For years, outsourcing and work visas like H-1B and OPT have remained flashpoints in the US job market. American workers and students argue that they are being edged out, not because they lack skills, but because companies can hire cheaper labour elsewhere. This has now been laid out by US edtech founder Hany Girgis who recently shared his views on X.

“This is why jobs keep leaving,” Girgis wrote. “Not because we lack talent. Because offshore labour is 70 percent cheaper.” His post breaks down, in financial terms, why companies increasingly look beyond US borders, especially to India, when hiring tech talent.

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The salary gap

According to him, a typical engineer in the US earns between $110,000 and $160,000 a year. In contrast, an engineer based in India may earn anywhere between $18,000 and $35,000 annually. “That’s a 60 to 85 percent cost reduction on base salary alone,” he pointed out, saying that this gap is impossible for companies to ignore when cutting costs is a priority.

The salary difference, Girgis says, is only the beginning. Once companies account for benefits, healthcare, payroll taxes, office space, regulatory compliance and unemployment insurance, the cost of employing someone in the US rises sharply. By his estimate, the fully loaded cost of a US employee ranges from $150,000 to $220,000 per year. For an offshore employee in India, that figure drops dramatically to around $22,000 to $40,000.

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“That’s 70 to 90 percent cheaper overall,” he wrote.

Role of outsourcing firm

Girgis also explained how large Indian outsourcing firms structure their pricing. When US companies hire through major IT services providers, offshore delivery from India typically costs between $22 and $38 per hour. The US-based equivalent can cost anywhere from $85 to $150 per hour. “Again: 60 to 80 percent cheaper, even after the outsourcer adds its margin,” he said.

According to Girgis, the low cost of offshore labour is not due to a single factor, but a combination of structural advantages. Lower living costs, the absence of US payroll taxes and benefits, reduced compliance burdens, and a large supply of IT professionals all play a role. India’s long-established outsourcing ecosystem further strengthens this cost advantage.

H-1B and OPT dilemma

This is where the debate around work visas becomes more complex. Girgis says that when companies weigh their options, the numbers speak for themselves. Hiring an American worker can cost upwards of $150,000 a year. Hiring offshore in India may cost less than $40,000. Visa-tied workers, such as those on H-1B or OPT, fall somewhere in between.

“They’re cheaper due to FICA savings, mobility constraints, and no job-shopping,” he wrote.

“The math is brutally simple,” he said. If companies can save 70 to 90 percent by going offshore, appeals to loyalty or patriotism are unlikely to change behaviour.

“Twenty-five percent won’t do it,” he added, referring to partial policy measures. His final question cuts to the core of the debate: “If companies save 70 to 90 percent by going offshore, how do we expect any amount of patriotism to stop outsourcing without policy pressure?”

In his view, without stronger policy intervention, the economic logic driving outsourcing will continue to outweigh every other consideration.

Disclaimer: The content in this article is based on a viral social media discussion and is intended for informational and entertainment purposes only. The financial figures and strategies mentioned are personal to the user and have not been independently verified. This story does not constitute financial advice or an endorsement of any specific investment strategy. Readers are advised to consult a SEBI-registered investment advisor before making financial decisions.