Service Company vs Product Company: Working Onsite at Client (India)

I've worked as a billable resource at three different client sites. My payroll company—an IT services firm—placed me at their clients, charged them significantly more than they paid me, and I worked daily at the client's office as if I were their employee.

Two of those assignments felt like working at my own company. I was integrated into the team, treated equally, trusted with important decisions. The third was a stark reminder that being a "vendor resource" can mean second-class citizenship when the wrong culture meets the wrong management.

The difference wasn't my skill level or the work I delivered. It was how the client chose to treat people based on whether you were on their payroll or someone else's.

This is the reality for millions of developers in India working for IT services companies—TCS, Infosys, Wipro, Cognizant, and hundreds of smaller firms. You're employed by Company A, but you work at Company B's office, on Company B's projects, with Company B's teams. Company A bills Company B for your time and keeps a significant margin.

This article breaks down what this arrangement actually looks like versus working directly for a product company, based on real experience navigating both. Not theoretical comparisons, but the practical realities that affect your daily work, your compensation, and your career trajectory.

The Setup: How IT Services Staffing Actually Works

When you join an IT services company in India, you're rarely working at their office. You're a billable resource—placed at a client site, working on the client's projects, sitting with the client's team.

Your service company (TCS, Infosys, etc.): Handles your payroll, benefits, HR policies, appraisals. Charges the client ₹12-18 lakhs per year for your services.

The client (where you actually work): Assigns your tasks, manages your daily work, provides your workspace. Pays your service company that ₹12-18 lakhs.

You: Earn ₹6-10 lakhs from your service company. The ₹6-8 lakh difference is their margin—covering their overhead, sales costs, and profit.

This creates a split loyalty situation that direct hires never experience. You have two bosses, two sets of policies, two approval chains. Your service company owns your employment, but the client controls your daily work. Neither has full responsibility for your wellbeing, and sometimes that shows.

Meanwhile, the client's direct hires doing the same work often earn ₹12-14 lakhs. They have one employer, clear policies, simpler approvals, and their compensation isn't split between two companies.

The Good: When Service Company Placements Work Well

In two of my three client placements, the experience was overwhelmingly positive. The client integrated service company resources fully into their teams. We attended the same meetings, had access to the same information, contributed to the same decisions, and were judged by the same standards as their direct hires.

When this happens, working through a service company offers real advantages.

Job Security During Transitions

When a project ends or gets cancelled at the client, you don't lose your job. Direct hires at the client might get reassigned to struggling projects or face layoffs. Service company employees go "on the bench"—still employed and paid while your company finds your next placement.

This is genuinely valuable. Between client assignments, you're still earning a salary. You're not frantically job hunting while unemployed. Your company is incentivized to place you quickly because they only make money when you're billable, but you have a cushion.

The bench period isn't permanent—if you're there too long, eventually termination happens—but it's significantly better than immediate unemployment when projects end.

Variety and Learning Across Companies

Service company employees rotate through multiple clients over their career. You might spend 1-2 years at a bank, then move to a retail company, then to a healthcare client. This exposure to different industries, tech stacks, and team dynamics accelerates learning.

You see what works and what doesn't across multiple organizations, building perspective that's hard to gain staying at one product company. You learn different coding standards, architectural patterns, and business domains.

This variety also keeps work interesting. When a client becomes tedious or a project becomes frustrating, you know your assignment eventually ends. There's a built-in rotation that product company employees lack—they either tolerate bad situations longer or quit entirely.

Lower Performance Pressure (Sometimes)

In healthy client relationships, being a service company resource can mean clearer boundaries. You're there to deliver specific outcomes. When those are met, your job is done. There's less pressure to participate in company politics, prove loyalty through overwork, or pretend to care about corporate values you don't believe in.

This can translate to better work-life balance, though it depends entirely on the client culture and project demands.

