True cost of offshore dev.

Offshore development costs headline 40-70% less per hour than onshore, but the true saving is narrower once management overhead and quality adjustment are applied. Management overhead covers extra project coordination, timezone friction, and context loss - typically 10-20% of base cost. Quality adjustment accounts for rework and longer onboarding - typically 15-30% depending on work type.

5 developers at 120/hr onshore vs 40/hr offshore across 2,000 hours/year. Onshore total: 1.2M. Offshore base: 400k plus 15% overhead (60k) plus 20% quality (80k) = 540k. Net savings 660k/year. That's material but 40% less than the headline 'two-thirds cheaper' comparison.

Offshore works best for clear, well-specified work (testing, maintenance, routine development). It struggles for ambiguous, creative, or high-stakes work where context-sharing cost outweighs hourly savings. Many teams land on hybrid: senior architects and product staff onshore; implementation and maintenance offshore. This captures 60-70% of pure-offshore savings with less quality risk.

Quick example

With developers needed of 5 and onshore hourly rate of 120 (plus offshore hourly rate of 40 and hours per year of 2,000), the result is 660,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Developers Needed, Onshore Hourly Rate, Offshore Hourly Rate, Hours per Year, and Management Overhead %. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the winning option changes.

What's happening under the hood

Onshore cost = devs × onshore rate × hours. Offshore total = devs × offshore rate × hours × (1 + overhead % + quality %). Savings = onshore - offshore total. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Using this as a check-in

Re-run this every three months. A single reading tells you where you stand; four readings tell you whether things are improving. The trend matters more than any individual snapshot.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.