7 Must-know Principles of Cost Saving When Outsourcing (Part-3)

In the previous blog, Part 2 of this 3-part series, we talked about 3 more principles of cost savings while outsourcing. In the 3rd and concluding part, we will discuss the final two principles: Contradictory Behavior: Why our actions and attitudes don’t align; and Comparing Apples to Oranges: Are you looking for the best talent locally but the cheapest ‘quote’ offshore? Read on.

TL;DR: Don’t under-invest in the process you distrust. If you choose to outsource, commit fully and compare apples-to-apples: evaluate total cost, capability, and experience, not just salary or hourly rates.

6. Contradictory Behavior

Most clients are highly skeptical and pessimistic when it comes to outsourcing—but then, as touched on previously, are highly negligent, invest very little time in the process of outsourcing, and prioritize working with the ‘cheapest’ service providers.

In short, our actions highly contradict our attitudes because when we are skeptical, unsure, and ill-informed about something, what we typically do is tread carefully, investigate, and research, and look to partner with the most trusted and reputed firms.

Again, drawing a parallel from medical tourism—if I needed specialized medical treatment and was considering having the procedure overseas, I would not only invest time in learning more about my condition and the treatment but also scrutinize hospitals meticulously and hire a highly accomplished and vetted doctor.

Why, then, is outsourcing an exception? The root of this complacency once more lies in perceptions. A negative outlook on the industry as a whole leads to skepticism towards all outsourcing companies and doubt about the success of any engagement. Consequently, many adopt a mindset that if failure seems

likely, it’s better to expedite the process and minimize expenditure. This approach is akin to ‘throwing a coin in the wishing well,’ – relying more on hope and chance than a well-thought-out strategy, with an uncertain outcome.

However, this strategy, often unconscious and deeply flawed, overlooks a crucial point: if one is so cynical about outsourcing, it might be more prudent to refrain from it altogether. My advice is straightforward: if you choose to outsource, commit to doing it correctly. Otherwise, it’s better to not engage in it at all.

What many clients fail to realize is that the root of many outsourcing failures lies in their approach and negligence. A thorough and careful process can quickly eliminate incompatible and incompetent vendors. Additionally, the decision to outsource should be data-driven, guided by tangible metrics that set realistic expectations for outcomes. Without this level of diligence, the process is set up for failure from the start.

7. Comparing Apples to Oranges

Would you consider hiring a highly skilled and experienced senior content and copywriter in India, offering twenty years of experience, for $2,500/month? Imagine a professional who speaks and writes the King’s English, possesses international experience, has a background in journalism, and a comprehensive knowledge of digital marketing.

You might instinctively reject such a proposal, thinking, “I could hire someone locally for the same amount, or even less.” But why am I so certain of this reaction? Because, based on sixteen years of data, we’ve observed a consistent lack of interest in such offers.

At first glance, this reluctance might seem justified. However, a more methodical examination reveals a different picture.

Firstly, can you really hire a content writer locally for $2,500/month? Not according to talent.com, (an industry leader with over 30 million jobs listed on its platform), which reports:

• Entry-level content positions start at $43,875 per year.
• The average content writer’s salary in the USA is $58,500 per year or $30 per hour.
• Experienced writers make up to $95,000 per year. Additional Context: U.S. Bureau of Labor Statistics – Writers & Authors pay

Okay—so maybe clients are exaggerating when they say they can hire content writers for $2,500/month locally. But even so—if it’s a toss-up between $40,000 at home versus $30,000 overseas—it’s a no-brainer, the former is still, by far, the better deal, right? A $10,000 saving simply isn’t enough to justify hiring a non-native writer—not to mention having to also collaborate remotely.

Well, no.

Here we are making another classic mistake:

Total Cost vs. Salary

According to hourly.io, a leader in providing worker’s comp data and management—while there is no one-size-fits-all policy—the most commonly used formula to budget for a new hire is to multiply the base salary by between 1.25 and 1.4.

The actual cost to hire an entry-level content writer would be around $43,875 x 1.325 = $58,134.

This frequent underestimation of total cost versus salary further underscores the emotional bias often overshadowing analytical decision-making in outsourcing.

Junior vs. Senior

Comparing the cost of hiring a junior writer to that of a seasoned professional with twenty years of experience is another mistake. A fair comparison would be $133,000/year (using $95,000 x 1.4) against $30,000/year in India, pointing to a potential annual saving of over $100,000 (Illustrative estimate based on talent.com salary ranges and a 1.25–1.4x total-cost multiplier (hourly.io); actual results vary by role and market.).

