Total Cost of Ownership: Offshore vs Local
Workforce Strategy · 6 min read · Updated 2026-07
Total cost of ownership for a local hire runs to roughly 1.4–1.7x base salary once you add employer taxes, benefits, recruitment, equipment, software, floor space and management overhead. A fully-managed offshore hire consolidates all of that into one monthly rate, which is why the true TCO comparison shows a 60–70% saving.
What goes into local TCO
Base salary, superannuation or employer taxes, payroll tax, workers' comp, recruitment (amortised), equipment, software seats, floor space and a share of management overhead. Add them up and the real number is well above the salary line.
Why offshore TCO is cleaner
The fully-managed offshore rate already includes recruitment, payroll, equipment, IT security and management — so the number on the invoice is close to the true cost. That's what makes the like-for-like comparison so favourable.
Key takeaways
- Local TCO ≈ 1.4–1.7x base salary.
- Include taxes, benefits, recruitment, equipment, overhead.
- Offshore rate already bundles those costs.
- True TCO comparison shows 60–70% saving.
Common questions
Why not just compare salaries?
Because salary is only ~60–65% of a local hire's real cost. Comparing salary-to-salary badly understates the offshore saving.
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