Offshoring to the Philippines can offer real cost savings, but knowing if it’s the right move starts with using an offshoring ROI calculator. Many companies see lower costs through reduced labor costs, fewer indirect employee costs, and improved efficiency, but it’s not always guaranteed. Achieving a strong ROI requires evaluating not just base salaries, but also training, onboarding, software, and management time—then weighing those against benefits such as increased output, time savings, and revenue growth.
Offshoring accounting, customer service, or back-office support can help accounting firms, CPA firms, and other businesses achieve better cost efficiency and revenue growth. This guide walks through measuring ROI, monitoring key performance indicators, and making informed decisions using key metrics that align with your financial goals.
Why ROI Matters in Offshore Hiring Decisions
Cost savings from lower hourly rates may look good at first, but they don’t tell the whole story. The true return on investment (ROI) includes more than just how much you save—it measures what you gain from your outsourcing investment in terms of work delivered, improved efficiency, and time saved. An offshoring ROI calculator helps you track expenses and outcomes like revenue streams and customer satisfaction.
Lower labor costs are helpful but not enough for small businesses, especially accounting firms and CPA firms. You must also factor in training costs, overall productivity, and key performance indicators. Measuring ROI helps companies decide if offshoring supports their financial goals or leads to a negative ROI. A focus on ROI gives you valuable insights, reduces risks, and enables you to make informed decisions about your offshoring initiative.
What Costs to Include When Calculating Offshore ROI
Companies must include all costs to measure ROI correctly—not just base salaries. ROI calculation should account for indirect employee costs, onboarding expenses, and management time. This full picture shows the real investment and helps determine if the move will lead to cost efficiency and improved operations.
Base salaries: U.S. vs. Philippines comparison
The biggest difference in offshoring comes from labor costs. In the Philippines, base salaries are often much lower than in the U.S. This gap allows companies to reduce costs while maintaining high service quality. However, offshoring accounting or other skilled roles means looking at more than just the yearly average—it’s about the value you get for that salary.
| Role | US Yearly Average | Philippines Yearly Average |
|---|---|---|
| Virtual Assistant | $35,000 | $6,000 |
| Customer Support Rep | $42,000 | $5,400 |
| Bookkeeper | $50,000 | $7,200 |
| Graphic Designer | $55,000 | $8,400 |
Additional expenses: software, hardware, onboarding
Offshoring still comes with setup costs. Factoring in these additional costs is essential to avoid underestimating your total offshore investment—and ensures your ROI calculations reflect the true bottom-line impact.
- Software licenses (Zoom, Microsoft Office, CRMs)
- Laptops or desktops per team member
- Internet/data allowances
- Headsets, webcams, and other gear
- Training costs and onboarding resources
- Time spent by managers on initial setup
- Team collaboration tools like Slack or Asana
Management and communication overhead
Managing an offshore team takes ongoing effort. U.S.-based managers often spend extra time on handoffs, performance evaluations, and task reviews. These indirect costs affect overall productivity and should be added to your ROI calculation.
For example, Barbara, who runs a small agency, found that for each offshore team member, she spent three extra hours each week handling updates, resolving questions, and ensuring quality control. That time translates to cost—and must be counted as part of the total investment in your outsourcing initiative.
What Benefits to Include in Your ROI Formula
ROI isn’t just about what you spend—it’s also about what you gain. When using an offshoring ROI calculator, including all the benefits that boost business results and not just the money saved on salaries is crucial.
Labor cost savings (up to 75%)
Outsourcing cost savings often come from reduced labor costs. Hiring a skilled Filipino worker can cost up to 75% less than hiring for the same role in the U.S. These lower hourly rates help reduce costs without lowering quality. For many companies, this is the biggest factor in achieving positive ROI and meeting long-term financial goals.
Extended hours of productivity (overnight advantage)
Offshore teams in the Philippines work while U.S. teams are asleep. This leads to increased efficiency through a 24-hour work cycle. Tasks can be handed off at the end of the U.S. day and completed by the next morning. This setup increases overall productivity and shortens delivery times, helping companies serve more clients and improve customer satisfaction.
Ability to scale services or offerings
A strong offshoring initiative gives small businesses the power to grow faster. With lower costs and more available talent, companies can expand services, take on more projects, and test new revenue streams without overloading their in-house staff. This kind of flexibility supports operational efficiency and supports long-term business improvement.
ROI Calculation Formula for Philippine Offshoring
To determine your return on investment (ROI), you need a clear formula that compares what you spend versus what you gain. The offshoring ROI calculator uses a simple method to help companies make informed decisions.
[ (Local cost – Offshore cost) ÷ Offshore cost ] x 100
This formula helps measure ROI by showing how much you save compared to what you invest. For example, if hiring locally costs $60,000 and offshoring costs $15,000, your ROI is [(60,000 – 15,000) ÷ 15,000] x 100 = 300%. This means the outsourcing investment returned 300% in labor savings alone. Still, this is just the start—you must also factor in indirect costs and benefits to get the full picture.
Customizing the formula for different roles or teams
Each role has unique costs and benefits. Offshoring accounting work, for instance, may include extra software or quality control needs, while offshoring customer service may focus more on training and performance evaluations. Adjusting the ROI calculation for each team helps track key metrics and leads to more accurate results.
