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Frank Lee · · 4 min readHiring locally, overseas, or via work pass: The ultimate hiring cost comparison
If you’ve ever felt unsure about the costs and trade-offs between hiring onshore, offshore, or getting people onboard on a work pass, you’re not alone. It’s something that customers have often asked us when they try to expand and grow their businesses.
Photo credit: Disruptivo
Most of the time, it all boils down to these three options. So which strategy works best for you? When should you implement them and how?
Disclaimer: The comparison is between hiring onshore workers and those under work passes in Singapore and hiring offshore employees in Vietnam, as the latter is our area of expertise.
Definition of offshore, onshore, and work pass
What is the difference between these three terms?
Onshore refers to a company operating within its home country, whereas offshore refers to a company’s operations outside its locality. This is more of a geographical differentiation than anything else. Work pass, on the other hand, refers to engaging foreigners to relocate and work in your country.
If an IT company plans to expand, for instance, it could do so in three ways:
- Onshore: Hiring more IT talent from the local market
- Offshore: Hiring and building up a dedicated tech team overseas
- Work pass: Hiring a tech specialist from overseas to come and work in the company
At this point, you might be thinking, “All right, so that means I should try all of them?”
Yes and no. It’s always a good thing to expand your team and explore all the options if possible. Unfortunately, startups and small and medium-sized enterprises will quickly run out of cash by doing that. As such, they often focus on one strategy first to build up the foundation before branching out.
In the next section, we’ll dive deeper into the cost differences between offshore, work pass, and onshore hiring.
We will use a sample candidate with five years of work experience at an average age of 31 years old for offshore and work pass hires. For local hires, we’ll put the average age at 33 years old to factor in the two years spent in Singapore’s national service.
Let’s take a look at the numbers.
Headcount and administrative costs
Leave benefits
Welfare bonuses
Mandatory welfare
Optional welfare (annual cost)
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