Should You Hire an Engineer, or Outsource? A Full Cost Comparison Across 3 Company Sizes

"Shouldn't we just hire an engineer? It's cheaper long-term, right?" — that was the operations lead of a 40-person trading company, mid-meeting. They had an order system to maintain, a website they wanted to redesign, and a LINE automation the owner kept asking for. An NT$80,000/month offer looked like a bargain, until finance worked out the real annual cost: that NT$80,000 was only about 60% of a NT$1.6-1.7M total. This piece isn't about "which is better." It's a framework that flattens both sides onto one spreadsheet you can copy.

1. Four Places Most People Get the Math Wrong

Myth 1: "Annual cost = monthly salary × 12." Wrong. On top of salary, a Taiwanese employer must cover labor insurance, health insurance and pension. Under 2026 rates, labor insurance (ordinary risk) is 11.5% with the employer bearing 70%, health insurance is 5.17% with the employer bearing 60%, and the pension employer contribution is a fixed 6% — these are the statutory rates published by Taiwan's Bureau of Labor Insurance, not optional. Add year-end bonus, paid leave, equipment and software licenses, and the true cost is roughly salary × 1.35–1.5.

Myth 2: "In-house is cheaper than outsourcing." Only true when you have enough work to fill a full year. An engineer at NT$80K/month costs roughly NT$1.6M/year, i.e. NT$130K–150K per effective working month. If you only have six months of real development need, the other six months are pure waste.

Myth 3: "Hire someone and you're instantly at full speed." There's a ramp gap. Industry data puts ramp-up productivity loss at US$8,000–15,000 in the first quarter; in the Taiwan context, output in the first 2–3 months is typically only 30–50% of normal.

Myth 4: "One person can cover everything." Front-end, back-end, mobile, DevOps and security are distinct skills. Covering two or three is already rare; the rest of the gap still has to be outsourced or filled with another hire.

2. The Core Decision Formula: Demand Saturation × Skill Breadth

• Step 1 | Compute "demand saturation": Over the next 12 months, how many months genuinely have development work? = effective demand months ÷ 12.
• Step 2 | Compute "skill breadth": How many distinct skills do these tasks span?
• Step 3 | Map to a decision: Saturation ≥ 0.8 and skills concentrated in 1–2 areas → hiring wins. Saturation 0.4–0.8, or skills spanning 3+ areas → outsourcing / hybrid wins. Saturation < 0.4 → pure outsourcing; hiring will lose money.

In one line: whether hiring saves money depends not on how high the salary is, but on whether you can keep them busy all twelve months.

3. Three Company Sizes, Three Real-World Estimates

The same engineer cost produces three different conclusions. If firm B insists on hiring, that idle half-year burns roughly NT$800K extra every year.

4. The Hidden-Cost Checklist for In-House (the 40% off the books)

• Statutory employer burden (employer share of labor + health insurance + 6% pension): ~NT$150K–180K/yr.
• Equipment and software licenses: ~NT$60K–100K/yr.
• Recruiting cost: one-time NT$50K–150K; for senior roles an agency can reach 15–25% of first-year salary.
• Management and mentoring: roughly 10–15% of their output.
• Ramp-up loss: 30–50% output in the first 2–3 months.
• Turnover cost: each departure typically eats 2–4 months of capacity.

Add it up and the true annual cost of an NT$80K salary lands at NT$1.5–1.7M — the headline salary is only about 60%.

5. Outsourcing Partner KPI Scorecard

• Skill coverage: can one firm fill the multiple skills you lack?
• Pricing transparency: itemized and comparable (not one lump sum)?
• Deliverable ownership: do source code, accounts and IP clearly belong to you?
• Response SLA: are turnaround times for urgent issues written into the contract?
• Maintainability: does delivered code come with docs and tests?
• Stack fit: mainstream, hand-off-friendly frameworks (Laravel / Flutter etc.)?
• Track record: verifiable work at similar size / industry?
• Communication cadence: a fixed reporting rhythm and a point of contact?
• Exit clause: a clean handover at contract end, no lock-in?
• Scaling flexibility: can they add people or modules as demand grows?

