The true cost of an in-house team.

Why salary isn’t the true cost of an employee

When a business decides whether to take someone on, the figure on the table is nearly always the salary. It’s the number in the job advert and in the budget, and the one people hold up against any other way of getting the work done.

But the salary is only what the person receives. What the business commits to, what’s often called the fully loaded cost of an employee, is a good deal more, and most of it is spread across other budgets and other people’s time, so it never lands on one line. This part follows a hire from before they start to the day they leave, and gathers it all in one place. It applies whether the work is customer service, back office, social media or anything similar, and whether the team is one person or fifty.

Before they start

Every new person costs something before they’ve done a day’s work. There are adverts or an agency fee, checks and references, and the hours spent shortlisting, interviewing and doing the paperwork. Then someone has to train them, and that’s someone else’s time as well as theirs.

It doesn’t happen once. Staff turnover varies by kind of work. It tends to be highest in frontline roles, where contact centre studies put it at around a quarter to a third of a team each year, but even a steady team loses people. So these costs come round again and again, and each time a post is empty, the work either waits or someone covers it with overtime or a temporary worker, which usually costs more than the salary it stands in for. The simplest way to see their real cost is to spread each new starter’s costs across the time people usually stay.

What the law adds

Every country adds something to pay by law. The details differ, but the kinds of cost are much the same everywhere, a tax or social insurance contribution the employer pays on top of wages, usually a pension contribution, and in some countries health cover. Paid holiday and sick pay are set by law in most countries too. They don’t cost more than the salary, since the salary already pays for those days, but they do mean nobody works every hour they’re paid for, which part two comes back to.

Three examples show how much it varies.

• In the UK, employer National Insurance is 15% of pay above £5,000 a year, and the minimum workplace pension is 3% of pay between £6,240 and £50,270. Most employers can take up to £10,500 a year off their National Insurance bill through the Employment Allowance, though it’s for the whole business, not each person.
• In Ireland, employer PRSI is 11.4% of all pay for anyone earning over €552 a week, from 1 October 2026. The new My Future Fund pension adds 1.5% for staff without a workplace pension, rising in stages to 6% by 2035.
• In the US, Social Security and Medicare cost the employer 7.65% of pay, with federal and state unemployment taxes on top. Health insurance isn’t required by law for most employers, but most full-time jobs come with it, and the employer’s share averaged about $7,900 a year for single cover and $20,100 for family cover in 2025.

Rates for the UK’s 2026/27 tax year, Ireland from 1 October 2026 and the US for 2026, using Texas for state unemployment tax. They change every year, and this guide is updated when they do. Wherever your team is employed, your payroll provider or accountant will know the figures that apply.

That’s where most comparisons stop, and it’s only the start.

Benefits and extras

Then there’s what a business spends to make the job worth having and the team worth being in. Health cover, gym and cycle-to-work schemes and a better pension. Bonuses and incentives. The end-of-year party, the summer social, team nights out and family days. Merchandise, refreshments and the small things that make a place feel looked after. In some countries benefits carry tax of their own, such as the UK, where many are subject to 15% employer National Insurance.

None of these is large on its own. Together they’re often more than people expect, and they grow with every person added.

Somewhere to work

Each person needs somewhere to work and something to work on. If the office space is already there, one more person may add little until the room runs out, and then it adds a lot. Working from home has costs of its own, from an allowance to the equipment. Either way, everyone needs a computer, screens and a headset, replaced every few years, along with IT support and security.

The software they use

Every person needs logging in to something, and most of it is charged for each person, each month. There’s email and office software, such as Microsoft 365 or Google Workspace. There’s whatever the team answers customers in, the helpdesk, live chat and phone system, often with a customer database alongside. More and more there are AI tools as well, an assistant for each person or AI built into the helpdesk, sometimes charged for each conversation it handles. Then there are the tools for planning, checking and training the work, and whatever else the work needs, from an order system to a password manager.

Each licence looks small on its own. Together they add up quickly, and they grow with every person added, the people around the team included. If an outsourced team would work in your own systems, some of these stay with you either way, so they belong on both sides of a comparison.

The people around them

A team never runs on the people in it alone. Around it there’s someone who:

• leads it, and in a small business that’s often the owner or a manager with a full job of their own
• answers the questions the team can’t, and takes the conversations that need more authority
• trains new people, and refreshes everyone when something changes
• checks the quality of the work and gives feedback
• plans who works when
• pulls the figures together
• runs the contracts, the payroll and the holiday records

In a small team, one person usually does most of this, often the team lead, or the owner or a manager alongside a full job of their own. As the team grows, the work splits into roles of its own. In a large operation there’s often one team lead for every twelve or fifteen people, with separate people for quality, training and planning. However it’s shared, it’s a real cost, and an easy one to miss, because it sits in other people’s diaries.