The Bad: When Being a "Vendor Resource" Shows Its Limitations

My third client placement revealed the downsides. The client maintained a clear hierarchy: their direct hires were part of the company, service company resources were external vendors. This played out in dozens of small ways that accumulated into a fundamentally different experience.

The Partiality Problem

In meetings, direct hires' suggestions were considered carefully and often implemented. Service company resources' ideas were acknowledged but rarely acted upon, even when objectively better. Decision-making conversations happened in rooms we weren't invited to, then presented as done deals we were expected to implement.

Performance issues among direct hires were handled quietly through coaching and support. Similar issues among service company resources led to quick removal from the project or contract termination. The standards applied weren't equal, and everyone knew it.

Promotions, interesting projects, strategic planning, leadership opportunities—these went to direct hires. Service company resources executed tasks but were rarely included in shaping direction. You could be technically excellent and still hit a ceiling simply because you weren't on the client's payroll.

This wasn't explicit discrimination. No one said "you're just a vendor." But the two-tier system was obvious in who got promoted, who got interesting work, who was included in strategic discussions, and whose opinions mattered when priorities conflicted.

The Pay Gap Reality

Here's the uncomfortable math: The client pays your service company ₹15 lakhs per year for you. Your service company pays you ₹8 lakhs. The ₹7 lakh difference is their margin.

Meanwhile, a direct hire at the client doing the same work earns ₹12-14 lakhs. They're costing the client less than you (no service company markup), while earning 50-75% more than you.

You generate ₹15L of value. Direct hire captures ₹12-14L. You capture ₹8L. Service company captures ₹7L.

The service company argues their margin covers overhead, sales costs, training, and the security of keeping you employed between projects. That's legitimate. But it means you're earning significantly less than the value you're creating, while doing the same work as people earning significantly more.

For some people, the trade-off is worth it—steady employment, variety, learning across companies. For others, seeing colleagues earn 50% more for the same work becomes increasingly frustrating.

The Approval Nightmare

Here's a scenario full-time employees never face: You need to take two days off for a family emergency.

As a full-time employee: Tell your manager. Manager approves. Done.

As a contractor: Tell your client manager. Client manager says okay. Now inform your consulting firm manager. Consulting firm manager needs to update their systems. Now you're maintaining leave requests in two separate systems—client's Workday and consulting firm's Workday (or whatever they use). One has your project allocation, the other has your actual employment records.

The same happens for expense approvals, training requests, equipment needs, and anything else that touches both companies. Every administrative task becomes a coordination exercise between two bureaucracies that don't talk to each other well.

The Timesheet Circus

Contractors fill out timesheets. Sometimes two of them.

Your consulting firm needs timesheets to bill the client and pay you. The client needs timesheets to track project costs and contractor utilization. These systems rarely sync automatically. You're manually entering the same hours into two different systems with slightly different categories, tracking codes, and approval workflows.

Miss a timesheet deadline at either company? Your payment gets delayed or project costs aren't tracked properly. Neither company considers this their problem to fix—it's on you to manage both.

Full-time employees might track time for project allocation, but they don't need to do it twice, and their salary doesn't depend on getting it right every single week.

The Bench: Advantage or Anxiety?

When a project ends or gets cancelled, contractors often go "on the bench"—still employed by the consulting firm but not assigned to a client. Full-time employees at the client get reassigned to other projects or laid off. Contractors theoretically have a safety net.

In practice, the bench is a mixed blessing.

The good part: You're still getting paid while between assignments. You're not immediately unemployed when a project wraps up. This is genuinely better than sudden termination.

The stressful part: The bench is temporary and uncertain. Your consulting firm is paying you but not making money from you. This creates pressure to find your next assignment quickly. You're interviewing with new clients while technically employed—better than unemployed, but not exactly stable.

And here's the reality: if you're on the bench too long, the consulting firm will eventually let you go. They can't carry non-billable employees indefinitely. So the bench is a cushion, not a safety net. It buys time but doesn't eliminate the fundamental job insecurity contractors face.