6. ScriptWalker's Four Engagement Models — and the Cases We Turn Down

• Project: clear, one-off delivery (website, MVP). Suits scenario A's sprint.
• Retainer: ongoing maintenance + minor revamps — ideal for scenario B's intermittent demand, converting idle cost into a predictable monthly fee.
• Advisory: you have an in-house team but lack architecture decisions or technical review; we bill by the hour.
• Full outsourcing: hand us the whole digital stack — for companies without a tech team.

Cases we honestly won't take:

• Demand saturation ≥ 0.9 with a single skill — hiring one person is genuinely cheaper for you.
• An "all-you-can-eat, cut the rate in half again" relationship — that only ends in a loss for both sides.
• A lock-in arrangement where all source code is sealed off and you get no delivery rights — that violates our delivery principles.

7. From "Should I Hire?" to "Which Model?" — a 90-Day Playbook

• Weeks 1–2 | Inventory: list the next 12 months of dev items, apply the "saturation × breadth" formula, and get a first read on hire / outsource / hybrid.
• Weeks 3–4 | Estimate: put the true in-house annual cost and the outsourcing quote on one table; compare cost per effective working month.
• Month 2 | Small-scale test: pick a clear, verifiable mini-project and test a partner's quality and communication on a project basis.
• Month 3 | Decide: pick the model based on results; if retainer, write SLA, deliverable ownership and exit clauses into the contract.
• Day-90 review: check actual hours vs estimate and cost vs projection; renew or resize.

8. Decision Self-Check Checklist

• ☐ Have I counted how many of the next 12 months genuinely have dev work?
• ☐ How many skills does my demand span — can one person carry it?
• ☐ Did I compute in-house cost as salary × 1.35–1.5, or just the headline salary?
• ☐ Did I include employer labor/health insurance and pension?
• ☐ Did I include recruiting and ramp-up cost?
• ☐ If the person sits idle for half a year, have I accepted that cost?
• ☐ Did I reserve for turnover / re-hiring cost?
• ☐ Did I demand itemized, transparent outsourcing quotes?
• ☐ Is deliverable ownership (code / accounts / IP) written into the contract?
• ☐ Is the response SLA for urgent issues spelled out?
• ☐ Can I exit cleanly at contract end without lock-in?
• ☐ Have I computed cost per effective working month for both sides?

Frequently Asked Questions

Does an NT$80K/month engineer really cost NT$1.6M a year?

Yes. NT$80K/month, ~NT$1.12M annual salary with year-end bonus, plus employer labor and health insurance and the 6% pension contribution (per the 2026 Bureau of Labor Insurance rates), plus equipment, software, recruiting and management, and the real annual cost usually lands at NT$1.5–1.7M.

Below what saturation is hiring always a bad deal?

Generally below 0.4 (only about five months of real dev demand a year), idle cost overwhelms outsourcing. Between 0.4 and 0.8, a retainer or hybrid is advised; above 0.8 with concentrated skills, hiring clearly wins.

Is a retainer more expensive than hiring?

For intermittent demand, a 40-person firm's maintenance retainer is roughly NT$300K–450K/year — far below an engineer's ~NT$1.6M real annual cost, and without the wasted idle half-year.

Who is the hybrid model (core in-house + outsourced overflow) for?

Companies with continuous demand spanning multiple skills, like scenario C. Keep the most critical, latency-sensitive work in-house and outsource periodic or specialized work.

Will outsourcing lock in my system so I can't switch later?

Not if you write deliverable ownership into the contract, use a mainstream hand-off-friendly stack, and specify exit-handover terms. That's exactly why the KPI scorecard includes "exit clause" and "deliverable ownership."

Do the Math First, Then Decide

You don't need to sign anything first — spend 30 minutes computing your own "demand saturation" and hidden costs, and the answer often surfaces on its own. ScriptWalker offers a free 30-minute consultation; we'll flatten your in-house and outsourcing costs onto one table, and if the conclusion is "you should hire someone," we'll say so plainly.

• Email: [email protected]
• Phone: 0916-224-047
• LINE: @ufv9089p