To help you with making a decision on hiring staff, an offshore employee cost calculator can crunch the numbers for you. 

In this article, you’ll learn more about what an offshore employee payment calculator is and how to use it to make better hiring decisions.

Key Takeaways

• A Tool for Strategic Financial Planning, Not Just a Simple Calculation: An offshore employee cost calculator is a strategic tool that allows businesses to move beyond guesswork. It enables accurate cost forecasting for international hires, which is essential for managing cash flow and making informed, data-driven decisions.
• It Calculates the Total Labor Cost, Not Just the Base Salary: A crucial function of this tool is that it computes the total labor cost, which includes not only the employee’s gross pay but also all additional costs. These can include mandatory benefits, perks, and any administrative or management fees from an offshore staffing partner.
• Provides a Clear Comparison of Cost Savings: The primary and most direct benefit of using the calculator is that it provides a clear comparison between the cost of hiring an employee locally and the cost of hiring for the same role offshore in a location like the Philippines. This allows businesses to see the potential for significant and quantifiable savings.
• Promotes Transparency and Ensures Compliance: Using a reputable calculator offers transparency into the full cost structure of an offshore hire. It helps employers understand the breakdown of payments, which in turn helps ensure that their offshore partner is compliant with local labor laws and that employees are being compensated fairly.

What are the Total Labor Costs of Hiring an Employee?

The purpose of using the cost of hiring an employee calculator is to determine the expected costs of hiring and retaining an employee. In this case, the calculators compute the total labor costs of hiring an employee.

If you want to know the computation of the total labor cost, know that many of the salary cost calculators out there generate results by looking into these factors:

• Gross Pay
• Net Hours Worked Per Year
• Additional Employee Costs

In general, though, the average hiring cost is around USD 4,700 per employee, according to the Society for Human Resource Management (SHRM). However, Edie Goldberg, founder of Menlo Park, mentions that hiring costs could be around three to four times whatever the salary is for the position you’re looking for.

Other Factors to Consider Regarding Employee Hiring Costs

Aside from the gross pay or salary that you give your employees, there are additional employee costs to consider when computing total labor costs. 

Here are a few examples of these additional expenses:

Employee Benefits and Perks

There is strong competition for high-value candidates these days. Employee benefits and perks that you offer can make or break a candidate’s decision to join your company.

Some of the most in-demand employee benefits that you can offer are the following:

• Retirement savings
• Health insurance
• Flexible work arrangements
• Paid time off
• Physical and mental health wellness programs

Of course, getting these benefits for your employees can cost you money, so they should be part of your total cost computation when using an employee calculator.

Demand for the Role

Some job roles are more in demand now than they were a few years ago. Therefore, also consider the fluctuations of the demand for a role to see how much it will cost you to hire an employee.

For example, one of the offshoring trends is an increase in demand for knowledge process outsourcing (KPO). This can influence hiring tendencies and job role costs in that industry.

Location of Employees

Hiring an offshore employee versus hiring locally can make a world of difference in terms of calculating labor costs. However, that doesn’t necessarily mean a reduction in work quality of any sort if you have the right talent acquisition strategies in place. This is why a lot of companies are hiring offshore employees from places like the Philippines.

Your Business Location

Another factor that can drive employee costs up or down is your business location, as that can affect things like average wages, taxes, and so on. Even when you’re in the same country, tax rules can differ by state or locality. For example, employer costs for compensating employees can differ per region in the US.

What is an Offshore Employee Total Cost Calculator?

Computing the total cost of hiring an employee is complicated. However, one way to simplify that is with the help of a fully loaded employee cost calculator. Better yet, if you are weighing between hiring locally vs. hiring abroad, you can also use an offshore staffing calculator.

You can find a cost of employment calculator anywhere on the internet. But with an offshore employee cost calculator, you’ll get an estimate of how much it could cost your company to hire an offshore employee.

While both can estimate employee costs, an employee cost calculator specifically examines the hiring costs of an employee in your locality. On the other hand, an offshore employee calculator estimates the cost of hiring an employee from overseas, including other benefits. It may also include the management fees when you work with an offshore staffing company.

Why Should You Use a Total Employment Cost Calculator?

You might wonder why you should use this calculator in the first place. Well, here are a couple of compelling reasons to try it out.

Stay Compliant While Paying Employees Right

A responsible employer wants to make cost-effective hiring decisions without compromising on the quality of the employees they provide. A reputable offshore staffing company should be able to manage your hiring practices in the country of your choosing and ensure that you are compliant with the labor laws there.

