Cost Guide: Hiring Remote Staff vs. Local Employees in 2025

Hiring remote staff can save businesses up to 70% compared to local employees in the U.S. Here's why:

• Salaries: Filipino professionals earn significantly less, with annual salaries averaging $10,910, compared to $61,984 for U.S.-based employees.
• Benefits: U.S. employers spend $7,000 annually per employee on health benefits, while Filipino benefit packages range from $5,000 to $10,000.
• Operational Costs: Remote teams eliminate office expenses like rent and utilities, saving thousands annually.
• Recruitment: Filipino professionals often have higher retention rates, reducing turnover and onboarding costs.

Quick Comparison

Remote hiring works best for businesses looking to cut costs and access global talent. However, local employees may be better for roles requiring in-person collaboration or local expertise. For many, a hybrid approach combining both options offers the best balance.

1. Remote Staff (Filipino Professionals)

Salary and Benefits

Hiring Filipino remote professionals can offer a noticeable financial advantage compared to employing U.S.-based workers. In the United States, the average annual salary is $63,795, with median weekly earnings of $1,192 (approximately $61,984 annually) as of Q4 2024 [4]. While salaries for Filipino professionals vary depending on the role and industry, they typically fall below U.S. compensation levels for similar positions.

The difference is particularly striking in specialized industries like tech, finance, and healthcare, where U.S. salaries tend to be higher than those in fields like education or service [3]. Filipino professionals also sidestep the geographic salary premiums often seen in the U.S. workforce [3]. Additionally, many professionals today prioritize flexibility and comprehensive benefits over higher base salaries, a trend that aligns well with remote work arrangements [3].

On top of lower salaries, businesses can save further through reduced operational costs.

Operational Expenses

Operational costs for remote teams depend on company policies and the local infrastructure. For instance, only 28% of remote employees report their employers cover internet expenses, while 64% say their employers handle hardware costs [6]. In the Philippines, both internet and equipment costs are generally lower than in the U.S. On average, Americans spend up to $8,466 annually on commuting - a cost completely eliminated for remote workers [6]. For companies requiring physical workspaces, coworking spaces in the Philippines are far more affordable than their U.S. counterparts [5]. Interestingly, only 22% of remote workers report their employers cover coworking space memberships [6].

"The key for strategic workspace decision-making today is a flexible approach that takes into consideration employee work styles, how the physical work environment is used, and how the organization is set up to roll with the punches in a continuously evolving business world." - Stacey Messier, GM of New England for CIC [7]

Recruitment and Retention Costs

Remote hiring can also help businesses cut recruitment and onboarding expenses, particularly by addressing high turnover rates in the U.S. workforce [8][9]. While turnover and replacement costs are a significant burden for many U.S. companies, Filipino remote professionals often show stronger retention rates. That said, investing in proper onboarding is still critical. A workplace survey revealed that 94% of employees are more likely to stay with a company that invests in their learning and development [9].

Productivity and Tools

The cost of productivity tools remains the same, regardless of where employees are located. Platforms like Slack, Zoom, and various project management tools incur identical monthly fees whether used by U.S.-based or Filipino remote workers. However, when paired with the lower salary expenses of Filipino professionals, these consistent tool costs can enhance overall cost efficiency for businesses.

Hiring Domestically vs Hiring Overseas - Pros & Cons

2. Local Employees (U.S.-Based)

Hiring employees based in the U.S. comes with a range of financial obligations that extend far beyond just salaries. While remote hiring can save costs, employing U.S.-based staff introduces additional expenses in several key areas.

Salary and Benefits

U.S.-based employees typically earn higher wages, with an average annual salary of $61,984. This figure varies significantly depending on the state - ranging from $46,511 in Mississippi to $87,063 in Maryland[12]. On top of base pay, mandatory contributions like Social Security, Medicare, unemployment insurance, and workers' compensation add an extra 30–40% to salary costs[11][14].

"In 2025, a good salary depends on how far your income stretches where you live. A $90,000 paycheck feels tight in San Francisco but goes much further in cities like Raleigh or Tulsa." [3]

To stay competitive, employers also need to offer supplemental benefits such as retirement plans, healthcare coverage, and paid time off. For instance, as of 2018, 85% of employees received short-term disability coverage, while 94% were covered for long-term disability[10]. These benefits, while essential for attracting and retaining talent, further increase overall costs.

Operational Expenses

For office-based employees, operational costs can add up quickly. These include expenses like rent, utilities, office supplies, and equipment maintenance. Companies operating in high-cost areas, such as metropolitan or coastal regions, often face significantly higher overhead due to elevated tax rates and commercial real estate prices[13].

Recruitment and Retention Costs

Recruiting U.S.-based employees involves considerable expenses that go beyond just salaries and benefits. Recruitment costs have risen 14% since 2019, with onboarding alone averaging $4,100 per new hire[15][16]. Executive roles are particularly costly, with recruitment expenses averaging $28,329 per hire due to agency fees and longer ramp-up times[18].

