The True Cost Of An International Hire

Key Takeaways

• The full cost of an international hire is pay plus platform or employer-of-record fees, statutory costs if employed, tools, and your management time.

• For a contractor, the total is usually pay plus a few percent. For an employer-of-record employee, add statutory costs and a monthly fee.

• A local hire costs salary plus 25 to 40 percent in taxes, benefits, and overhead.

• Even fully loaded, a remote hire starting at $6/hr is a fraction of the local equivalent.

Why Salary Is Not The Number

Owners compare a remote rate with a local salary and stop there. Both numbers hide costs. The honest comparison is total cost per productive hour on each side. Here is how to build it.

The Cost Of A Remote Contractor

• Pay: starting at $6/hr full time in Latin America, the Philippines, and South Africa, more for experience and specialty.

• Payment platform fees: typically a small percentage or a flat monthly amount.

• Any allowances you add: health stipend, thirteenth-month pay, internet allowance.

• Software seats: chat, task tool, and any role-specific tools.

• Recruiting: a placement fee if you use a managed service, or your own time if you do not.

• Your management time: two to three hours a week in month one, under an hour after.

See hidden costs of hiring a virtual assistant for the details.

The Cost Of An Employer-Of-Record Employee

Everything above, plus statutory employer costs in the worker's country, such as social security contributions and mandatory benefits, plus the employer of record provider's monthly fee. In exchange you get local compliance and a worker with employment status. See hidden costs of employer of record services.

The Cost Of A Local Hire

• Salary.

• Employer payroll taxes.

• Health insurance and other benefits.

• Paid leave and holidays.

• Equipment, software, and a desk or office share.

• Recruiting cost and the months the seat sits empty.

Together these commonly add 25 to 40 percent to salary. See virtual assistant vs full-time employee cost.

Putting It Together

Build a simple sheet with each line for each option. Divide by productive hours per year. The remote contractor is usually the lowest total. The employer-of-record employee is next, still far below the local hire. The local hire is highest, and that is before counting the months it takes to fill the seat. For most admin, support, and operations roles, the gap is large enough that the decision is not close.

Costs People Forget

• A first payment to test the route before day one.

• A backup internet stipend in regions with outages.

• Raises on a schedule, especially where inflation is high.

• Replacement cost if the hire does not work out. A managed service with a guarantee reduces this.

Our guide on setting pay abroad covers the raise schedule. We give clients a full cost estimate for every role before recruiting. See how it works.

What This Looks Like In Practice

An accounting firm compares a local administrative hire with a remote one. The local candidate wants a salary that, with taxes, benefits, and a desk, comes to well over $60,000 a year, and the search has already taken three months. The remote candidate in the Philippines, fully loaded with platform fees, a health stipend, software seats, and a placement fee, comes to a small fraction of that in year one and less in year two.

The partners build the sheet, add their own management time on both sides, and divide by productive hours. The remote hire costs roughly a quarter as much per hour and starts three weeks later instead of three months. They hire remotely, and the sheet becomes their template for every role since.

A Quick Checklist Before You Start

• A sheet with every cost line for remote contractor, employer-of-record employee, and local hire.

• Platform fees, allowances, and software seats included.

• Statutory costs and provider fees for the employer-of-record option.

• Taxes, benefits, leave, equipment, and recruiting time for the local option.

• Your management time on every side.

• Cost per productive hour as the final comparison.

Count everything, and the remote hire still wins for most roles by a wide margin.

Questions Owners Ask

Is A Remote Hire Always Cheaper?

For roles that can be done remotely, almost always, even fully loaded. The exception is highly specialized roles where global rates approach local ones.

What Percentage Should I Add To A Remote Rate For Total Cost?

For a contractor, typically 5 to 15 percent for fees, tools, and allowances. For an employer-of-record employee, more, depending on the country's statutory costs.

How Do I Account For My Own Time?

Estimate two to three hours a week for the first month and under an hour after. Multiply by what your time is worth and include it honestly on both sides.