Let’s put it together. A three-person team with one mid-level backend developer, one mid-level frontend developer, and one QA engineer, all employed through an EOR:
- Gross salaries: approximately €35,000/year combined
- Employer statutory contributions (~20%): €7,000/year
- EOR fees (€450/person/month): €16,200/year
- Tools and licences: €2,400/year
- Equipment stipends (one-time): €1,200
- Recruitment (one-time): €2,000–€5,000
Year one total: approximately €62,000–€67,000
That’s significantly less than the cost of one mid-level developer in Germany or the Netherlands. But it’s also meaningfully more than the raw salary figure suggests. Plan for the real number and you won’t be caught out.
Want a cost estimate tailored to your specific team structure and hiring approach? Get in touch — we’ll put together a clear breakdown for your situation.