The cost of living in top offshoring destinations, ranked
How does the cost of living compare in top offshoring destinations?
The cost of living in top offshoring destinations is far lower than in Western markets, so companies can pay fair local wages and still save money.
- Living costs in these countries often sit at a fraction of US or UK levels.
- Lower costs let offshore workers earn competitive pay for their region.
- So outsourcing supports local incomes rather than exploiting them.
As a business in a developed country, you might think low wages abroad are unfair. In fact, some skeptics still believe outsourcing exploits cheap labor for their work.
What many people miss is that the industry does the opposite. It helps improve offshore workers’ lives with competitive salaries and benefits. The key to this is the cost of living in offshoring destinations.
So if you want to outsource and are curious about wages and expenses abroad, read on. Below, we compare the cost of living in top offshoring destinations. To see which markets lead, you can also browse the best countries for outsourcing services.
How is the cost of living calculated?
Cost of living is the amount a person or family needs to live comfortably in a place. It covers everyday spending on the basics.
It is worked out by comparing the prices of needed items in a location. These prices are then weighted by spending patterns and budgets. In short, the costs are split into housing, healthcare, food, and utilities.
You can also compare one location against another, no matter the geography. As a result, experts can judge how expensive a place is to live in comfortably.
The cost of living in top offshoring destinations
A cost-of-living calculator helps you compare prices across countries, including offshore destinations. Many institutions use the cost of living index (CLI) for this. The index shows whether a location sits above or below a base cost, which is set at 100.
Some indexes focus on one country. Still, sources like Numbeo give reliable data for many locations at once. Using data from Numbeo, we compare the cost of living for each offshoring destination below, including India and the Philippines. The figures below reflect current Numbeo index values and are indicative rather than exact.
India
- Population: about 1.46 billion
- Average salary: see the full local pay picture
- Cost of living index (CLI): about 18
Quick fact:
The cost of living in India is much cheaper than in the Philippines, though it depends on the city. For example, Mumbai is one of India’s priciest cities to live in. So costs can swing widely from one region to the next. For more on the market, see why firms outsource to India.
Brazil
- Population: about 212 million
- Average salary: see the full local pay picture
- Cost of living index (CLI): about 33
Quick fact:
Brazilians are lovers of luxury. Luxury brands have sold in the country since the ’90s and still thrive today. Despite the low cost of living, luxury goods in Brazil cost more than in developed markets like the UK.
The Philippines
- Population: about 115 million
- Average salary: see the full local pay picture
- Cost of living index (CLI): about 29
Quick fact:
Manila is among the pricier cities in Southeast Asia. Still, it stays well below Western capitals on cost. Meanwhile, the Philippines remains a top pick for support roles. To learn why, read why the Philippines is a go-to country for BPO.
Vietnam
- Population: about 101 million
- Average salary: see the full local pay picture
- Cost of living index (CLI): about 27
Quick fact:
Vietnam is one of the safest and least expensive countries to live in across Asia. In fact, it was named among the most affordable places for foreigners in a 2017 report. It remains a strong low-cost option today.
Poland
- Population: about 37 million
- Average salary: see the full local pay picture
- Cost of living index (CLI): about 46
Quick fact:
Poland is one of the less expensive places to live in Europe. For context, its capital Warsaw ranked 169th out of 209 cities in the 2020 Mercer Cost of Living ranking. So it offers European talent at a lower cost base.
South Africa
- Population: about 63 million
- Average salary: see the full local pay picture
- Cost of living index (CLI): about 39
Quick fact:
South Africa has struggled with power supply in the past. Eskom, a major power supplier, once ran heavy “load shedding” that cut power for hours at a time. Since then, national load shedding has largely been suspended, though some local cuts still happen.
Thailand
- Population: about 66 million
- Average salary: see the full local pay picture
- Cost of living index (CLI): about 37
Quick fact:
Bangkok and Chiang Mai are among the pricier cities to live in across Asia. As noted, Bangkok runs neck and neck with Manila on cost of living. Even so, both stay far below Western city costs.
The cost of living in offshoring countries vs. developed countries
The figures above prove that offshoring is far from cheap labor. Instead, companies can hire skilled teams at a fair rate. Meanwhile, that rate still supports a good local standard of living.
The table below compares the cost of living index across offshore and developed markets. It shows just how wide the gap is. For a deeper view, compare the trade-offs in offshoring vs. outsourcing.
| Country | Cost of living index (CLI) | Relative cost level |
| India | about 18 | Very low |
| Vietnam | about 27 | Very low |
| Philippines | about 29 | Low |
| Brazil | about 33 | Low |
| Thailand | about 37 | Low to moderate |
| South Africa | about 39 | Low to moderate |
| Poland | about 46 | Moderate |
| United Kingdom | about 68 | High |
| United States | about 70 | High |
| Australia | about 71 | High |
The pattern is clear. Offshore markets sit far below Western ones on cost. So a Western salary stretches much further when you hire offshore, while local staff still earn a strong wage for their region.
Why should companies outsource to these destinations?
Cost is one of the main reasons to offshore, but it should not be the only one. These countries offer global companies several other clear advantages. You can see this across many offshore staffing benefits, including:
- High-quality hires. These countries produce millions of graduates each year. As a result, workers arrive with the skills and attitude to adapt fast.
- Round-the-clock service. Time zone gaps let offshore teams work while you sleep. So your business stays open to customers at all hours.
- Process improvements. BPOs here have run these functions for decades. Because of this, they can help you sharpen your own processes.
Frequently asked questions
Which offshoring destination has the lowest cost of living?
Among major destinations, India tends to have the lowest cost of living. Vietnam and the Philippines also rank very low. Still, costs vary by city, so always check the specific location you plan to hire in.
Does a low cost of living mean lower quality work?
No, it does not. A lower cost base simply reflects local prices, not skill. In fact, many offshore markets produce millions of skilled graduates each year. So you can get strong work at a fair local rate.
How does cost of living affect offshore salaries?
Salaries track local living costs, so they look low in US dollars. Yet they often provide a comfortable life in the local market. As a result, workers earn competitive pay while you still save money.
Is outsourcing just a way to exploit cheap labor?
No. Competitive local wages and benefits tell a different story. Outsourcing often lifts incomes and creates stable jobs in these regions. So the gain runs both ways, for the business and the worker.
Which factors matter besides cost when choosing a destination?
Look beyond price to talent, language skills, time zone, and infrastructure. Political stability and data rules matter too. So weigh the full picture before you pick a country for your team.
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