Home ／ Insights on entering the Indian market
2026.03.24
India has the world's largest young working-age population, with about 12 million people newly entering the labor market each year. About 5 million engineers are active in the IT and technology sector, earning a strong global reputation in fields such as AI, cybersecurity, cloud computing, and software development. However, recruiting talent in India is not easy for Japanese companies.
As of 2024, Japanese companies operating in India have reached 1,434 (JETRO), and many cite “securing top talent,” “addressing high turnover,” and “cultural gaps” as their biggest management challenges. This article provides a practical guide to eight key points for hiring and retaining top talent in India.
India’s recruitment market has a fundamentally different structure from Japan’s. Where Japan follows a “new graduate hiring and lifetime employment” model, India’s standard is “skill-based, market-value-based” hiring.
Difference in job-change frequency: The average tenure of IT professionals in India is 2 to 3 years, far shorter than Japan’s 6 to 7 years. The “Annual Increment Exodus” — a wave of resignations after the annual salary review period (typically April) — is a recurring challenge for companies in India.
Rising salary levels: Salaries for IT professionals in India are rising at 8 to 15% a year, with AI and machine learning engineers now reaching annual salaries of 2 to 5 million rupees (roughly 3.6 to 9 million yen). In some roles, this has begun to overtake salary levels in Japan.
Difference in career orientation: Top talent in India places a high value on “early career advancement” and “maximizing market value.” Be aware that this can create a gap with the “long-term commitment” that Japanese companies expect.
It is important to understand the main recruitment channels available in India and the characteristics of each.
LinkedIn: India has over 130 million LinkedIn users, the second-largest user base in the world. It is most effective for hiring at the mid- to senior-level, and a strong company page combined with direct recruiting works well.
Naukri.com: India’s largest job site, used by more than 70 million people a month. It is strong for hiring at the junior to mid-level.
Campus recruiting: Gaining access to top institutions such as the IITs (Indian Institutes of Technology) and IIMs (Indian Institutes of Management) requires building long-term relationships with university career centers and professors (Phinx). This is a high hurdle for companies newly entering the market from Japan, so working with a local recruiting partner is recommended.
Recruitment agencies: Global and local staffing firms such as Robert Half, Michael Page, TeamLease, and Randstad India are active in this space. Among Japanese firms, JAC Recruitment, Pasona India, and RGF (Recruit) operate in India.
For job seekers in India, awareness of Japanese companies is, in reality, lower than that of Western firms or major Indian companies. Employer branding that clearly communicates “why work for a Japanese company” is essential.
Points to emphasize: Japan’s technological strength, commitment to quality, global career paths (including opportunities to be posted to the head office in Japan), a stable business foundation, and structured training programs.
Points to avoid: An implicit message of “we expect a Japanese-style way of working” tends to put off job seekers in India. It is more effective to lead with flexible working arrangements, performance-based evaluation, and opportunities for career growth.
Japanese-style interview processes include elements that do not work well in the Indian market (ALP Consulting).
Speed: Top candidates in India are often considering multiple offers at once. If the time from interview to offer exceeds two weeks, the candidate drop-off rate rises sharply. Approval processes at the Japanese head office should be shortened as much as possible.
Evaluation criteria: Qualitative criteria that Japanese companies value — such as “personality,” “cooperativeness,” and “loyalty” — are unfamiliar to candidates in India. What is expected instead is an objective, transparent evaluation process using skills tests, technical interviews, and case studies.
Clarity of the offer: It is essential to clearly state salary, allowances, salary review rules, and the evaluation system in writing. An approach of “we’ll discuss it after you join” undermines trust.
Compensation structures in India differ greatly from those in Japan, so packages need to be designed around local practice.
CTC (Cost to Company): In India, it is standard to present compensation on a CTC (cost to company) basis. In addition to base salary, the total is typically presented inclusive of HRA (house rent allowance), LTA (leave travel allowance), PF (provident fund), health insurance, and other benefits.
Stock options and bonuses: For talent from a startup background in particular, stock options and performance bonuses are an important factor in their decision. A package that includes variable pay alongside a fixed salary is more competitive.
Benefits: Health insurance (for the employee and family), commuting allowance, meal subsidies, flexible working, and childcare support are all valued. Consideration for mental health in particular is becoming increasingly important among younger employees in India.
