Virtual Assistant vs. In-house Employee: A Full Cost Comparison

Key Takeaways

• The True Cost of a U.S. Hire is 30-40% More Than Salary: The biggest mistake in cost comparison is looking only at salary. The "fully loaded" cost of a U.S. employee includes payroll taxes (~15%), benefits (~25%), and other overheads, making the true cost significantly higher than what you see on a pay stub.

• The Bottom Line: Up to 80% Savings. When you compare the fully loaded cost, the savings are staggering. While a typical U.S. employee can have a true annual cost of over $82,000, a comparable virtual assistant from a global talent hub can have a total cost of around $33,000. In many cases, the savings can reach up to 80% depending on the role and location.

• The Contractor Advantage: Eliminating Hidden Costs. The primary reason for this massive saving is that most overseas VAs work as independent contractors. This means you are not responsible for their payroll taxes, health insurance, or retirement benefits, which are the largest hidden costs of a domestic W-2 employee.

• Want an Employee? The EOR Model is Still Cheaper. For businesses that want the stability of a full-time employee without the legal complexity of international hiring, an Employer of Record (EOR) service is the answer. An EOR partner like Globaltize can handle local payroll, benefits, and compliance, giving you a dedicated employee at a fraction of the cost of a U.S. hire.

• Don't Guess: Calculate Your Exact Savings. These numbers are just an example. The exact savings depend on the role, location, and experience level. To see a personalized breakdown for the position you need, use our Payroll Calculator to compare the true costs side-by-side.

When business owners consider hiring their first team member, they often make a critical calculation error. They look at the salary of a potential hire and budget accordingly. But the salary is just the tip of the iceberg. The true, fully loaded cost of a domestic W-2 employee is often 30-40% higher than their base salary, a figure that catches many entrepreneurs by surprise and can wreak havoc on their financial plans. [1]

This is where the strategic advantage of hiring a virtual assistant (VA) from the global talent pool becomes crystal clear. It is not just about a lower base salary; it is about a fundamentally different cost structure that can save your business up to 80% on a fully loaded basis. Understanding this difference is the key to making a smart, scalable hiring decision.

This guide will break down the true, all-in cost of hiring a U.S. employee versus a virtual assistant. We will go beyond the base salary and look at the hidden costs that make up the bulk of your employment expenses. The numbers will speak for themselves.

The Anatomy of a U.S. Hire: Uncovering the Hidden Costs

Let’s take a common scenario: you want to hire an administrative assistant. The average base salary for this role in the U.S. is around $57,500 per year. [2] This is your starting point. But it is far from your final cost.

Here is a breakdown of the additional, mandatory costs you must factor in for a domestic W-2 employee:

• Payroll Taxes (~15%): This is the employer’s share of FICA taxes (Social Security and Medicare), which is 7.65%, plus federal and state unemployment taxes (FUTA and SUTA). This adds approximately $8,625 to your annual cost.

• Benefits (~25%): To be a competitive employer, you need to offer benefits. This includes health insurance, dental, vision, and often a retirement plan contribution. The cost of benefits for a single employee can easily be 25% of their salary, adding another $14,375 to your annual cost.

• State-Specific Taxes (e.g., EDD/SUI in California, ~3%): Many states have their own additional employment taxes. This can add another $1,725 or more.

Let’s do the math:

As you can see, your $57,500 employee actually costs you over $82,000 per year. And this doesn’t even include the “soft” costs of overhead like office space, equipment (computer, desk, phone), software licenses, and office supplies. The true cost is likely even higher.

The Virtual Assistant Advantage: A Radically Different Cost Structure

Now, let’s look at the alternative: hiring a skilled virtual assistant from a global talent hub like Latin America. The vast majority of overseas VAs work as independent contractors. This is a critical distinction that fundamentally changes the cost equation.

Here is a typical breakdown for a comparable administrative assistant from Latin America:

• Annual Contractor Rate: A competitive rate for a skilled, experienced VA in this region might be around $24,576 per year.

• Payroll Taxes: $0. As an independent contractor, the VA is responsible for their own taxes in their home country.

• Benefits: $0. You are not required to provide health insurance or other benefits.

• Overhead: $0. They work from their own home office, using their own equipment.

Even if you partner with a recruitment firm to find, vet, and place this candidate for a one-time fee (e.g., 35% of the annual rate), the numbers are still dramatically in your favor:

The result is a total first-year cost of $33,178, a staggering 60% savings compared to the $82,225 domestic hire. In subsequent years, without the one-time placement fee, your savings increase even further. Depending on the role and the region you hire from (for example, the Philippines can be even more cost-effective), it is not uncommon for businesses to see savings of up to 80%.

The Contractor vs. Employee of Record (EOR) Model

The independent contractor model is the most common and most cost-effective way to hire overseas. It offers maximum flexibility and minimum administrative burden for you as the business owner. You get top-tier talent without the complexity and cost of being a traditional employer.

However, some businesses prefer the stability and structure of a full-time employee relationship. They want their remote hire to have set hours, be fully dedicated to their company, and perhaps even receive local benefits to increase loyalty and retention. In the past, this would have required setting up a legal entity in a foreign country, a complex and expensive undertaking.

Today, there is a much simpler solution: the Employer of Record (EOR) model.

An EOR is a third-party company (like Globaltize) that acts as the legal employer for your remote hire in their home country. The EOR handles:

• Local Payroll: They pay your employee in their local currency, withholding the correct taxes.

• Benefits Administration: They can provide competitive, local benefits packages (like health insurance and retirement plans).

• Compliance: They ensure that you are fully compliant with all local labor laws.

Your remote hire is, for all legal purposes, an employee of the EOR, but they work exclusively for you, on your projects, as a fully integrated member of your team. You get the dedication and stability of a full-time employee without the legal and administrative nightmare of international employment. And even with the EOR’s service fee, the total cost is still significantly lower than hiring a domestic employee.

Don’t Guess: Calculate Your Exact Savings

The numbers in this guide are based on a specific role and region. Your actual savings will depend on the position you are hiring for, the experience level you require, and the country you choose to hire from.

Instead of relying on estimates, it is crucial to do a direct, personalized comparison. This is why we built our Payroll Calculator. In just a few clicks, you can select the role you need, see the average salary in different global talent hubs, and compare the fully loaded cost side-by-side with a U.S. hire. It is the fastest way to see the true, data-backed financial impact that global hiring can have on your business.

The conclusion is clear. When you look beyond the base salary and analyze the fully loaded cost, hiring a virtual assistant is not just a minor cost-saving tactic; it is a transformative financial strategy. It allows you to access world-class talent, build a more scalable team, and reinvest tens of thousands of dollars back into the growth of your business, all while providing a life-changing opportunity to a professional in another part of the world. It is the definition of a win-win.

References

[1] U.S. Small Business Administration. (as cited in multiple HR publications). Costs of Hiring an Employee. [2] Glassdoor. (2025). Administrative Assistant Salary Data.