The True Cost of Setting Up a Dedicated Offshore Development Team

The Hidden Cost of Hiring Locally

Hiring locally sounds like the safe option, but the true cost is often invisible. A senior developer with a $140,000 salary actually costs closer to $274,000 in their first year once you include superannuation, payroll tax, equipment, recruitment fees, onboarding, lost productivity and infrastructure. Even after year one, your ongoing cost remains around $188,000 annually per developer.

And when that developer leaves in 18 months (as many do), you pay again to replace them. That is not including the opportunity cost of your product delays or the management time spent on performance reviews, HR paperwork, and career development plans.

Contractors Cost Even More

To avoid employment obligations, many Australian companies use contractors. But the economics are worse. At $1,000 per day, a full-time contractor costs $260,000 per year. There is no continuity, no institutional knowledge and no long-term thinking. When a contract ends, your roadmap suffers and you are forced back to square one.

What a Dedicated Offshore Team Really Includes

Hiring a dedicated offshore team is not simply buying developer hours. You are investing in a full-stack solution that includes recruitment, onboarding, infrastructure, local oversight, legal protection and ongoing support.

A senior full-stack developer with five or more years of experience typically costs between $3,500 to $5,000 USD per month, or $42,000 to $60,000 USD per year. That includes salary, benefits and office infrastructure. More specialised roles like DevOps or AI engineers attract slightly higher rates.

What makes this model different is the local management layer. Australian or European technical leads provide architecture guidance, code reviews, mentoring, and cultural alignment. This is not just outsourcing. This is building a real team, with quality controls baked in from day one.

A Real-World Cost Breakdown

Let's say you need three senior developers. Here's what you will pay for a dedicated team setup in Vietnam with Australian oversight:

But more than savings, you get scalability, speed and access to talent you simply cannot hire locally.

Beyond Cost: What You Actually Get

A dedicated offshore team lets you scale without hiring drama. Need to add two mobile developers? Offshore, you can do it in under three weeks. Locally, you will wait three months and pay thousands in recruitment fees.

You also get access to specialised talent. Machine learning engineers, DevOps specialists and mobile app developers are difficult to find in Australia. Offshore, you can tap into experienced global talent and integrate them into your existing processes quickly.

Plus, you gain the option of 24/7 development cycles. With good timezone management, your offshore team can build and test while your local team sleeps. This shortens feedback loops and improves delivery times without burning out your team.

Why Cheap Offshore Teams Are Expensive

It is tempting to hire offshore developers for $15 per hour. But the hidden costs are real. Lower productivity, poor code quality, lack of documentation and excessive management overhead quickly turn that $15 into $45 per hour or more. By the time you rework the code and manage the fallout, your savings are gone.

Worse, you accumulate technical debt. Poor architecture decisions, unmaintainable code and missing test coverage force painful rewrites later. One company saved $30,000 by hiring cheap offshore help, then spent $200,000 rewriting the entire system two years later.

And don't forget the risks: IP theft, security breaches, compliance violations, missed deadlines and cultural friction can all derail your roadmap.

The Value of Quality

A quality offshore provider, by contrast, invests in developer training, ensures English proficiency, builds secure environments, and integrates with your workflow. You are not buying code. You are buying a process. You are buying results. You are buying peace of mind.

Turnover is also lower. Top offshore partners achieve 85%+ developer retention, preserving institutional knowledge and reducing the cost of onboarding.

Flexibility Without Compromise

Unlike contractors, dedicated offshore teams give you flexibility without the markup. You can scale up or down monthly. Add DevOps for a product launch, scale back once it is complete. And because the team is dedicated to you, you maintain continuity and product context. That is something no contractor marketplace can offer.

When Not to Use Offshore Teams

This model is not for everyone. If you are still figuring out what to build, or working in a highly regulated government contract with strict data sovereignty, offshore might not be the right fit yet.

Short projects under six months are also better suited to agencies or local contractors. Dedicated teams work best for long-term partnerships and ongoing product development.

Final Thoughts: It's About Value, Not Just Cost

The smartest CEOs are not just chasing lower costs. They are investing in better outcomes. Dedicated offshore teams allow you to build faster, scale more predictably, and stay competitive without the hiring drama.

Instead of fighting for overpriced local talent or juggling short-term contractors, you get a real team that delivers real results. The savings are significant, but the real ROI is in the product velocity, quality and strategic capacity you gain.

If you are tired of hiring bottlenecks, spiralling costs, and limited access to talent, now is the time to explore the dedicated offshore team model. It might just be the most important business decision you make this year.