Is outsourcing to India actually cheaper? The total-cost-of-ownership math (2026)

Outsourcing to India is cheaper than a US or UK in-house hire in 2026 — but only when you measure total cost of ownership, not the hourly rate alone. On a like-for-like basis India runs roughly 50–70% lower, and the gap holds because an offshore engagement strips out costs an in-house hire carries quietly: benefits, payroll tax, office space, tooling, recruitment fees and the management overhead of running the role. This post does the full math, and is honest about where the saving narrows.

Engagement tiers are on the AB7 pricing page; delivery scope on the Digital & Development Services page.

Rate is not cost

A US mid-level developer at, say, $120,000 salary does not cost $120,000. Add benefits and payroll tax (often 25–35%), office and equipment, software licences, recruitment fees to hire them, and the management time to keep them productive, and the fully-loaded figure is materially higher. Compare that loaded number — not the salary — against an offshore engagement, or you are comparing the wrong two things.

What AB7’s price already includes

A dedicated AB7 FTE from $1,500/month is billed as a single monthly invoice with payroll, HR, IT, workspace and compliance handled on the India side. There is no separate recruitment fee, no benefits load, no office cost, and no payroll administration for you to run. A multi-discipline pod is $4,500/month on the same basis. That single-invoice model is a large part of why the total-cost gap is wider than the rate gap alone suggests.

A worked comparison

Cost line	US in-house mid-level dev	AB7 dedicated FTE
Base salary / fee	~$120,000/yr	$18,000/yr ($1,500/mo)
Benefits + payroll tax	+25–35%	included
Office, equipment, tools	several thousand/yr	included
Recruitment fee	15–25% of salary once	none
Payroll/HR admin	your overhead	included

The point is not the exact figures, which vary by city and seniority — it is that the in-house column keeps adding lines while the offshore column does not.

Where the saving shrinks

Be honest about the cases where India is less compelling. Very small one-off tasks rarely justify any onboarding overhead. Work that needs an on-the-ground physical presence cannot be delivered remotely. And if you manage an offshore team badly — vague specs, no overlap hours, no named lead — rework can erode the saving. Each is a management choice, not a flaw in the model: scope a real engagement, set overlap hours, and use a vendor with a named tech lead and high retention.

Get your own TCO comparison

Tell AB7 the role and your current loaded cost, and get a side-by-side TCO against a dedicated FTE from $1,500/month or a pod from $4,500/month. See the pricing page and the Digital & Development Services page, then call +1-321-341-7733, email director@ab7solutions.com, or book a 30-minute call with Ashok.