9 December 20257 min read
Every comparison between hiring and outsourcing eventually reaches a table with a salary on one side and a rate on the other. The salary is the wrong number. It is an input to the employer's cost, not the employer's cost, and depending on the country it can be a long way from it.
This piece deliberately contains no figures. Employer costs vary enormously between Germany, France, the Netherlands, Belgium, the UK, Switzerland and the Nordics, they change with legislation, and any table published here would be wrong somewhere and out of date everywhere. What follows is the list of things to price, and where to get each number for your own country and your own company.
1. Employer contributions
On top of gross salary, employers pay statutory contributions: social security, pension, unemployment, health and accident insurance, in combinations that differ by country and sometimes by region or sector. Some are capped above a ceiling, some are not, which means the loading percentage itself changes as salary rises.
Where to get the real number: your payroll provider can produce the employer cost for a given gross salary in minutes, and it is the number they use every month. Failing that, the national social security institution publishes the current schedule. Do not use a percentage you remember from a previous employer or a previous country.
2. Mandatory and customary extras
Beyond contributions there are payments that are either legally required or so customary that not offering them makes the role unfillable: an additional month's salary in some markets, holiday allowance, occupational pension above the statutory minimum, private health cover, meal or transport allowances, and profit sharing where it applies.
These are the items most often missed, because they are invisible in a monthly payroll run and appear once or twice a year. Ask finance for last year's actual total employment cost for a comparable role, rather than reconstructing it from the offer letter.
3. Recruitment, amortised
The cost of acquiring the person is real whether you paid an agency fee or spent your own team's hours doing it. The correct treatment is to amortise it across the expected tenure of the role, because a hire who stays four years carries it far more comfortably than one who stays fourteen months.
Include the interviewing time honestly. Engineering hours spent screening are capacity taken from delivery, and pricing them at zero is how a hiring process comes to consume a quarter of a senior team's month without anyone deciding that it should.
4. The cost of a seat
- Hardware, refreshed on a cycle rather than bought once
- Software licences and tool seats, which now dominate hardware for most roles
- Office space per head, or the home-office allowance that replaced it
- Training and conference budget, if you actually intend to honour it
- Insurance, occupational health and the administrative overhead of employing a person
Individually these are small. Together, per head, per year, they are not, and unlike salary they are largely the same for a junior and a senior, so they weigh more heavily on the roles that look cheapest.
5. Days you pay for and do not get
This is the step that changes the shape of the comparison. An annual employment cost buys a calendar year, not a working year. Out of it come public holidays, contractual leave, sick days, training, onboarding at the start, and the notice period at the end during which output is rarely at its peak.
Divide fully loaded annual cost by realistic productive days and you have cost per productive day, which is the only figure that can be compared like for like against a provider's day rate. Comparing an annual salary against a day rate, which is what most tables do, is a category error dressed as a spreadsheet.
6. The exit side
Employment in most of Western Europe carries a cost of ending it: notice periods measured in months, statutory or negotiated severance, and in some jurisdictions a process with legal costs attached. This is not an argument against hiring. It is an argument for pricing a permanent hire as a multi-year commitment rather than a monthly expense, and for treating the expected cost of a hire as higher than its nominal cost.
What to do with the figure
Once you have cost per productive day for your own roles, the outsourcing comparison becomes arithmetic rather than argument. Put the provider's day rate next to it, add the provider-side items that the rate excludes and the internal management time the engagement will consume, and read the result.
The saving quoted anywhere on this site is measured against exactly this fully loaded figure, not against a headline salary, which is why building your own version of it matters more than accepting anyone else's. The site's cost calculator exists so you can put your numbers in rather than taking ours.