Outsourcing ROI Case Study: How a 45-Person Company Cut Overhead 40%

The CFO ran the numbers on a Thursday in October 2023. Not an elaborate model. Just a spreadsheet with five columns: salary, benefits, payroll taxes, overhead allocation, total.

Three roles on the sheet. One HR coordinator. Two data engineers. A third DE seat they’d been trying to fill for 22 weeks. The two filled roles came to $432,000 fully loaded. The open seat was costing something harder to quantify: 15-hour project delays every sprint because the team was running a three-person workload with two people.

She sent one email. “What would this cost offshore?”

Six weeks later, they had vendor shortlists. Eighteen months after that, both functions were running offshore. Annual cost for the same three roles: $124,000. Total company overhead: down 40.3%. If you want to run your own numbers before going further, the free outsourcing ROI calculator takes under two minutes.

This is how they did it, what broke along the way, and whether the model is right for your company.

What the Company Looked Like Before the Move

45 employees. B2B SaaS, Dallas area. $6.2M ARR in 2023, growing at roughly 18% per year. Profitable, but not by enough margin to hire freely. The kind of company where every headcount decision gets reviewed twice.

The HR coordinator had been there four years. She handled onboarding documentation, I-9 verification, benefits enrollment, PTO tracking, payroll coordination with their ADP account, and compliance filings. For 45 people, that ran about 30 to 35 hours per week. The rest of the time she was handling fires she shouldn’t have been fighting in the first place, the kind that happen when HR is one person and the company keeps growing.

The Data Engineering Setup

Two data engineers running Snowflake for the data warehouse, dbt for transformations, Airflow for orchestration. They were building and maintaining reporting pipelines for seven internal teams plus two enterprise clients. Good engineers, but understaffed for the scope. The open seat had been posted since April on Indeed, LinkedIn, and two specialized recruiting platforms. Three qualified candidates in 22 weeks. All three accepted competing offers.

Average base salary for the two active engineers: $149,500. Fully loaded with benefits, payroll taxes, and overhead allocation: $175,000 per person. According to HireWithNear’s 2024 salary data, US mid-level data engineers averaged $128,000 to $162,000 in base compensation alone. That open seat wasn’t just an absence. It was costing roughly 12 hours of delayed pipeline work per week.

The fully loaded cost of HR for a small business rarely gets calculated correctly. Most companies look at salary and stop there. Benefits, payroll taxes, recruiting replacement costs, overhead per desk: those four add 30 to 45% on top of the base number before you’ve counted a single missed deadline.

Why They Decided to Move Both Functions at Once

The conventional advice is to pilot one function, prove the model, then expand. It’s not bad advice. It wasn’t right for this company.

Two things forced the timeline. The HR coordinator gave notice. Two weeks. That compressed the evaluation window whether they were ready or not. The data engineering situation was a slow bleed, not a crisis, but 22 weeks with an open seat had moved it from “problem to address eventually” to “problem costing real money now.”

Moving HR first and data engineering later would have meant two separate vendor evaluations, two separate onboarding processes, two separate disruption windows. The CFO ran that comparison and landed on a clear position: one disruption, done right, beats two easier ones. They engaged a single BPO partner for both.

There’s a second reason the simultaneous approach made sense that doesn’t get talked about enough. Vendor leverage. A company moving one 45K/year role offshore has limited negotiating power. A company moving three roles with a clear expansion roadmap gets better pricing, more senior support during onboarding, and a vendor who’s invested in the long-term relationship. The economics work differently at different scales, even when the functions are simple.

The Real Cost Breakdown: Before vs. After

Before the move, fully loaded annual cost for the three roles hit $432,000. After: $124,000. A $308,000 annual swing, representing 40.3% of total company overhead for those two functions combined.

The table shows the itemized breakdown.

Three things worth noting about these numbers before anyone runs them through their own model.

First, the offshore cost includes internal oversight and vendor fees. They didn’t eliminate all HR leadership. The VP of People kept 0.25 FTE of her time for oversight, escalations, and anything requiring US-based judgment. That’s a real cost. Leaving it out would make the numbers look cleaner than they are.