By using a hiring cost calculator, you can find out how much your offshore employee is taking home as well as how much your offshore staffing agency or employer of record (EOR) is getting from the transaction.

Accurate Cost Forecasting

Assuming the cost of hiring decisions without data to back you up can lead to unexpected expenses and inaccurate cost forecasting.

When you’re able to create accurate expense forecasts, it’s easier to manage your business’s cash flow. It’s also a way to measure the benefits that a hiring decision has given your company compared to the expenses involved in making it.

How to Use Â鶹ԭ´´â€™ Offshore Staffing Calculator

Â鶹ԭ´´ has an offshore staffing calculator that can quickly compute the total cost of hiring an offshore employee in the Philippines. The results also compare the cost to what you would pay to hire someone with the same job specialization in your home country, based on your location. 

Here’s how to use it:

1. Select the job specialization you’re looking to hire or the closest one to it. You can even add more than one job specialization at a time. 

2. Choose the country where your business is based. For this example, we’ll calculate true cost of hiring an employee in Australia.

3. Click the Generate Results button, and it will automatically calculate the employee cost.

4. A tabulated result should show you the Total Employee Cost of hiring for your chosen role in the country you’re from versus the cost of hiring an offshore employee in the Philippines.

The dropdown buttons above the tabulated results allow you to modify the view of the table. For example, instead of the annual salary, you can change it to a monthly salary view.

Most importantly, you can view the estimated cost savings you gain should you choose to hire an offshore employee with Â鶹ԭ´´.

How You Can Make the Most Out of Â鶹ԭ´´â€™ Offshore Staffing Calculator

By now, you know how the offshore staffing calculator works and how to use it. But, how can you create better and more efficient hiring decisions using this cost-of-employee calculator?

Since the Philippines is one of the best places to hire exceptional offshore staff, it has probably been on your radar if you’ve been searching for candidates to fill an open role. You can use the calculator to compare the costs of hiring locally vs. hiring offshore staff in the Philippines.

You can even compare costs based on seniority level under the Seniority column in the tabulated results. If you’re interested in hiring for roles within multiple levels, you can change the Seniority setting to check hiring costs for different hierarchies.

You can use the results to make informed hiring decisions. At the same time, the insights from the results are a great way to forecast staffing costs if your company is planning on hiring multiple roles.

While this offshore employee labor cost calculator is useful, do note that not all roles or even countries are available in the dropdown options. If this is the case for you, don’t hesitate to reach out to Â鶹ԭ´´, so you can get results customized to your talent needs.

Using an offshoring salary calculator, you can get the data you need, so you will know whether hiring an onshore employee is a worthwhile decision compared to hiring abroad. 

Next time you need to fill open roles, consider using the offshore staffing calculator to help you figure out the best hiring strategy for your company.

Related: Offshore Staff in the Philippines: How to Hire, Manage, and Stay Compliant

Frequently Asked Questions

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Offshore staffing is the process of moving an entire business process to a location outside of the country and hiring overseas or offshore employees to do the work there.

While hiring offshore employees is a great solution for talent shortage issues, that doesn’t mean that haphazardly implementing this strategy will instantly solve operational deficiencies in the company.

The rigor you apply to your recruitment process for employees from your main headquarters should be the same for your offshore employees. Otherwise, the cost savings you get from offshoring might not be enough of a return on your investment.

With that in mind, here are tips on improving your offshore employee recruitment process, so you can hire the most qualified and skilled employees for your team.

Related: Hire Offshore Across the US, UK, AU, and SG: The Core Rules Operators Need

3 Things to Do Before You Hire Offshore Employees

While you might be in a hurry to fill roles in your company, there is a ton of prep work you have to do before you even start creating a job description. 

Yes, it will take a bit of time and effort on your part, but the benefits of preparing beforehand will all be worth it.

Here are the three main tasks to complete before you hire offshore staff.

1. Categorize the Business Functions You Want to Offshore

One of the first things you need to do before you even initiate offshoring is to categorize your business functions based on their value to your customers.

The tasks and processes that matter the most differ from business to business. For example, customer service is one of the core business processes for the hospitality industry. It might not be the same thing for e-commerce.

Aside from what the customer values, you should also rank these functions based on how difficult it is to do.

By doing so, you create a barometer that shows you whether a function is something you can offshore. If a task is too valuable and too complicated to accomplish, it is better to do it in-house since it’s an essential business process that is too attached to your core competencies and is too easy to do wrong.

