Reading the real cost of an offshore team

Offshore staffing is usually sold on a single number: the monthly rate compared with a local salary. That comparison is real, but it is incomplete in both directions. Some costs disappear that people forget to count, and some appear that quotes rarely mention.

Where the savings actually come from

The headline saving is the wage differential, but it is not the only one. A local hire carries costs beyond salary: recruitment fees or internal recruiter time, statutory employer contributions, equipment, desk space, software licences, management time, and the cost of the vacancy while you search.

In a managed offshore engagement, most of those sit with the provider and arrive as one line item. That consolidation is part of why the comparison favours offshore even when the wage gap alone would not justify it.

The second saving is less visible: the cost of not hiring. Work that sits undone has a price — support tickets ageing, invoices unchased, leads not followed up, a founder doing admin at 10pm instead of selling. That cost rarely appears in a budget, but it is usually the reason the conversation started.

The costs quotes leave out

Three are common.

• Onboarding time. Someone on your side has to document the role and answer questions for the first few weeks. Budget real hours for it, from someone who actually knows the work.
• Management attention. Even in a managed engagement, you still direct the work. Expect a standing check-in and a review cadence. Roles left unmanaged drift regardless of where they sit.
• Tooling. Another seat in your CRM, helpdesk, or project tool. Usually minor, occasionally not, depending on per-seat pricing.

None of these are large. All of them are real, and a provider who pretends otherwise is setting up a disappointment.

Compare scoped roles, not rates

A rate card is not comparable across providers, because the same job title covers very different work. One provider’s “virtual assistant” is a scheduling and inbox role. Another’s handles bookkeeping support, supplier coordination, and reporting. The rates look similar; the capability does not.

The same applies to the local side of your comparison. If you are benchmarking against a local salary, use the fully loaded figure — salary plus employer costs, equipment, space, and a share of the management overhead — not the base wage.

Where the 40% figure comes from

Cost reductions in the range of forty percent against fully loaded local cost are achievable for many roles. Whether a specific role lands there depends on the skill level required, the coverage window, and what your current local cost genuinely is.

Treat any single percentage as an indication rather than a quote. The number that matters is the one produced by comparing a specific scoped role against your specific current cost — and that requires ten minutes with real figures, not a rate card.

The cheapest option is rarely the least expensive

Below a certain rate, something has been removed: training, supervision, backup coverage, or the employment protections that keep good people in their jobs. Those removals are invisible in month one and expensive by month six, when the role turns over and you restart onboarding from scratch.

Turnover is the cost that quietly destroys offshore economics. Every replacement means re-recruiting, re-onboarding, and a period of reduced output. Two turnovers in a year can erase the annual saving entirely.

A practical way to evaluate

Work out the fully loaded cost of doing the work locally. Get a scoped role and a price from the provider, with coverage and backup stated. Add your own onboarding and management time for the first quarter. Then ask what the provider’s retention looks like, and what replacement takes.

If the numbers still favour offshore after that, they will hold up in practice — which is the only test that matters.