Second, transition costs are amortized over three years. Year one was more expensive because of onboarding fees and a 30-day parallel-run period where both the outgoing coordinator and the incoming offshore admin were working the same queue simultaneously. The year-one math was closer to $148,000, not $124,000. The payback period accounts for that.

Third, the open data engineering seat isn’t in the “before” column because it was a vacancy, not a filled role. But it was costing them. Their internal estimate was around $4,000 per week in delayed pipeline work and engineering overtime. That’s not in the table. It’s also not nothing.

How They Built the Offshore HR Team

Three weeks from vendor selection to the offshore HR admin having live access to BambooHR and ADP. That timeline surprised them. They’d budgeted eight weeks.

What transferred offshore, in the first 30 days:

• Onboarding documentation and I-9 coordination
• Benefits enrollment administration and annual open enrollment support
• PTO tracking, accrual updates, and HR system maintenance
• Payroll submission coordination with ADP (data input, not payroll decisions)
• Compliance filing reminders, deadlines calendar, and state notice tracking
• Employee file maintenance and document version control

What stayed with the VP of People:

• All hiring and termination decisions
• Performance reviews, compensation decisions, and equity discussions
• Culture, employee relations, and sensitive HR matters
• Any situation requiring US-based legal judgment

The handoff took more internal effort than they expected. Not because the offshore admin wasn’t capable. She was running the function independently by week 6. The problem was documentation gaps on their end. Two SOPs didn’t exist in written form. They lived in the outgoing coordinator’s head. Writing them before handing them off added two weeks to the timeline and surfaced three edge cases nobody had thought to document.

That pattern is consistent. Outsource Accelerator’s analysis of HR outsourcing outcomes finds that nearly 80% of US companies outsource at least one HR function, but the ones that struggle most in the first 90 days are consistently the ones that hand off undocumented processes and expect the vendor to reconstruct them from scratch. Document first, transfer second. This isn’t a best practice. It’s the difference between a smooth 30-day ramp and a 90-day headache.

By month 4, the offshore admin was completing benefits enrollment faster than the previous coordinator had. Not because she was more skilled. Because she wasn’t also handling 12 other competing priorities.

How They Moved Data Engineering Offshore Without Breaking the Pipeline

This one was harder. Not because of skill gaps on the offshore side. The two engineers they hired in Manila were both strong. It was because data engineering pipelines fail in ways that aren’t always immediately visible, and silent failures are harder to catch than loud ones.

The stack, Snowflake, dbt, Airflow, is standard enough that qualified offshore engineers know it well. The Philippines has a substantial pool of data engineers who’ve run this exact combination for US companies. That wasn’t the challenge.

Timezone overlap was manageable. Manila runs at UTC+8. US Eastern is UTC-5. A 13-hour gap sounds like it should break everything. What they actually ran: a 2-hour overlap window at 8 AM EST, 9 PM Manila, for daily sync. Everything else operated async via Loom video updates, Notion documentation, and Slack threading. Most data engineering work doesn’t require live collaboration. Pull requests, pipeline runs, transformation updates, schema maintenance. None of those need a real-time conversation.

What broke was an Airflow DAG (a scheduled data job) that failed silently for 11 days in month 1. Not a mistake by the offshore team. A monitoring gap that had existed before the transition. The pipeline was completing with a success status. An upstream schema change wasn’t propagating to one output table correctly. They discovered it when an enterprise client flagged a dashboard that hadn’t updated in 11 days.

The fix took 4 hours. The detection took 11 days.

After that incident, they added output-level alerts on all downstream tables, not just pipeline run statuses. That monitoring layer should have existed before the transition. The transition was what surfaced its absence. Worth being honest about the difference.

For anyone evaluating the salary gap, an in-house vs. offshore data engineer cost breakdown puts the numbers in context. US-based mid-level data engineers averaged $128,000 to $162,000 base in 2024 according to HireWithNear. The offshore equivalents in Manila ran $30,000 to $48,000 annually, including the BPO vendor management fee. That isn’t a small arbitrage. It’s a structural difference that compounds over years.