Your confidence and comfort level with offshoring other tasks will depend on your risk appetite. But simply taking the steps to organize your business functions can help you get better results from your offshore staff.

2. Document the Tasks You Want to Offshore

Before you hire offshore employees, document the business function that you plan to offshore.

You can’t offshore a business function effectively if you haven’t found a way to codify what you do to achieve the goals of said business process. Too many companies only think of creating a step-by-step guideline for business operations after they’ve offshored the process already. It’s better to keep them in-house at first until you’ve streamlined and ironed out the details of how you prefer to accomplish the process you want to offshore.

Documenting your business processes is a significant part of hiring and building your offshore team and setting them up for success. You can provide your offshore team with reference materials like use cases, best practices, instructions, and more to create uniformity in the job execution. It also makes it easier in the long run to figure out what part of the work you can control, manage, or tweak should you find the results unsatisfactory.

3. Set Accurate Success Metrics

Speaking of setting up your offshore team for success, before you start the recruitment process, it’s a good idea to identify accurate measures of success for a more optimized offshore team management approach. That will let you know whether your offshoring strategy will yield an appropriate return on your investment or if you need to make changes to it.

Again, it is difficult to set key performance indicators (KPIs) only after you’ve taken these processes offshore. The best way to create accurate KPIs is to see how you’d perform these tasks closely and set accurate measures of success based on that. That way, your offshore team won’t feel like you’re moving goalposts every time because you didn’t accurately set the goals right the first time.

Accurate measures of success can also make it easier to craft compelling job descriptions once you start recruiting. You can give that information to your offshore staffing agency partner should you hire one, so they can incorporate that into the candidate search vetting process.

See also: 5 Talent Acquisition Challenges and How to Overcome Them

5 Tips for Vetting More Qualified Offshore Employees

After doing the necessary foundation for a better recruitment process to hire qualified offshore workers, it’s time to start recruiting. 

Here are some tips to raise your chance of hiring skilled offshore workers who are a good fit for your company.

1. Create Clear and Detailed Goals and Requirements

Having clear but brief details on what qualifications you’re looking for with your outsourced staff will make it easier to filter out candidates who don’t meet your requirements. These details will be useful should you hire offshore employees through local offshore staffing companies.

Make sure to double-check the wording, grammar, and clarity of your job description, too. Highly skilled candidates might not want to apply if they find it vague, confusing, or too long.

You should also create an internal list of requirements, specifically for determining cultural fit. A good understanding of your current company culture can determine whether a candidate can mesh well with your company culture or not.

For example, if you’re face-to-face with a headstrong, individualistic candidate who prefers working by themselves, but you have a collectivist company culture, then the misalignment can lead to dissatisfaction for both sides in the future. 

Therefore, keep your company culture in mind when crafting your recruitment goals and requirements to reduce turnover rates.

2. Decide on Your Offshoring Location

Once you’ve finalized the job descriptions for the roles you’re hiring for, choose your preferred country for building an offshore remote team. A popular option for many companies is to offshore staff to the Philippines because of their English proficiency and their globally competitive skilled workers.

When choosing your preferred offshoring destination, consider the following factors:

• Accessibility of specializations
• Budget for labor costs
• Average salaries for the job role
• English proficiency and communication skills
• Time zone differences
• Labor laws and tax obligations in the offshoring location
• Reputation and track record of offshore support companies

Researching these elements can narrow down the countries that would be the best offshoring option for you.

Read more: Top 5 Reasons to Build Your Remote Team in the Philippines

3. Account for a Realistic Budget

Poor compensation is one of the top reasons for employee turnover. That’s why, despite cost savings being the most likely reason you choose to hire offshore employees, that doesn’t mean that you can’t be cost-efficient while ensuring that you’re providing your offshore employees with enough compensation for their work.

Doing research beforehand on average salaries for the job role you’re hiring for in their locality, employee benefits, taxes, and other fees can create a more accurate account of what your offshore workers’ compensation should be.

4. Streamline Your Recruitment and Vetting Process

The longer it takes to find an employee to fill a job role, the costlier it can get for your company. Thus, make sure that your time-to-hire is as short as possible without compromising on the quality of candidates that go through recruitment. That’s why streamlining your candidate pipeline is a constant process that you should do even as recruitment is ongoing.

A streamlined recruitment process is especially vital when hiring offshore remote workers. That’s because studies have shown that online job seekers are quite likely to abandon an online job application if the process is overly complicated. 

