Nano GCC True Cost vs the Advertised Rate Card

Rate cards are the standard currency of offshore comparison and they are close to useless for the decision most companies are actually making. An hourly or monthly rate tells you the price of an hour. It does not tell you how many hours are needed, how much supervision they consume, how much rework they generate, or whether anything accumulates at the end.

This matters because the differences between offers on those dimensions are far larger than the differences in rate. Two proposals separated by fifteen percent on rate can differ by a factor of two on total cost of the capability, and the cheaper rate is frequently the more expensive option.

This guide covers what a rate card excludes, how to put competing offers on the same basis, and the specific questions that expose the difference before you sign rather than eighteen months afterwards.

What a rate card does not tell you

A rate card compresses a great deal of variation into a single number, and most of what it removes is what determines the eventual cost.

The last row is the one that determines whether the arrangement was a good decision, and it never appears on a rate card at all.

The seniority problem

Job titles are not standardised across the market, and a senior engineer in one proposal may have four years of experience while a senior engineer in another has twelve. Because rate correlates with title rather than with capability, the cheaper senior rate is often a less experienced person.

This matters more than the rate difference. A genuinely senior engineer resolves ambiguity without asking, makes architectural decisions that do not need revisiting, and requires a fraction of the supervision. A nominally senior engineer generates questions, and each question consumes expensive time on your side and adds a day of latency.

The practical protection is to interview to your own standard rather than accepting the label, and to compare rates only after you have confirmed the people behind them are equivalent. Comparing rate cards before that is comparing two different things.

Supervision is the invisible line item

Every offshore arrangement consumes onshore time: reviewing work, answering questions, unblocking, coordinating and managing. This never appears on any invoice because it is your own people s time, and it varies enormously between arrangements.

A team that resolves its own ambiguity might consume a few hours a week of onshore senior time. A team that escalates constantly can consume two days a week of a principal engineer, which is expensive capacity that was supposed to be freed up rather than absorbed.

This is why the cheapest rate frequently produces the highest total cost. The saving on the rate is real and modest; the additional supervision cost is invisible and often larger. Measuring onshore hours consumed per unit of output is the single most useful comparison you can make, and almost nobody makes it.

What accumulates, and what does not

Over a one year horizon, arrangements look broadly similar in cost. Over three to five years they diverge sharply, and the divergence is driven by whether anything accumulates.

In an owned entity, the engineers are your employees, context stays with the company, and the systems they build are owned outright through a short chain of title. In a contracted arrangement, the engineers work for someone else, may be rotated to other clients, and take their accumulated understanding with them when they go. The work product is normally assigned to you, but the knowledge of why it is built that way is not transferable by contract.

This is not an argument that contracting is wrong. It is an argument that a rate card comparison between a contract and an owned team is not a like for like comparison, and treating it as one systematically favours the option that accumulates nothing.

Putting offers on the same basis

A workable comparison needs five adjustments, all of which can be made before signing anything.

Questions that expose the difference

These questions take a few minutes each and reveal more than any amount of rate analysis. The quality and specificity of the answers matters as much as their content.

• Who employs these engineers, and can they be reassigned to another client?
• What decisions can this team make without asking us?
• How many onshore hours per week do you expect this arrangement to require?
• What happens to the knowledge if the engagement ends or the team rotates?
• What is included in the rate, and what is billed separately?
• What is your actual attrition rate on accounts of this size, and who covers the replacement ramp?
• Who owns the IP, through what chain, and is the intercompany or assignment agreement executed?

When a low rate is genuinely the right choice

None of this means the cheapest option is always wrong. For bounded, well specified work with a defined end, where you do not need the capability afterwards and supervision requirements are genuinely low, the rate card comparison is close to sufficient and the lowest credible rate is usually the right answer.

The comparison breaks down when the work is permanent, ambiguous, or expected to produce capability that stays with you. That describes most core product engineering, and it is exactly the case where rate card comparisons are most commonly applied.

Frequently asked questions