Cost of setting up an offshore team: A complete breakdown
At a glance
- Setting up an offshore team involves one-time setup costs plus ongoing running costs.
- Salaries, recruitment, facilities, equipment, and management all factor in.
- Using a provider can cut setup cost and time sharply versus going it alone.
Building a team abroad can save a lot, but it is not free to start. The cost of setting up an offshore team combines one-time setup with ongoing running costs. Setup covers recruitment, equipment, and getting established. Running costs cover salaries, facilities, and management. The total depends heavily on how you set up: on your own, or through a provider. Both paths can work.
Let us walk through the costs involved.
Setup costs vs running costs
Two kinds of cost appear. Setup costs are one-time: recruiting the team, buying equipment, and establishing a presence, which may include legal registration if you go it alone. Running costs recur: salaries, office or workspace, software, and management. The savings come from lower offshore wages, since US roles are expensive by comparison, with customer service representatives alone earning a median of $44,770 a year.
Mature hubs make setup easier. The Philippines, with a $35.4 billion digital economy, has the infrastructure and talent to get a team running quickly.
The main cost components
The table lists what goes into the total.
| Component | Type | Notes |
|---|---|---|
| Recruitment | Setup | Finding and vetting staff |
| Equipment and software | Setup | Computers, tools, licenses |
| Legal setup | Setup | Only if you form your own entity |
| Salaries | Running | The largest ongoing cost |
| Facilities and management | Running | Workspace, oversight, support |
Going it alone means carrying all of these yourself. Using a provider bundles many of them into one fee.
Two paths to setting up
1. Doing it yourself
You can register your own entity and build the team directly. This gives maximum control but carries the most setup cost, time, and legal work. It suits larger, long-term commitments where full ownership matters.
2. Using a provider
A staffing or outsourcing provider handles recruitment, facilities, and often employment, for a fee. Setup cost and time drop sharply, since you skip entity registration and infrastructure. This is the common path for most companies, especially smaller ones.
Keeping the total down
Match the path to your scale. For a few roles, a provider almost always costs less overall than building your own operation. Mind local employment compliance, and invest in strong management so the team performs. The biggest savings come from lower salaries, so protect that gain with good process rather than letting coordination costs eat it.
Frequently asked questions
Is it cheaper to use a provider or set up your own entity?
For most companies, a provider is cheaper to start, especially for a small team. Setting up your own entity means legal fees, registration, facilities, and ongoing administration, which only pay off at larger scale over the long term. A provider bundles recruitment, workspace, and often employment into one fee, cutting both cost and setup time. Building your own operation makes more sense once the team is large and the commitment is long-term.
What is usually the biggest cost of an offshore team?
Salaries, by a wide margin, as the main ongoing cost. Even at lower offshore rates, wages dominate the running total once the team is established. Setup costs like recruitment and equipment are significant at the start but are one-time. When budgeting, focus on the monthly salary and management cost over time, since that is what you will pay continuously, rather than fixating on the initial setup figure alone.
How long does it take to set up an offshore team?
It varies with the path. Through a provider, a small team can often be running within weeks, since recruitment and infrastructure are ready. Setting up your own entity takes much longer, often months, because of registration, facilities, and hiring from scratch. If speed matters, a provider is usually faster. Factor the time cost in too, since a long setup delays the savings and value the team will bring.
Are there ongoing costs beyond salaries?
Yes. Beyond salaries, expect facilities or workspace fees, software and equipment, and management or oversight costs. If you use a provider, many of these are bundled into a single fee. If you run the team yourself, you carry them separately. There may also be compliance and administration costs. Budgeting for the full running cost, not just salaries, gives you an accurate picture of what the team will cost each month.
Independent