Example TCO Math (Illustrative)

Role & Location Base Salary (Annual) Typical Total-cost Multiplier Estimated TCO Source Anchors

Entry-level content

writer — USA $43,875 1.25–1.40× ≈ $54,844–$61,425 talent.com · hourly.io

Senior content writer —

USA $95,000 1.25–1.40× ≈ $118,750–$133,000 talent.com · hourly.io

Senior content writer —

India (dedicated) $30,000 (all-in vendor rate) n/a ≈ $30,000 VE pricing model

While some may view this with skepticism, I am not asserting that you will save exactly $103,000. However, I am emphasizing that this figure represents the potential savings at stake.

If you determine that the Indian writer’s skills do not match those of a local senior writer, that’s perfectly acceptable. What matters is that the assessment was conducted fairly, leading to an objective conclusion.

Only through a thorough assessment of a candidate can you accurately gauge the potential savings. Judging solely based on a quote is insufficient. An interesting exercise can be to consider what it would cost to hire the same level of Indian professional locally, assuming they migrated to the US. Either way, a fair comparison and evaluation of true cost savings necessitate testing the candidate first and evaluating how they compare to local talent.

Even if the Indian writer matches the competence of a mid-level local writer, the savings, estimated at $47,500 annually (estimate for like-for-like skill levels; validated during pilot.), are significant, rendering any comparison to hiring a local graduate for $2,500/month irrelevant.

When we compare apples to oranges—a senior Indian writer to a local graduate – it means the full potential of the opportunity is misrepresented, and we don’t realize what is really at stake.

When we falsely believe our choice is between $40,000 for a local hire and $30,000 for an offshore hire—naturally the opportunity appears modest and unappealing. Consequently, decision-makers, often pressed for time, hastily

dismiss this option. In short, depending on your reference point, the same opportunity can be viewed as a potential $10,000 saving or $100,000 saving. This is why unfair and biased comparisons severely and erroneously mislead us.

In summary, clients often err in their assessment of the cost-saving potential of outsourcing by making ‘apples to oranges’ comparisons, and this error typically manifests in five distinct ways:

1. Comparing senior offshore professionals to local graduates.

2. Seeking the best talent locally while aiming for the cheapest options offshore, then expressing disappointment over the perceived lack of talent or poor results overseas.

3. Weighing the total cost of hiring offshore against just the salary of a local candidate.

4. Matching senior offshore professionals with those in local minimum salary positions.

5. Equating reputable outsourcing companies with unreliable, ‘fly-by-night’ operators, as previously mentioned.

When we compare apples to oranges, the evaluation becomes inherently biased right from the start, leading to a flawed decision-making process. To ensure that a comparison is truly valuable and informative, it needs to be objective, requiring a like-for-like comparison.

45-Day Playbook: Applying the Final Two Principles in Practice

(Principle 6: Contradictory Behavior | Principle 7: Apples-to-Oranges Thinking)

Outsourcing discipline doesn’t end with insight – it begins with execution.

Here’s a simple 45-day roadmap teams can follow to turn these last two principles into measurable savings:

Goal: Align decision logic with outcome metrics while eliminating unfair comparisons between vendors, roles, or regions.

Procurement Leads (0–15 days)

• Add a TCO column (1.25–1.40×) to cost sheets; remove salary-only comparisons.
  KPI: 100% of new RFPs use TCO, not rate-only.

Hiring Managers / Delivery Leads (15–30 days)

• Run one apples-to-apples pilot (senior offshore vs mid-level local). Track time-to-value, rework.
  KPI: ≥20% measured TCO improvement with no quality drop.

C-Suite (30–45 days)

• Publish a post-engagement ROI summary using actual delivery data; approve scaling on verified TCO.
  KPI: Threshold met (e.g., ≥15% TCO improvement vs baseline).

Decision Checklist

• Did we compare TCO, not just salary?
• Is the comparison like-for-like (senior vs senior, same scope)?
• Did we verify vendor capability before price?
• Do we have pilot data (time-to-value, rework) to back the choice?

Final Thoughts

In conclusion, consider whether you are seeking the best local talent and the cheapest offshore options. Are you comparing the highest offshore costs with the lowest local ones? Or are you measuring the total offshore cost against only the local salary? If the answer to any of these is yes, you risk overlooking talented overseas professionals who could offer significant cost savings. This is because your initial and immediate perception of value may be distorted by an unsystematic and unfair comparison.