The Money Reality: Who's Actually Making What

The service company billing model is straightforward but often opaque to employees. Understanding it helps explain why compensation feels unfair.

Real example with actual numbers:

• Client pays service company: ₹15 lakhs per year
• Service company pays you: ₹8 lakhs per year
• Service company's margin: ₹7 lakhs (47% markup)
• Client's direct hire (same role): Earns ₹12-13 lakhs

This creates a situation where:

• You earn ₹8L for generating ₹15L of billable value
• Direct hire earns ₹12L for generating ₹12L of cost
• Service company captures ₹7L without doing your actual work
• Client pays ₹3L more for you than they would for a direct hire

Why clients use service companies despite higher cost: Flexibility to scale up/down without permanent headcount, no recruitment overhead, no severance obligations, specialized skills on demand, ability to terminate quickly.

Why the service company markup exists: Sales and client relationship costs, bench period salaries (paying you between projects), training and onboarding, HR and administrative overhead, profit margin.

Whether this arrangement is fair depends on perspective. The service company provides job security during transitions and handles employment complexity. But you're trading 30-50% of your market value for that security and convenience.

Many developers tolerate this early in their career for stability and learning, then switch to direct product company roles once they've built enough experience to command higher compensation directly.

Job Security: Service Company vs Product Company

Service company employees have a different security profile than product company employees. Neither is absolutely better—they're different risk distributions.

Service company security: When a client project ends or gets cancelled, you go on the bench—still employed and paid while your company finds your next placement. You're not immediately unemployed. But if bench time extends too long (typically 2-3 months), termination happens.

Product company security: When a product fails or company restructures, you might be reassigned to a different team, or you might be laid off entirely. No bench period cushion. But if the company is stable and you perform well, you can work there for years without worrying about project rotations.

During economic downturns: Service companies cut bench costs quickly—people sitting unbilled are immediate targets. Product companies might have longer layoff processes and severance packages, but when they cut, they cut deeply.

Individual control: At product companies, your security depends on company performance and your individual contribution. At service companies, it depends on client demand, your billability, and your company's ability to continuously place you.

Neither offers absolute security. Service companies provide short-term cushions but constant rotation uncertainty. Product companies provide long-term stability (if the company succeeds) but sharper drops when things go wrong.

Career Growth: Where Each Path Leads

Product company employees have clearer vertical growth paths. They build relationships with leadership, demonstrate commitment over time, and accumulate organizational capital that translates into promotions. Management opportunities, architectural decisions, and strategic projects typically go to permanent employees who've proven themselves over years.

Service company employees gain breadth of experience but face growth limitations. You rotate through multiple clients and tech stacks, building diverse skills. But you rarely stay anywhere long enough to reach senior leadership roles or shape company strategy. Growth happens through your service company's internal ladder (team lead, project manager, architect), not the client organizations where you actually work.

This creates an interesting dynamic: service company experience is excellent for building technical breadth and becoming a strong individual contributor or technical lead. Product company experience is better for reaching senior IC roles, management positions, or strategic influence.

Common career path: Many developers start at service companies (TCS, Infosys, Wipro) for 2-4 years to gain exposure, learn multiple technologies, and build foundational skills. Then they switch to product companies for higher compensation, focused expertise, and vertical growth opportunities.

This isn't absolute—some people build entire careers in service companies and reach senior positions. But the typical trajectory favors service companies for early-career breadth and product companies for mid-to-senior career depth and compensation.

The Right to Disconnect (Or Lack Thereof)

Neither contractors nor full-time employees in most companies have a meaningful right to disconnect. This is especially true in tech and professional services.

The theoretical boundary contractors have—"I'm here to deliver specific outcomes"—rarely protects you from after-hours expectations when deadlines are tight or when client culture normalizes constant availability.

Contractors might be slightly more protected by clear contract terms, but in practice, refusing after-hours work or weekend urgencies gets you labeled "difficult" just as quickly as it would for full-time employees. The employment relationship's power imbalance exists in both cases.

