Many companies have turned to offshore staffing as an affordable way to meet their workforce needs. A common query is: Are offshore workers underpaid? Why offshore staff cost so low? A combination of comparative cost advantages and economic factors provides the solution.
Cost of Living and Currency Rates
Living expenses in nations like India are lower. Thus, hiring offshore staff is cheaper. In India, the cost of essentials including food, education, and internet access is far lower than in Western nations. In India, a basic lunch can cost between $1 and $2. But in the US or Europe, it could cost five to ten times higher. In India, attending college also costs a lot less. In the United States, bachelor tuition fees are around $100,000. Whereas in India, the average college tuition cost is $3,950.
The exchange rate is an important factor to consider. Indian currency is much cheaper than the USA or UK. So, companies and offshore employees are at benefit while working with each other. Based on the US rate companies will be paying much less and based on the Indian rate remote staff will be earning more.
Parity in Purchasing Power (PPP)
This cost difference can be explained by purchasing power parity, or PPP. PPP uses the price of a common commodities basket to assess the values of different currencies. A dollar goes a lot farther in nations where living expenses are lower. In INR, a pay that appears to be lower in USD or EUR may give an equal or even greater level of living.
Savings while Working from Home
An additional factor in the affordability of offshore staffing is remote work. Working from home saves money on professional gear and transportation costs. Employees frequently accept lesser pay for this convenience than they would for an on-site position. Additionally, working remotely improves work-life balance and boosts retention and job satisfaction.
In summary, a win-win situation
The low cost of hiring offshore workers does not imply that they are paid less. Their pay is fair when you take the cost of living and the state of the local economy into account. Employers save money on labor expenses and employees have a good quality of living as a result of this strategy.
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