Outsourcing cost breakdown

People want to know how much outsourcing costs. They ask for just one simple price. Surely, that isn’t too much to ask?

Unfortunately, the answer is simple.

To make things more complex, people often see someone’s salary as the total cost. Yet, as with any employment, the salary is just one component of the total.

I would love there to be a Netflix of employment, but alas, employing people is complex – and so the cost structure tends to reflect this.

Let’s look at the main factors

Role:

For a start, salaries can vary tremendously. Do you want an entry-level admin or a senior Web3 dev? A junior sales associate or a veteran VP of sales

The govt. and benefits:

On top of the salary, you’ll incur typical government taxes, insurance, healthcare, and employer contributions – as is the case with any country

Location:

Salaries tend to be much higher in major cities. They are much lower in the countryside, but selection is limited.

Location

Facilities:

Then there is the office, facilities, and hardware. These days, it’s a lot more acceptable to work from home – but it’s not necessarily the best approach for everyone. Call me old, but I still believe in offices.

Recruitment and onboarding:

Recruitment can be painfully expensive in Western countries. Luckily, it is significantly cheaper in outsourcing destinations. You can also try and recruit yourself using various portals. But someone does have to do it.

Some outsourcing firms will offer free recruitment – but you get what you pay for

Long list!

As you can see, there are a few factors to consider. Wait, there’s more..

Service fee:

Then there is the service fee. This is the money that goes to the outsourcing firm to make all of this happen – seamlessly and reliably. Yes, these guys also have to make some money. They are the glue that sticks it all together. These fees are sometimes a percentage of the salary costs (markup), and sometimes they are a flat fee.

You also have the option to get very light support from the outsourcing firm, or alternatively, they can offer maximum support to the point where they can run the department for you.

Service fee

Build your own:

The above considerations are a guide only. There are no hard rules. It’s a bit like making a sandwich.

People may get frustrated when they see all of these sandwich layers add up, but if you think about it – these costs are identical to employing people anywhere in the world. This is especially the case with traditional employment, where the costs of hiring someone can easily add another 50% – sometimes 100% – on top of their salary.

Perspective:

The costs do add up, however, despite paying ‘all of these extra costs,’ you will still save about 60%-70% compared to the comparative employment costs in your own country.

Not bad.

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the average all-in employment costs in the
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Western counterparts

Philippines United Kingdom Australia United States
Software Developer
$7,221
$39,913
$62,653
$81,994
HR Manager
$9,506
$46,669
$66,518
$78,007
Team Leader
$7,152
$31,174
$45,428
$75,823
Accountant
$5,959
$58,479
$67,190
$72,923
Copy Writer
$4,767
$52,088
$56,600
$62,653
Customer Service
$3,337
$22,137
$29,717
$35,275
Virtual Assistance
$2,285
$39,066
$42,240
$31,797
Select a role to view salaries
Philippines $7,221
United Kingdom $39,913
Australia $62,653
United States $81,994

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About OA

Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO).

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Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between world-leading outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2,300+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.