The people doing this work have their own employer costs, benefits and desks too, so their share of those belongs in the cost as well, at least for the people who work directly with the team. Further up, it’s harder to say how much of a manager’s time any one team takes.

When things go wrong, or they leave

Some of the cost of a team only shows when something goes wrong. Long absences, performance problems and conduct cases take a manager’s time, and HR’s, and sometimes outside advice. They’re not everyday events, but in any team of size they happen every year.

And a team that might ever need to shrink has a cost waiting in it. The law sets a minimum for anyone with two years’ service.

Most countries have rules of their own, and an employer can choose to pay more under a policy of its own. Notice counts too, since anyone who isn’t asked to work their notice is paid for it instead. A business that might reduce its team one day is wise to count what that would take.

Why a small team costs more per person

Almost every cost above has a part that doesn’t shrink with the team. A team of three still needs someone to lead it, train it, check it and plan its cover. A team of thirty needs the same, but shares it across ten times as many people.

So what each person costs depends on the size of the team. A team lead shared by twelve people is a twelfth of a salary each. For a team of three it’s a third. The same is true of training, quality, planning and HR. It’s why small teams so often go without some of them altogether, and why the true cost of a small team surprises people most.

An example, a team of five in the UK

Here’s how it adds up for a team of five, each paid £26,000. The legal costs are this year’s rates. The rest are example figures, chosen to be realistic for a team like this, and your own will differ.

That’s about 1.5 times the salary, or £15,850 a month for the team. Put in your own figures below to see yours.

How outsourcing is priced

An outsourcing provider takes on most of the costs in part one and charges for them in its price. There are a few ways that price is set, and they don’t all measure the same thing.

• A price for each person, each month. You pay for a set number of people working only on your business. It’s simple to budget for, and it’s the closest to how you’d think about your own team.
• A price for each productive hour. You pay for the hours someone actually spends working on your business, rather than the hours they’re paid for. Time away from the work, such as holiday, sickness, training, meetings and breaks, is the provider’s to cover. It only works if the hours can be measured in a way both sides trust. That usually means records from your own systems of when someone is logged in and working, with what counts agreed at the start. A figure that only the provider can see is hard for either side to rely on.
• A price for each scheduled hour. You pay for every hour someone is rostered on your work, including the time they spend away from it. It’s simpler to measure, and more of the cost of absence falls on you.
• A price for each contact, minute or outcome. You pay for each call, email or chat handled, each minute on the phone, or each case resolved. It suits work that rises and falls, though the bill is harder to forecast, and it’s worth agreeing exactly what counts as one.

Around the rate itself, there’s usually more to agree:

• fees for setting the work up, or moving it across
• a minimum commitment, in people, hours or volume
• different rates for evenings, weekends, public holidays and other languages
• how and when prices are reviewed, often once a year

Any of these can be good value. To compare one with your own team, turn the quote into what it would cost you over a year, for the work you actually need done.

What a productive hour is

Someone paid for a full-time year isn’t working for all of it. Take one person on 37.5 hours a week, with round figures for illustration.

That’s about three-quarters of the hours they’re paid for. Your own figures will differ, but the gap is always there, and it’s why a price for each productive hour can’t be set against an hourly wage. Part three shows how to compare the two.

What a price usually includes

A price for each person or each productive hour usually covers the person’s pay and what the law adds, and much of what’s around them, such as leading the team, training it, checking its work, planning its cover, reporting, and replacing people who leave. It usually covers somewhere to work, and the provider’s own equipment and systems.

But providers draw the line in different places, and some costs depend on how your business works. It’s worth asking about each of these:

• Hardware. If the work needs a particular computer, extra screens, or equipment set up to your own security standards, that needs agreeing with the provider, and it may be charged for.
• Your software. The team may need licences in the tools your business already uses. That could be your helpdesk and phone system, but also a work email and documents on Microsoft 365 or Google Workspace, Slack, or a customer system such as Salesforce. These are often paid for by you, even when the provider runs the team.
• Volume above what was planned, and what happens on an unexpectedly busy day.
• What’s promised on performance, how it’s measured, and what happens if it’s missed.
• How long you’re committing for, and how much notice either side gives.

Getting started

Whatever the starting point, a new team has to learn your business, your products, your policies and your customers, and that takes training and some of your own people’s time. The same is true of people you hire yourself.