Replacing an employee is another major expense. For salaried positions, replacement costs typically range from 6 to 9 months' salary, while for executive roles, they can soar to 213% of annual compensation[15][16]. The hidden costs - such as lost productivity, team disruption, and diminished institutional knowledge - can reduce team efficiency by 20–30%[8].

"When all of these professionals are meeting with potential candidates, screening applications, scheduling a few rounds of interviews and making final decisions, it takes away time from accomplishing organizational goals/outcomes, which then certainly ties to ROI." [17]

Productivity and Tools

Although productivity tools and software costs remain consistent, the higher salaries and operational expenses associated with U.S.-based employees drive up the overall cost per productive hour. Additionally, investments in training and the time it takes for employees to reach full productivity further inflate costs. In 2023–2024, companies spent an estimated $98 billion on training alone[14], underscoring the importance of continuous professional development to maintain a competitive edge.

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Pros and Cons

When deciding between hiring remote Filipino staff or local U.S. employees, businesses need to weigh several factors beyond just cost. While cost savings are a significant advantage of remote hiring, other aspects like retention, productivity, and compliance also play a crucial role.

The cost advantages of hiring Filipino professionals are clear. For example, a 10-person team can save $26,400 per month compared to U.S. staffing. To illustrate, a virtual assistant role that costs $4,000 per month in the U.S. can be filled for just $700 in the Philippines - an 82.5% cost reduction.

However, managing remote teams comes with unique challenges. A survey found that 71% of remote employees prefer fully remote work, and 98% would recommend it to others, highlighting its popularity among Filipino professionals [19]. Yet, companies must address potential issues like time zone differences and data security. For instance, 80% of remote employees store sensitive information on personal devices, which can pose risks [21].

Compliance also differs significantly. U.S.-based employees may require adherence to complex multi-state regulations. As Gregory Abrams from Tucker Ellis notes:

"A company with only one physical location in one state nonetheless could be responsible for complying with employment laws across multiple states" [21].

By contrast, Filipino professionals often work as contractors, simplifying compliance requirements.

On the productivity side, Filipino teams report a work-life balance score of 4.92 out of 7. Companies that invest in relationship-building and professional development see a 45% productivity boost [20]. Local employees, while offering immediate cultural alignment and easier collaboration, come with added costs for office space, utilities, and other overheads.

Modern communication tools help bridge the gap for remote teams, but time zone management remains crucial. The Philippines' outsourcing industry is expected to grow by 6% in 2025, reflecting rising confidence in remote Filipino talent [19].

For businesses prioritizing cost savings and access to skilled professionals, Filipino remote staff can be a compelling choice. On the other hand, companies that need in-depth local market knowledge or frequent in-person collaboration may find U.S.-based employees more suitable.

Conclusion

Employing remote professionals from the Philippines can reduce payroll expenses by as much as 70% compared to hiring U.S.-based employees [22]. For businesses struggling with rising labor costs - a reality for 61% of small and medium-sized business owners in the U.S., UK, and Australia - remote hiring presents a practical solution [23].

Consider this: a full-time employee in the U.S. typically costs over $50,000 annually when factoring in salary, benefits, and taxes. In contrast, a similarly skilled professional in the Philippines costs significantly less, saving companies an average of $35,000 per employee each year through remote hiring models [23]. It's no surprise that more than 25,000 companies globally are embracing this approach [23].

However, the decision to hire remotely shouldn’t rest solely on cost savings. While budget considerations are critical, they need to align with your business needs, the nature of the work, and your long-term goals. Remote employees, for example, log about 51 more productive minutes per day than their office-based counterparts, and 76% of employees say flexible work schedules influence their decision to stay with a company [24].

That said, remote hiring isn’t ideal for every scenario. If your business requires frequent in-person collaboration, demands deep local market expertise, or operates in industries with strict compliance regulations, investing in local talent might be worth the added expense. The key lies in tailoring your hiring strategy to meet your operational requirements, rather than focusing solely on cost.

As HR and payroll advisor Anita Lettink aptly points out:

"Location plays an important role when paying people. And there are reasons why employees must always inform their employers where they are working, even if they are 'working from anywhere.'" - Anita Lettink [1]

Many companies find success with a blended approach - combining local and remote talent. For roles that demand physical presence or nuanced local knowledge, local employees are invaluable. Meanwhile, remote professionals can excel in specialized or administrative roles, allowing businesses to optimize costs while maintaining flexibility.

The trend toward remote work is undeniable, with 22.8% of U.S. employees working remotely at least part-time as of March 2025 [2]. Whether you opt for remote, local, or a hybrid workforce, success hinges on setting clear expectations, maintaining strong communication, and equipping your team with the right tools. Ultimately, aligning your hiring strategy with your operational needs will ensure your business thrives in today’s evolving work environment.

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