Glossary · Costs

Labor arbitrage

Labor arbitrage is the cost advantage a company gains by having work done where wages and living costs are lower, while selling in a higher-cost market. It is the economic engine of offshoring. Done well, it funds better coverage and growth; done badly, it trades quality for a cheaper hourly figure.

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What it means in practice

The gap in pay is real, but it is not the whole story. Quality of talent, English proficiency, time-zone overlap, and retention decide whether the cost advantage survives contact with real work.

That is why we place full-time professionals who work your hours and pass top 2% vetting, rather than competing on the lowest possible rate. A great hire at a fair price beats a cheap hire you have to replace.

See the numbers for your role in the salary calculator, and compare markets on our offshore hiring costs by country page.

  • Offshoring

    Offshoring is moving work to people in another country, usually one with lower labor costs, a large skilled workforce, or useful time-zone coverage.

  • Fully loaded cost

    Fully loaded cost is the total an employer pays for a worker, not just the salary.

  • Nearshoring

    Nearshoring is moving work to a nearby country with a similar time zone, rather than a distant one.

  • Employee retention

    Employee retention is a company's ability to keep good people over time.

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