Thus, you should always look out for complicated parts of the recruitment process that you can iron out as well as unnecessary trials that you can cut out entirely from the recruitment process.

5. Conduct Thorough Interviews and Trial Projects

Conducting structured interviews is a reliable way to validate the quality of a candidate. 

Here are some parts to include in your hiring process to get in-depth information about your potential candidates:

• Assess technical competence through practical tests.
• Test problem-solving skills by presenting hypothetical problems to candidates.
• Review the CV or resume and portfolio, and mention standout parts in the interview.
• Include a current team member from the department you’re hiring for to join the interview.
• Be mindful of their communication skills in terms of tone, clarity, and promptness.
• Check past experiences to see if they have worked with a cross-cultural team.
• Create behavior-based hypotheticals to see how a candidate operates under different work settings.
• Gauge a candidate’s interest in your company’s values, mission, and vision to see if there’s a potential cultural fit.

By adding these scenarios and questions, you can discern the candidate’s communication abilities, cultural fit, as well as technical abilities.

As a backup plan, you can enact a trial period or project with a candidate to see how a potential candidate works. Should they fail to meet your requirements or display unwanted behavior, you can end your working relationship after the trial period.

Related article:

• Offshore Staff in the Philippines: How to Hire, Manage, and Stay Compliant
• Find the Best Talent: Hiring Remote Workers in the Philippines

Final Thoughts

The combined effort of prep work before starting recruitment along with the optimization of your candidate search can reduce the likelihood of hiring unqualified offshore employees.

That’s why if you’re planning to hire offshore employees, make sure that you go through these two phases to ensure that you build a high-performing offshore team that’s aligned with your onshore employees.

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Awarded by the prestigious Financial Times and Statista, this recognition celebrates the remarkable growth of businesses across the Asia-Pacific region that achieved the highest revenue growth rates between 2019 and 2022. 

Charting Our Phenomenal Growth

Additionally, Â鶹ԭ´´ leads this year’s roster of the 21 fastest-growing Philippine-based companies, outpacing contenders from various industries. 

On a global scale, Â鶹ԭ´´ secures an impressive third position within the employment services sector, solidifying our standing as a leader in providing top-tier talent solutions worldwide.

In the words of our CEO and Co-Founder, Nicolas Bivero, “Securing a place in the Asia-Pacific High-Growth Companies 2024 ranking is a remarkable achievement for all of us at Â鶹ԭ´´. We take immense pride in this recognition, especially as it coincides with our company’s 10th anniversary.”

This honor follows our recent distinction as the top-ranked Fastest-Growing Company in the Philippines 2024 by Statista and the Philippine Daily Inquirer.

Addressing Global Talent Challenges

These achievements signify not just our growth but also that of our clients’. 

In today’s world where talent shortages abound, businesses struggle to find the skilled workforce they need. Â鶹ԭ´´ addresses these global talent challenges by sourcing the top 3% of Filipino talent.

Complementing this talent acquisition strategy is the Hypercare approach—a framework for optimizing the onboarding process to make the talent deliver value faster, aligned with the tasks that the client wants them to do.

These strategies have enabled our clients to build high-performing, culturally aligned remote teams efficiently.

Expanding Our Global Footprint

Â鶹ԭ´´ is strategically positioned to boost our presence in key markets such as the United States, the United Kingdom, Australia, and Japan. “We are positioning offshore staffing as a solution to address acute talent shortages in these regions,” emphasized Faria.

This market expansion strives to introduce top-tier Filipino talent to these markets, benefiting both businesses in need of skilled professionals and Filipinos seeking diverse employment opportunities. We aim to create 5,000 jobs for Filipinos by 2028.

At Â鶹ԭ´´, we remain steadfast in our commitment to driving growth, nurturing talent, and reshaping the future of work. Thank you for being an integral part of our journey toward excellence!

See also:

• Top 5 Reasons to Hire Remote Workers in the Philippines
• Â鶹ԭ´´ Named One of the Top 500 Global Outsourcing Firms

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If around 83% of small businesses are investing in outsourcing, it makes sense that larger businesses are also doing the same thing.

Although offshore talent acquisition has been a solution for many businesses, challenges come with it as well. That’s why in this article, we’ll cover some of the obstacles businesses often encounter in offshore recruitment, plus tips on how to jump over these hurdles.

What is Talent Acquisition?

Before talking about global recruitment challenges, let’s quickly discuss the talent acquisition meaning first.

Talent acquisition refers to a business’ processes, systems, and strategies for identifying, searching for, and reaching out to qualified, skilled workers to address certain organizational needs.

Is There a Difference Between Talent Acquisition and Recruitment?

People often use the terms talent acquisition and recruitment interchangeably. However, technically speaking, there is a difference between the two.

Talent acquisition is the ongoing organizational strategy of finding and filling candidate positions on all levels for your business. It involves longer-term strategizing and human resources planning.

On the other hand, recruitment is a part of the talent acquisition process. It is where you start actively looking for the candidates you need and is usually a short-term aspect of talent acquisition.

Why is a Talent Acquisition Strategy Important?

More businesses should pay attention to their talent acquisition strategy. It is key to finding the right talent and determining the roles your company needs to hire in the first place.

Without a well-defined talent acquisition plan, your business might waste time, money, and effort hiring candidates who are not the right fit.

Paying particular care to how you acquire the right talent is crucial to your success. The right offshoring strategy can get you candidates with the right skills at the right cost.

5 Offshore Talent Acquisition Challenges and How to Address Them

Now that you have a better understanding of talent acquisition, let’s discuss the common offshore talent recruitment challenges and solutions.

High Competition for Recruiting High-Value Candidates

Skilled candidates are becoming harder to come by, either because of a lack of training or a high competition for high-value candidates. If you want to get the attention of these highly skilled candidates, then your business needs to step up its talent acquisition game.

A business can consider offering certain benefits that attract skilled candidates. One of these could be a flexible work arrangement.

If possible, a hybrid or remote work arrangement should be a part of your offer to candidates. Since 51% of working professionals prefer remote while 46% prefer hybrid, offering flexible work arrangements can be a strong benefit in your favor.

Being up-to-date on what candidates are looking for is crucial for a continuously successful talent acquisition strategy. That’s why if you want to attract top talent, listen to what they look for in a workplace and consider adding that to your benefit package.

Poor Recruitment Process

For many startups and small businesses that might not have experienced hiring offshore staff yet, one of the challenges could be an inconsistent and unclear recruitment system.

If your recruitment process is confusing to you, what would it appear like for your candidates?

An unclear and poorly planned recruitment system can lead to a lack of transparent communication with the candidate, goalposts constantly moving around, and lots of scheduling issues.

All these unprofessional moves can lead to your business losing the opportunity to hire the right fit.

To solve this hiring challenge, take your time clarifying and plotting your recruitment pipeline.

Picture how your candidate recruitment and interview process is supposed to go and track their movement along that pipeline. That way, it’s easier to create a smoother process for both you and your candidates. Consider availing of an offshore staffing service to do the bulk of the work for you, so you can focus on your core business function or expertise.

Weak Business Presence Deters Ideal Candidates

The more familiar your business is to a candidate, the likelier they are to respond to your recruiters. That’s why boosting your business presence is important not only for attracting customers but also for hiring offshore staff.

You don’t have to be a massively popular enterprise to achieve this. Having a website, an updated social media profile for your business, and a Google My Business account can do the trick.

One of the most common hiring challenges online is the proliferation of scammers out there. Candidates want to protect themselves from them too.

The lack of an online presence might deter them from replying to your recruitment messages, so establishing your digital presence before you reach out to your candidates is a vital step.

Long Hiring Process

A faster hiring process will be more convenient for your candidates and your company. While it’s still a good idea to take your time to find the best client that fits your needs, an unnecessarily long hiring process can leave your business with a gap in the workforce.

Time-to-fill is the length of time it takes for a business to hire a candidate upon a job requisition confirmation. The ideal hiring process length differs from industry to industry. However, the overall average length of time-to-fill is around 44 days, according to a hiring trends report.

To make your hiring process more efficient, consistent and constant communication with candidates and a standardized hiring system is helpful. You can also use the tools mentioned before to speed up certain aspects of the entire talent acquisition system.

Language Barriers/Communication Problems

To avoid language problems and miscommunications, it’s a good idea to hire a local recruiter to bridge that gap for you. A local offshoring company can smoothen language challenges in the recruitment process.

You can also consider offshoring to the Philippines where most workers are fluent in English. Since it’s already one of the languages they speak, it’s easier to communicate with them directly.

Read more: Top Reasons to Hire Filipinos

Final Thoughts

With these tips on overcoming the common talent acquisition challenges and hiring issues, you should be able to find solutions that make sense for your business. Instead of paralyzing or slowing down your offshore recruitment process, face them head-on so that you can find the best candidate offshore in as little time as possible.

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