What offshore staffing costs, line by line

Most offshore staffing quotes arrive as a single number per month. That number is easy to compare and impossible to judge. Two providers can quote the same figure while paying their staff very differently, which is exactly what decides whether your person is still there in a year.

Here is what sits inside the price, the 2 ways providers structure it, and how to compare a quote against what a local hire actually costs you.

What you are paying for

An offshore staffing seat is not a freelancer’s hourly rate. The monthly cost covers a full employment package plus the infrastructure around it.

• the employee’s salary
• statutory employer costs in India, including Provident Fund and gratuity
• paid leave, public holidays and medical insurance
• office space, power, internet and a backup connection
• a managed laptop or desktop, plus the security controls on it
• local HR, payroll processing and compliance
• on-site supervision and attendance management
• recruitment and replacement when somebody leaves

A quote that looks unusually cheap is usually thin on the last 4 lines. That is the part you only notice when something goes wrong.

The 2 offshore staffing pricing models

Providers price offshore staffing in one of 2 ways, and the difference matters more than the headline number.

Flat rate per seat. You pay one monthly figure. You never see what the employee is paid, and you cannot give them a raise. The provider’s margin grows if they pay the person less, which is precisely the wrong incentive.

Markup on the actual wage. You set the salary with the provider’s guidance, and pay that salary plus a stated multiple. You can see what your team member earns, and you can raise it.

Bumsa uses the second model. For EOR hires in India the multiple is typically 1.75 times the wage, and it is lower as salary levels rise. The multiple applies to bonuses and raises at the same rate, so nothing is quietly clipped on the way through.

We use it because of what we saw as a client ourselves. A previous provider paid our workers poorly, we had no way to fix it, and we lost good people. Controlling the wage is what keeps the person you trained.

The 2 models with real numbers

Take a role where the fair market salary in Chennai is 50,000 rupees a month. Under a markup model at 1.75 times, you pay 87,500 rupees, and you can see both figures. If you decide to raise the salary to 55,000 to keep a strong performer, your cost moves to 96,250 and your employee actually receives the raise.

Under a flat rate, you are quoted a single monthly figure. You have no idea whether the person receives 50,000 or 35,000, and if you want to reward them, there is no mechanism to do it. Providers vary, and some pay well. The point is that you cannot tell, and neither can your employee.

Figures here are an illustration of how the 2 models work, not a quote. Ask for a benchmark for your actual role.

Comparing it with a local hire

Comparing an offshore quote with a Canadian or US salary understates your local cost badly. The fair comparison uses your fully loaded cost:

• base salary
• employer payroll contributions
• health benefits and paid time off
• desk space, utilities and equipment
• recruitment fees or job advertising
• the hours your managers spend hiring and covering the gap

Add those up, then compare. Our cost saving calculator runs that comparison for a specific role so the numbers are yours, not an industry average.

What changes the price

What is not in the price

Be clear on these before you sign, with any provider:

• software licences in your own name, such as your accounting or CRM seats
• one-time recruitment fees, if the provider charges them separately
• specialist equipment beyond a standard workstation
• statutory increases when Indian minimum wage or contribution rates change

Red flags in a quote

No visibility of the wage. If you cannot see what your team member is paid, you cannot protect them from being underpaid, and you cannot reward them.

A long lock-in with no notice clause. A confident provider does not need to trap you for 3 years.

A rate far below the market. Somebody is absorbing that gap, and it is usually the person doing your work.

Vague replacement terms. Ask in writing what happens, and who pays, if your team member resigns in month 2.

Questions to ask before you sign

• What exactly is my team member paid, and can I raise it?
• What is the notice period on each side, and is there a lock-in?
• Who pays for recruitment if they leave in the first 3 months?
• Is this an office seat, a remote seat, or hybrid, and who decides?
• Which costs are excluded from the quoted figure?
• Who is the legal employer, and where are the statutory contributions filed?

A provider who answers all 6 in writing is telling you how they operate. A provider who answers 2 of them is telling you something as well.

Start with the smallest real test

The cheapest way to find out whether offshore staffing works for you is 1 person on a narrow scope, not a team of 5 on a vague one. Once that seat is working and documented, the second and third are straightforward.

FAQ’s