By month 3, both offshore engineers were at full pipeline velocity. By month 6, the company had added a third offshore DE and officially closed the US job posting they’d been running for 28 weeks.

What the Numbers Showed at Month 12

The CFO ran the same spreadsheet. Same five columns.

Offshore HR admin: $14,400. Internal HR oversight (0.25 FTE): $22,000. Transition amortization: $4,000. Software and VPN access: $2,200. HR total: $42,600.

Two offshore data engineers: $38,400 + $31,200 = $69,600. Vendor fee: $8,400. Monitoring tools added post-incident: $1,800. Oversight time: $1,600. DE total: $81,400.

Combined: $124,000.

Original combined cost: $432,000.

Net savings: $308,000. Against $760,000 in total company overhead, that’s a 40.5% reduction. Payback period, accounting for all year-one transition costs: 6.3 months.

The number they weren’t expecting: pipeline throughput. With the open seat filled and the team no longer running understaffed, pipeline delivery time dropped 31% from the prior year baseline. Three offshore engineers were outperforming what two US-based engineers had been doing while running hot. That’s not a statement about quality. It’s a statement about what happens when a team is adequately staffed.

For a more detailed breakdown of what offshore TCO actually looks like over 2 to 3 years, the offshore developer total cost of ownership guide walks through the full model, including the costs that most company spreadsheets miss in year one.

What Almost Derailed the Move

Two things. Neither was fatal. Both were avoidable.

The first vendor quoted $42,000 in transition fees. Not unusual for large enterprise BPO engagements. For a 45-person company moving three roles, it’s misaligned pricing. They passed. The vendor they eventually used charged $8,000 in transition fees and built the parallel-run period into the first month’s billing rate. The range between BPO vendors on transition pricing is wider than most companies expect. Get three quotes. The same quality of placement can cost $8,000 or $42,000 depending on who you ask.

The first 30 days of the HR handoff surfaced two compliance documents that weren’t in the SOP library. A state-specific leave notice and a benefits acknowledgment form. Nothing was missed in terms of legal exposure. But they had to backfill documentation for seven employees and re-run an acknowledgment process. It added 12 hours of work and cost a week of trust in the transition.

The fix: extend the parallel-run period. They ran 30 days of overlap. In retrospect, 45 days would have surfaced more edge cases before the handoff was complete. The outgoing coordinator identified three undocumented processes during the 30-day window. A longer overlap would likely have found more.

I’ll be transparent: we benefit when companies use offshore BPO partners, Kore BPO included. But the undocumented process problem shows up in almost every client onboarding we manage, regardless of function. It’s worth saying regardless of who you ultimately use.

Is This Model Right for Your Company?

Not for every company. Not for every function. The model has a profile.

For HR specifically: the administrative side transfers cleanly. Compliance decisions, sensitive employee matters, and anything touching US employment law stay internal. The offshore admin executes. The US-based HR owner decides.

For data engineering specifically: pipeline execution, transformation maintenance, and reporting transfers well. Data architecture decisions, vendor selection, and new system design stay with someone who understands the business deeply enough to make judgment calls.

Before committing to a direction, calculate your actual outsourcing ROI with your real numbers. The formula accounts for fully loaded costs, transition overhead, and payback period. Most companies who run it are surprised how quickly the savings compound.

Most companies wait longer than they should. The math is usually there 12 months before anyone does anything about it. The HR coordinator giving notice just made the timeline real for this company. Most CFOs don’t get that kind of forcing function. They have to create their own deadline.

Three things this case study confirms. Moving two functions simultaneously is harder to manage than phasing, but often more efficient. One disruption window, done right, is better than two easier ones. Transition costs and parallel-run periods matter more than most cost models account for: build them in upfront. And document your processes before handing them off. Not after. The biggest problems in offshore transitions come from undocumented edge cases, not from the offshore team’s quality.

If your company has functions that fit the profile above, run your own numbers with the free outsourcing ROI calculator. Takes under two minutes. No email required to see the output.