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Information On Legal Matters and Outsourcing Laws in India


There is no denying the fact that any transaction between two entities involves a few legal implications. The same stands true for outsourcing to India. While handing over projects to another company in India, it is important for businesses to be aware of all the legal issues that might have an impact on their partnership with the service provider.

IDS Logic shares a few tips on how one can effectively deal with the legal issues of offshore outsourcing to India.


It goes without saying that taxation is the most important aspect that influences offshore outsourcing to any country. When it comes to India, the configuration of levying taxes is divided between the Central Government and the State Government. While the Central Government levies direct taxes such as personal income tax, corporate tax along with indirect taxes such as custom duty, excise duty and service tax, the State Government charges local and state taxes.

Thus, it becomes all the more important to find relevant and timely information about the various tax implications that you will have to deal with as a foreign company outsourcing its work to India. As no two countries have the same tax laws, it becomes essential that you discuss the various tax provisions beforehand with your chosen service provider in India and mutually agree about those tax provisions that are necessary to be included in the legal contract.

Tax implecation in India

Local Laws

While executing a legal contract, adhering to the laws of just one country is not adequate. Thus, before entering into any agreement, it is important to ensure that the local laws of both the countries governing the contract should be decided.

Also, conducting some research about the data protection and privacy laws that exist in the country of your preferred service provider is crucial. This will save your time and efforts later on, and will also help you stay away from legal issues.

Local Laws for outsourcing

Dispute Settlement

Another very important aspect that needs forethoughts while entering into a legal contract with an outsourcing company is dispute settlement. As two countries have two different legal systems, it is necessary that while making a settlement contract with your chosen service provider, you clearly mention the procedure of dispute settlement. State the country in which the case will be filed in the event of a dispute, because the case will be fought in the country where the case will be filed. Being clear about the legal aspects in outsourcing when it comes to dispute settlement can help both – the company assigning the work and the company taking the assignment, to avoid any future problems.

So, make sure you consider all these legal aspects before outsourcing your requirements to a well known and reliable Indian company.

legal aspects in outsourcing
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