Businesses today rely heavily on global tech talent. As hiring locally becomes expensive and competitive, companies are turning to offshore development centres (ODCs) to scale faster and reduce costs. But before building one, the first question is always the same:
“How much does it cost to set up an offshore development centre?”
The answer depends on team size, country, and how you plan to manage the operations. This simple guide breaks down the main cost components so you know exactly what to expect.
What Is an Offshore Development Centre (ODC)?
An offshore development centre is a dedicated team of engineers located in another country, working only for your company.
Unlike freelancers or short-term outsourcing, an ODC acts like a long-term extension of your in-house team.
Companies set up ODCs to:
Reduce development costs
Access skilled engineers faster
Scale teams without hiring locally
Improve delivery speed
Now let’s look at the cost involved.
1. One-Time Setup Costs
These are the initial expenses required to launch your ODC.
A. Recruitment & Hiring
You’ll need to source and hire offshore engineers. Recruitment costs can include job ads, screening, interviews, and onboarding.
Estimated cost:
👉 $5,000 – $40,000 depending on team size
B. Legal & Compliance
If you choose to set up your own entity in another country, you’ll need to register the business and handle legal documentation.
Estimated cost:
👉 $10,000 – $30,000+
C. Infrastructure & IT Setup
Every engineer will need the right hardware and software.
This includes:
Laptops
Workstations
Tools & licenses
Security systems
Internet and VPN
Estimated cost:
👉 $2,000 – $4,000 per engineer
D. HR & Admin Setup
To run an offshore team smoothly, you need payroll, attendance systems, HR policies, and a basic admin setup.
Estimated cost:
👉 $3,000 – $10,000
2. Monthly Operational Costs
These are the ongoing expenses to maintain and run your ODC.
A. Engineer Salaries
This is the biggest cost. Salaries vary by country.
Here is a simple average:
India: $2,000 – $4,000/month per engineer
Eastern Europe: $2,500 – $5,000
LATAM: $2,000 – $4,500
Southeast Asia: $1,800 – $3,500
B. Office Space (If Required)
If your ODC is office-based, you’ll need to pay for rent, utilities, and maintenance.
Estimated cost:
👉 $150 – $300 per seat in coworking spaces
👉 $1,500 – $3,000/month for private offices
C. HR, Payroll & Admin
Running an offshore team requires local HR support, payroll services, compliance management, and employee engagement activities.
Estimated cost:
👉 $400 – $1,000 per engineer/month
D. IT Tools & Cloud Services
To keep development smooth and secure, you’ll need cloud services, communication tools, and DevOps tools.
Estimated cost:
👉 $50 – $200 per engineer/month
3. Total Estimated Cost
For a 10-person offshore team in India, here’s a simple cost summary:
Setup Cost:
👉 $35,000 – $75,000 (one-time)
Monthly Operational Cost:
👉 $25,000 – $40,000 per month
Even with all expenses included, businesses usually save 50–70% compared to hiring the same talent in the US, UK, or Western Europe.
4. How to Reduce Your ODC Costs
If you want to set up an ODC at a lower cost, here are practical tips:
Start with a smaller core team
Choose cost-efficient regions like India or Vietnam
Standardize tools early to avoid rework
Use a trusted offshore partner to avoid legal & HR costs
Adopt flexible or hybrid office setups
These small decisions can significantly reduce your long-term spending.