When you’re moving work your own people already do, or moving it from one provider to another, there’s also a handover to plan. Knowledge has to pass across, the two teams often overlap for a while, and performance often dips while the new team settles in. Planned well, with the move staged and the targets agreed for that period, it’s a known cost rather than a surprise, and it belongs in the comparison.

When your own staff already do the work. In the UK, moving an existing team’s work to a provider usually brings in the transfer rules known as TUPE. The people who mainly do that work move to the provider on their existing terms, so their jobs and their pay are protected. Ireland and the rest of the EU have similar rules, and many other countries have their own.

Transfers like this are a routine part of outsourcing. The process is well established, and you and the provider agree up front how it will be handled and who carries which costs. It doesn’t apply when the work is new, when you’re adding people or hours, or when nobody is already dedicated to it.

When the work moves to a provider in another country, the people doing it rarely move with it. The rules can still apply, but in practice the business usually finds them other roles or makes their roles redundant, and that cost stays with the business. Part one covers what redundancy costs, and it’s worth taking advice early on how the rules would apply to you.

If you’d like to talk through how a move might work for you, we’re glad to.

Running it, and what stays with you

What running it looks like depends on the work and its size. It might be a short weekly call on how things went, a monthly review of the figures and the quality checks, and a quarterly look at what’s changing and what’s next, with a way to raise anything urgent in between. A small team needs less than that, and a large one usually more.

Most of the cost is in the price, but a few things stay with you:

• Your own software, if the team works in your systems.
• Hardware you’ve asked for, if it’s charged for separately.
• Someone’s time to look after the relationship. For a small team it’s part of someone’s job. For a large one it can be a role of its own.
• Visits and reviews, if you want to see the work in person or check it yourself.

Setting the rules, making the decisions the team brings to you and reading its reporting stay with you too. But they’re part of running any team well, your own included, so they aren’t an extra cost of outsourcing.

Changing it, or ending it

Work changes, and an outsourcing arrangement should be able to change with it. It’s worth knowing:

• how quickly the team can grow, and how quickly it can shrink
• how long the contract runs, and how much notice either side gives
• what happens to your knowledge, your processes and your data when it ends
• how the work would come back in-house or move to another provider, and whether transfer rules would apply again on the way

Compare the whole cost, not one person

It’s tempting to set one person’s salary against one quoted price, but that leaves most of the cost out on both sides.

On your own side, the cost is the whole team’s for a year. That’s everyone’s fully loaded cost, the people around them, hiring as people come and go, somewhere to work, equipment and software, and anything one-off spread over the years it serves. The calculator gives you that as a yearly figure for your team.

On the outsourcing side, it’s the yearly price for the same work, plus any set-up or move-across costs, plus what stays with you.

Compare the same work, not the same number of people

Ten people on your payroll don’t give you ten people’s worth of working hours. Holiday, public holidays, sickness, training, meetings and breaks all come out first, and what’s left is the time they’re actually working.

That matters most against a price for each productive hour. To compare fairly, work out what your own team costs for each hour it actually works, which is its yearly cost divided by its productive hours, not its paid ones. For the team of five in part one, at £3,170 a month each, that’s about £20 for each hour they’re paid, but about £25 for each hour they actually work. Against a price for each productive hour, £25 is the figure to compare.

Against a price for each person, check how many people the provider would need to cover the hours you need, and whether absence is covered within the price.

Count what you’d stop paying for, as well as what you’d start

Outsourcing moves some costs off your books, not just onto a price. Depending on what you hand over, you may no longer need to hire for it, provide desks and equipment, buy some of the software, or keep the people who lead, train, check and plan for that team. Those belong in the comparison as much as the price does.

Running both

Plenty of businesses do both. They keep a core team in-house and outsource part of the work, such as evenings and weekends, the busy seasons, other languages, or one kind of work that runs well on its own. Each side then carries its own costs. The in-house team still needs the people around it, even when it’s smaller, and the outsourced part has its price. The systems, the rules and the checking stay with you for both.

Beyond the figures

The cost is one part of the decision. The others are just as real, and only you can weigh them:

• Control. How close you want to be to the work, day to day.
• Flexibility. How much the work rises and falls, and how quickly the team would need to grow or shrink.
• Cover. Whether you can staff the hours and languages your customers need, through holidays and sickness.
• Experience. Whether you already know how to recruit, train, measure and lead this kind of team, or would be learning as you go.
• Focus. Where you’d rather your own leaders spent their time.

Put your own figures into the calculator, set them against a quote, and see which way they point. If they point to outsourcing, we can run the work for you, with a team we recruit, train and lead. If you keep it in-house, we can help you plan it and set it up, from the helpdesk to training and reporting.