In India’s talent market, retention matters just as much as hiring. The three to six months after joining are the period of highest turnover risk.
A thorough onboarding program: Run an onboarding program in the first month that clearly communicates the company’s vision, team structure, evaluation system, and career paths. Introducing a mentoring system is also effective.
Regular one-on-one meetings: Hold one-on-ones between managers and their reports at least once a month to catch dissatisfaction or problems early. Employees in India tend to expect clearer feedback than Japanese employees do.
Making the career path visible: Concretely showing “what position you can reach in how many years” is the most effective way to prevent turnover.
India’s labor law operates on a two-tier structure of federal and state law, and practice varies by state. It is important to understand the main regulations.
EPF (Employees’ Provident Fund): Both employee and employer contribute 12% of basic salary. Companies employing 20 or more people are required to enroll.
ESI (Employees’ State Insurance): Covers employees earning a monthly salary of 21,000 rupees or less. It is equivalent to health insurance.
Gratuity: An employer is obligated to pay employees who have completed five or more years of service. The amount is 15 days of final salary multiplied by years of service.
Using an EOR (Employer of Record): Before setting up a legal entity, you can use an EOR service to hire staff while complying with local labor law. For a service fee of roughly 100 to 700 dollars a month, compliance risk can be reduced significantly (Anju Smriti).
Differences in Business Customs Between Japan and India is the area that requires the most care in recruitment and HR management.
Communication style: Japan’s culture of “reading the air” does not work in India. Instructions and expectations need to be put into words explicitly. At the same time, active discussion and feedback from Indian employees should not be seen as “defiance,” but embraced as a strength of the organization.
Speed of decision-making: Business in India moves faster than in Japan when it comes to decision-making, and authority is increasingly delegated to the front line. If the approval process at the Japanese head office is slow, there is a risk of losing top talent to other companies.
Consideration for diversity: India is a society of many languages, religions, and castes, so consideration for diversity in the workplace is essential. Accommodating religious holidays, dietary restrictions (Vegetarian options included), and providing prayer space all have a direct effect on employee satisfaction.
Hiring talent in India comes with unique challenges that cannot be handled with a mindset shaped purely by the domestic Japanese market. With the right strategy and an understanding of local practice, however, it is possible to secure world-class talent.
India market entry To make hiring succeed, position hiring not as a “cost” but as an “investment,” and work Local partners together to build a long-term talent strategy. Market research By including talent considerations from that stage onward, you can significantly reduce the risks that arise after entering the market.
Where Japan follows a new-graduate hiring and lifetime employment model, India’s standard is skill-based, market-value-based hiring. IT professionals tend to have shorter average tenures, and large waves of resignations can occur after the annual salary review period. Top talent places a high value on early career advancement and maximizing their market value.
LinkedIn is effective for mid- to senior-level hiring, while the job site Naukri works well for junior to mid-level hiring. Gaining access to top institutions such as the IITs and IIMs requires long-term relationships with career centers and professors, and new entrants are advised to work with a local recruiting partner. Recruitment agencies are also active.
Because, in reality, awareness of Japanese companies among job seekers in India is lower than that of Western companies or major Indian firms. While it helps to emphasize Japan’s technological strength, commitment to quality, opportunities to be posted to the head office, and structured training programs, be careful that a message insisting on a Japanese-style way of working tends to be off-putting.
Speed matters. Top candidates are often weighing multiple offers at once, and a drawn-out process from interview to offer sharply increases the drop-off rate. Objective, transparent evaluation — through skills tests and technical interviews rather than qualitative measures like personality or cooperativeness — along with clearly stating salary and the evaluation system in writing, builds trust.
The main systems are the Employees’ Provident Fund (EPF), Employees’ State Insurance (ESI), and gratuity for long-serving employees. Labor law operates on a two-tier structure of federal and state law, and practice varies by state. Before setting up a legal entity, you can also hire staff in compliance with local labor law by using an EOR (Employer of Record) service.
Retention efforts should start from day one, since the first few months after joining are the period of highest turnover risk. Effective measures include onboarding that communicates the company’s vision and career paths, regular one-on-ones, and making the path to promotion concrete and visible. What matters is treating hiring as an investment rather than a cost.
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