Offshore vs in-house development team: the real cost comparison

Comparing an offshore developer's hourly rate with an in-house salary is the most common way to judge outsourcing, and the most misleading. A salary is only part of what an employee costs, and an hourly rate is only part of what an offshore team costs. This guide compares the full picture, so you can decide on facts rather than headline numbers.

What an in-house developer really costs

The salary is the visible part. The full cost of an employee usually includes:

• Payroll taxes, health insurance, pension and other benefits.
• Recruiting: agency fees or the time your team spends sourcing and interviewing.
• Onboarding time before the new hire is productive.
• Equipment, software licences, office space and training.
• Paid leave, sick days and the cost of covering for them.
• The risk of a bad hire, and the cost of starting again if someone leaves.

Once these are added, the true annual cost of a developer is well above the salary on the offer letter.

What an offshore team costs

With a dedicated offshore developer, you pay a monthly or hourly rate. A good agency includes in that rate:

• Salary, benefits and local taxes.
• Recruiting and vetting.
• Equipment, licences and office.
• Replacement if the developer leaves or is not a good fit.
• Light project management for larger teams.

The costs you still carry are your own time to manage priorities, and some overhead for communication across time zones. Our current rates are on the pricing page.

Where offshore wins

• Speed: a vetted developer can start in days, not months.
• Flexibility: scale a team up for a launch and down afterwards.
• Skills: access to .NET, React, Node.js or AI experience that is hard to hire locally.
• Cost: a senior engineer in India costs a fraction of a comparable hire in the US, UK or Western Europe.

Where in-house wins

• Deep, long-term product knowledge held inside the company.
• Fast informal communication in the same office and time zone.
• Work that legally or contractually must stay in-house.

The hybrid most companies end up with

Many of our clients keep product ownership and a technical lead in-house, and use an offshore team for delivery capacity. The in-house lead sets direction and reviews code; the offshore team builds, tests and ships. This keeps knowledge inside the company while keeping costs predictable.

How to make an offshore team work

• Insist on at least four hours of daily overlap with your working day.
• Use the same tools and rituals as your in-house team: stand-ups, pull requests, sprint demos.
• Make sure you own all code and IP from day one, under an NDA.
• Start with a short trial before scaling.

Our offshore software development page explains how we set this up, and you can hire dedicated developers by role if you want to start with one engineer.