When Service Company Employment Makes Sense

Working for IT services companies works well when:

• You're early in your career and want exposure to multiple industries, technologies, and companies quickly
• You value stability during transitions and prefer bench periods over unemployment gaps
• You want variety and would get bored working on the same product for years
• You're comfortable with administrative overhead of managing relationships with two companies
• Learning across clients matters more than compensation maximization at this stage
• You want broad technical skills rather than deep expertise in one domain
• The pay gap (30-50% less than direct hires) is acceptable for the security and variety offered

When Product Company Employment Makes Sense

Working directly for product companies works better when:

• You want higher compensation and are willing to trade variety for 30-50% more salary
• You prefer depth over breadth—becoming expert in one domain rather than generalist across many
• Career advancement matters and you want paths to senior IC, management, or leadership roles
• You want influence on product direction and strategic decisions, not just task execution
• Administrative simplicity is valuable—one employer, one set of policies, one approval chain
• Long-term relationships with colleagues and building organizational capital matters to you
• Benefits and perks (stock options, better health insurance, learning budgets) are important
• You're okay with sharper risks—no bench cushion, but potentially higher rewards

The Question No One Asks: Does Treatment Matter More Than Status?

My best contractor experience was better than some full-time roles I've had. My worst contractor experience was worse than any full-time position.

The difference wasn't the contract terms or the pay. It was whether the client chose to treat contractors as team members or as disposable resources.

A good contractor role at a fair company beats a full-time role at a dysfunctional one. The employment status matters less than the culture, management, and respect you receive.

Unfortunately, you can't always predict this during interviews. Client companies rarely admit "we treat contractors as second-class." You discover it through experience.

What to Ask Before Accepting a Service Company Placement

When evaluating client placements through your service company, ask these questions explicitly:

• "How are service company resources included in team decisions and meetings?" Vague answers or "you'll work separately" = red flag
• "What percentage of the team are service company resources vs direct hires?" Very high vendor ratio can indicate second-class treatment or unstable projects
• "Can service company resources work on strategic projects or only execution?" Tells you about growth opportunities and how you'll be valued
• "What's the typical contract duration and renewal process?" Understand your stability timeline at this client
• "How are performance evaluations handled for vendor resources?" Who evaluates you, what criteria, how does it affect your career?
• "What happened to the previous person in this role?" If they left quickly, find out why
• "What tools/systems do vendor resources have access to?" Limited access often means limited integration

Also ask your service company's account manager about the client relationship:

• "How long has our company been working with this client?" Long relationships often mean better treatment
• "What's the renewal rate for this client's contracts?" High renewal = stable placement
• "Are other resources from our company there? How's their experience?" Talk to them before accepting

Pay attention to how clearly and confidently they answer. Healthy placements have clear, positive answers to these questions.

The Honest Assessment

Service company employment isn't inherently better or worse than product company employment. It's a different set of trade-offs that work for some people at certain career stages.

If you're early in your career and value learning variety, security during transitions, and broad exposure to different industries and technologies—and you're willing to accept 30-50% lower compensation than product companies—service company employment can be an excellent launchpad.

If you want higher compensation, vertical career growth, strategic influence, and are comfortable with sharper employment risks, product company roles make more sense.

Neither path is permanent. The most common trajectory is service company employment for 2-4 years to build skills and experience, then switching to product companies for higher compensation and focused growth. Many successful senior developers started at TCS, Infosys, or Wipro and used that foundation to launch product company careers.

The key is being honest about what you're getting into and choosing deliberately based on your current priorities—learning and stability versus compensation and growth—rather than defaulting to whatever opportunity appears first or staying somewhere past the point where it serves you.

And if you do work for a service company: find clients that integrate you well, treat you fairly, and give you meaningful work. The employment model creates challenges, but good clients make those challenges manageable. Bad clients make them miserable.