Is a Contractor License Needed for Software Companies with T&M and Fixed Cost Models?

How to determine the applicability of a Contractor License for a software service provider company?

We work on two business models:

1. T&M: Here, our employees work under the direction and supervision of our clients but remain on our payroll.
2. Fixed Cost: Clients provide us with requirements, and we deliver the products to them.

Please suggest how to understand the applicability. I know the employee number criteria in Karnataka is 20 (twenty), but when does it get attracted?

Applicability of the Contract Labour Act

The Contract Labour Act will apply when your employees are working on the premises (meaning factory or office) of another person to fulfill a contract you have with that person or to deliver a result promised to him.

All 'Out-workers' are excluded. This means that employees working on your premises for a certain client are not considered contract workers.

If the employees are working on the client's premises and there are more than 20 of them, you need to apply for a license. It does not matter whether you are being paid a fixed cost or a variable cost, or if you are paid on a piece rate or a fixed contract for delivery. What is important is that they are working on the premises of another person.

There may be some specific exemptions for IT employees; you will need to check that out specifically.