How to project ROI over 6, 12, and 24 months
Looking at ROI over time gives a clearer picture of long-term value. Use your total cost—base salary, equipment, training costs, and indirect employee costs—alongside projected savings and increased output. Over 6 months, you may only break even due to upfront costs. At 12 months, you may start to see improved efficiency and lower costs. By 24 months, the ROI usually becomes much stronger as the offshore team gains experience and delivers more value with less time spent on onboarding or supervision.
Real-World ROI Example: Barbara’s Accounting Firm
Barbara owns a small accounting firm and wanted to cut costs while growing her client list. She turned to the Philippines for help and used a clear ROI calculation process to track results.
Initial investment vs monthly savings
Her initial offshoring investment included training, equipment, and onboarding costs totaling $4,800. Monthly, she saved about $3,500 compared to hiring U.S.-based staff. This gave her a positive ROI in just under two months, proving that offshoring cost savings weren’t just possible—they were fast and clear.
Impact on her firm’s capacity and profitability
With her offshore team handling routine work, Barbara could take on more clients without overloading her in-house team. Her firm increased its yearly average revenue by 18%, and customer satisfaction scores improved. The offshoring initiative boosted her productivity and reached new financial goals.
Time saved and reinvested into business growth
In her experience, Barbara saved around 15 hours per week, which she reinvested into higher-value tasks thanks to reduced supervision and faster task turnaround. She reinvested this time into marketing, client strategy, and new service offerings. This led to new revenue streams and improved performance across her operations, proving that calculating ROI goes beyond money—it’s also about creating time for growth.
Real-World ROI Example: Barbara’s Accounting Firm
Offshoring success isn’t measured in savings alone. As Barbara’s case shows, true ROI includes time freed, strategic growth, and enhanced capacity.
Initial investment vs monthly savings
The initial setup—including onboarding, training, and equipment—totaled $4,800. By hiring two offshore team members at a combined monthly cost of $3,500, Barbara cut her labor costs by 70%, recouping her investment in under two months which was significantly less than U.S.-based hires. Compared to hiring locally, she cut labor costs by 70%, achieving a positive ROI in less than two months. This allowed her to meet financial goals while staying lean.
Impact on her firm’s capacity and profitability
Once her offshore team was trained, the amount of work delivered doubled. Her in-house staff spent less time on repetitive tasks, and the firm began handling more client accounts without increasing headcount. Barbara’s yearly average profit rose 18%, and her firm reported fewer errors after her offshore team gained experience and processes were standardized to improve efficiency and clearer quality control processes.
Time saved and reinvested into business growth
Barbara saved more than 15 hours per week. That time was redirected into marketing, founder-level strategy, and building better revenue streams. Instead of micromanaging, she focused on growth—showing that calculating ROI isn’t just about money but about time saved and resources better spent.
Hidden ROI Factors Startups Shouldn’t Ignore
Startups often focus only on direct labor cost savings. However, an accurate offshoring ROI calculator must also include hidden gains supporting long-term success.
Improved team focus and founder productivity
Offshore teams reduce pressure on in-house staff. With routine tasks handled overseas, U.S. teams have more time to focus on high-value work. Founders spend less time managing small issues and more time on big-picture planning and informed decision-making.
Higher service levels and client retention
Offshoring can support customer satisfaction when teams are trained, workflows are well-managed, and support is fast and consistent. With total agents working across time zones, clients receive quicker responses. That leads to better reviews, more clients, and stronger retention, helping you meet quality and financial goals.
Stress reduction and long-term scalability
With the right offshoring initiative, business owners may help ease workload pressures on in-house teams, allowing for more sustainable work schedules. Delegating tasks lets startups build systems that scale smoothly. CPA firms, creative agencies, and service providers can expand operations, onboard faster, and grow without sacrificing performance evaluations or quality.
Final Thoughts: ROI Isn’t Just Financial—It’s Strategic
Return on investment (ROI) goes beyond reduced labor costs. A well-managed offshore team supports operational efficiency, adds valuable insights, and frees up time for growth. Using an offshoring ROI calculator helps account for all the costs and benefits—both direct and hidden. For startups looking to reduce costs and increase impact, offshoring becomes a smart, strategic move that helps achieve long-term business goals and maintain a competitive edge.
Frequently Asked Questions
How do I calculate ROI for outsourcing?
Use the formula: [(Local cost – Offshore cost) ÷ Offshore cost] x 100.
What are indirect employee costs in offshoring?
They include software, training, communication tools, and management time.
Can outsourcing save money for small businesses?
Yes, it reduces labor costs and boosts cost efficiency across operations.
What’s the average ROI from offshoring to the Philippines?
Many companies report significant ROI within the first year, but results vary depending on costs, operations, and team structure.
What’s the difference between outsourcing and offshoring?
Outsourcing is hiring third-party help; offshoring means that help is overseas.
References
- International Labour Organization. (n.d.). Decent work in the Philippines. https://www.ilo.org/regions-and-countries/asia-and-pacific/philippines/decent-work-philippines
- Outsourced. (2025). Outsourcing Statistics & Trends: Ultimate List for 2025. https://outsourced.ph/outsourcing-statistics/
- U.S. Bureau of Labor Statistics. (2025). International Comparisons of Hourly Compensation Costs in Manufacturing, 2012. https://www.bls.gov/fls/ichcc.htm
- U.S. Office of Personnel Management. (2022). Human Capital Framework. https://www.opm.gov/policy-data-oversight/human-capital-framework/
- U.S. Small Business Administration. (2024). Calculate your startup costs. https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs
