Labor Cost Comparison of Nearshore and Offshore Call Center Locations
by King White, on Mar 11, 2024 8:00:00 AM
Whether you are setting up a captive call center or outsourcing to a business process outsourcer (BPO), it is critical to investigate labor costs during the site selection process. Comparing labor costs for call center workers in nearshore and offshore countries involves examining a variety of factors, including average salaries, benefits (taxes, insurance, transportation and food), and overall cost of living in each region. It’s important to note that these costs can fluctuate due to economic conditions, exchange rates, market saturation and changes in local labor markets. To help guide you, here’s a general comparison to provide some insight:
Nearshore countries
Country |
Base Wage (USD/hour) |
Bonus |
Benefits |
| Colombia | $4-5 | 5-15% | 40-50% |
| Costa Rica | $6-7 | 5-15% | 40-50% |
| Dominican Republic | $4-5 | 5-15% | 30-40% |
| El Salvador | $4-5 | 5-15% | 30-40% |
| Guatemala | $4-5 | 5-15% | 30-40% |
| Jamaica | $4-5 | 5-15% | 30-40% |
| Mexico | $5-6 | 5-15% | 40-50% |
Offshore countries
Country |
Base Wage (USD/hour) |
Bonus |
Benefits |
| India | $2-3 | 5-15% | 20-30% |
| Philippines | $2-3 | 5-15% | 40-50% |
| Dominican Republic | $3-4 | 5-15% | 20-30% |
Factors influencing labor costs
- Cost of living: Higher in nearshore locations like Costa Rica and Mexico compared to offshore locations like India and the Philippines, influencing wage expectations.
- Benefit load: The employee benefit load can be significantly higher due to government taxes and subsidies for healthcare, transportation and meals.
- Skill level and language proficiency: Specialized skills or fluency in multiple languages can command higher wages in both nearshore and offshore locations.
- Market saturation: Very mature call center locations like the Philippines and Costa Rica have a lot of competition for labor due to the presence of other call centers, which can create wage pressure.
- Economic conditions: Fluctuations in local economies, inflation rates and currency exchange rates can impact labor costs over time.
- Government regulations and taxes: Labor laws, minimum wage regulations and taxes also play a role in determining the overall cost of labor in different countries.
Conclusion
While labor costs are generally lower in offshore countries compared to nearshore ones, the decision to open a captive site or outsource call center operations is influenced by more than just labor costs. Factors such as time zone alignment, cultural affinity, language skills, geopolitical stability, real estate availability and economic incentives also play critical roles in the site selection process. Companies often weigh these factors alongside cost considerations to find the best balance between service quality and operational efficiency.
