The shift to remote and hybrid engineering has permanently changed the cost structure of building software teams. But the conversation is often oversimplified: "remote is cheaper" or "in-person is more productive." The reality is more nuanced — and getting it wrong can cost you significantly.
This post breaks down the actual cost comparison between fully remote, hybrid, and fully onsite engineering teams, so you can make the decision based on data rather than instinct.
What are the key dimensions of the remote vs onsite cost comparison?
The cost comparison between remote and onsite breaks down across five dimensions:
- Salary costs
- Office and overhead costs
- Tooling and equipment costs
- Productivity and output
- Hiring pipeline and talent access
Do remote engineers cost less than onsite engineers?
This is where most organisations get the analysis wrong. Remote work doesn't automatically mean cheaper engineers — it depends entirely on your hiring geography.
Scenario A: Remote-first, UK talent pool
If you go remote-first but continue hiring from the same UK talent pools, your salary costs will largely track London-equivalent rates. Remote companies often pay London rates to attract top talent regardless of where candidates live. Net saving vs onsite: minimal.
Scenario B: Remote-first, geographically distributed
If you use remote work to hire from lower-cost regions — Eastern Europe, LATAM, Southeast Asia — the salary savings are significant. A senior engineer in Poland or Romania costs roughly 40–60% of a London equivalent in base salary terms. At scale, this is transformative.
Scenario C: Hybrid, one or two office locations
Salary costs largely track your office location. The hybrid model doesn't unlock geography-based savings unless you're intentionally mixing HQ-based and distributed hires.
The key question is not "remote vs onsite" but "which geographies does your model unlock?"
How much does office space cost per engineer in London?
London office cost per desk (2025):
- Central London: £8,000–£15,000 per desk per year
- Zone 2/3 fringe: £4,000–£8,000 per desk
- Other major UK cities: £2,500–£5,000 per desk
For a 20-person engineering team in central London, office costs alone run £160,000–£300,000 per year.
Remote team overhead:
- Home office setup stipend: £500–£1,500 per employee (one-time)
- Internet reimbursement: £50–£100 per month
- Coworking memberships (if offered): £150–£400 per person per month
- Annual offsites (1–2 per year): £500–£1,500 per person per event
Total remote overhead per engineer per year: approximately £3,000–£6,000. Compared to £8,000–£15,000 for a London desk, the saving is £5,000–£10,000 per head per year.
What does tooling and equipment cost for remote vs onsite engineers?
| Category | Onsite | Remote | |---|---|---| | Laptop | £1,200–£2,000 | £1,200–£2,000 | | Monitors / peripherals | Shared / office-provided | £300–£600 per person | | Communication tools | Standard | Standard | | Network / security | Centralised, lower per-head | VPN, endpoint security, higher per-head |
Remote teams may spend slightly more on async collaboration tooling and distributed security infrastructure, but the delta is rarely more than £500–£1,000 per engineer per year.
Is remote work more or less productive for software engineers?
The empirical research is mixed. Some studies show productivity improvements for remote workers; others show collaboration degradation over time in fully distributed teams.
Where remote typically performs well:
- Deep, focused, individual work (coding, architecture design, debugging)
- Teams with strong async communication practices
- Engineers who are self-directed and experienced
Where onsite or hybrid typically performs better:
- Early-stage teams establishing culture and working patterns
- Highly collaborative design work and product discovery
- Onboarding junior engineers
The pragmatic conclusion most CTOs reach is that a strong async culture with regular synchronous touchpoints delivers the best of both worlds.
What is the fully-loaded cost comparison between remote and onsite teams?
| Model | Salary | Office Overhead | Fully-Loaded per Engineer/Year | |---|---|---|---| | Fully onsite (London) | Market rate | £8,000–£15,000 | £130,000–£160,000 | | Hybrid (London, 2–3 days) | Market rate | £5,000–£9,000 | £120,000–£150,000 | | Remote-first (UK talent) | Market rate | £3,000–£6,000 | £110,000–£140,000 | | Remote-first (distributed) | 40–60% of UK rate | £3,000–£6,000 | £60,000–£95,000 |
Based on a senior software engineer with £90k UK base.
Which model should I choose for my engineering team?
The right model depends on your stage, culture, and goals:
- Early-stage startup (under 20 engineers): A shared office often builds culture faster than remote-first, and the cost delta is manageable.
- Scaling startup (20–100 engineers): A hybrid model with distributed hiring increasingly makes sense. You get talent access while maintaining culture anchors.
- Later-stage / enterprise: Fully distributed teams can work well with investment in async tooling and regular in-person gatherings.
Whatever model you choose, model the cost explicitly before committing.
Scenario-Planning with TeamCalc
TeamCalc lets you model the cost of your engineering team under different employment structures and locations — comparing a London-based permanent employee vs a remote contractor vs an offshore hire side by side, in real time.