The single biggest reason "offshore was cheaper on paper but more expensive in practice" is not currency swings or hidden taxes — it's middlemen. A meaningful share of India-facing vendor relationships involve at least one layer of subcontracting between the company paying the invoice and the engineer actually doing the work, and every layer takes a cut before the developer ever sees it.
How the daisy chain actually works
A common pattern: a foreign company signs with "Vendor A," who looks like a legitimate India-based development firm. In reality, Vendor A doesn't employ the engineers on your project — it resells capacity from Vendor B, who may itself be subcontracting from a smaller shop or a staffing agency. Each layer adds a 15-30% margin on top of what the previous layer charged, and by the time the invoice reaches you, you can be paying 40-50% above what a direct-hire arrangement with the same engineer would cost — with no visibility into any of it.
A second, subtler version: bench-loaded rate cards. A vendor's blended rate quietly bakes in the cost of engineers currently sitting idle "on the bench" between projects, spreading that overhead across every active client's invoice instead of eating it themselves.
The tells that you're in a subcontracting chain
- The vendor is reluctant to name the specific engineers assigned to your project, or to let you see their employment contracts.
- There's no option to visit the physical office where your team actually sits.
- Timesheets or attendance records are vague on which entity actually employs the people billing your account.
- The rate card looks like a single flat number regardless of role, seniority, or actual market rate for that skill in that city.
The street-smart move
Ask directly, before signing anything: are these engineers your direct employees, on your own payroll, sitting in your own office? A vendor with nothing to hide will show you the office, name the engineers, and let you see how the rate breaks down. A vendor running a subcontracting chain will get vague, redirect, or quote you a "we can't disclose vendor relationships for confidentiality reasons" line that should be a immediate red flag, not a reassurance.
At AllDomainSoft, every engineer on a client engagement is our direct employee, working from our own Gurgaon office, with no subcontracting layer between what you pay and what the engineer earns. That's not a marketing line — it's the difference between a rate card you can actually audit and one where the real cost of your team is a mystery three layers deep. If a current vendor won't tell you plainly who employs your engineers, that's worth a second look before your next renewal.
