FTE to contractual position in Indian IT - Advise needed

Career
1

Hi,

Fellow members with contractual experience please respond.

I have around 14years+ experience in IT in India. Till date I worked only as a FTE. I am now looking into both FTE and contractual roles. In 2025 I am receiving quite a few calls for contractual positions with big brands.

My questions are

  1. how to negotiate money in contract roles? Is there any standard in India.
  2. What are the upside and downside compared to FTE
  3. What are the income tax implications(as many contract position do not have Provident Fund, etc.)

From internet I get an idea that at least in US market it’s like below

Contract position salary = FTE Gross + 50% hike+14% tax & ben cost on top of a salary

Not able to find any numbers associated with Indian market.

2

One big advantage of contract over FTE is you can do a lot of tax savings by opening your own company to get paid and distributing the salary to family members, could effectively pay very low taxes. It will also provide you with a new perspective to become and entrepreneur and expand further if you want to.

Initial downside is companies can lay off with a short notice. You need to manage your own insurance and such. Pay can be great and you can negotiate in $/hr and not INR/hr if they can pay through their foreign entity. In that case you just need to find out what’s the typical rate in US per hour for your role and aim for 60% of that.

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  • Was on Contract for couple of years and now FTE in India. Would have preferred to stay as Contract.
    Since, you are in 14+ years bracket, you would be aiming for atleast mid-senior level roles.
    Not sure what your niche is - cybersecurity, development, management etc. All have different price bracket.
  • Going beyond the basics - Majority of companies don’t hire contractual workers directly in India. There is usually a company in middle which hires you for the company/client to work for. They will leach out atleast 40% of your pay. So, keep that in mind.
  • Better go for the companies which are hiring directly.
  • FTE sux in India for white collared people above 50LPA bracket, extremely heavy taxes and no real way to save. Contract, you can save almost 50% of yours as a professional.
  • Do not try to cheat the system by using offshore accounts. You will be caught. Better pay those taxes.
  • Choose FTE only if you want to settle down or want something stable for a while. You will be able to earn more by having multiple income streams.
  • PF is not a savings instrument, better park your money in MF. Do not open it with Contract position.
  • You can expect a 25-30% salary increase from FTE - Contract. If you are getting more. Get Contractual. This is the bare minimum.
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One other thing which you should be aware is if there is a middleman/bodyshop who is hiring you for their payroll and you’ll be contractor for only the end company. This is generally how it works in India. And if it is this way then you’ll receive worst of both worlds (contractor/FTE).

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