Jump to: What An Australian Developer Costs | What Offshoring Costs | Contractor Rules | Privacy And APP 8 | GST And Withholding | Regulated Industries | Choosing A Destination | Engagement Models | FAQ

Australians mostly call it offshoring, and the rest of the world calls the same thing nearshoring. For a company in Sydney or Melbourne, Manila and Kuala Lumpur sit two hours behind, which is closer in working terms than Mexico is to San Francisco. The trouble is that almost every guide on the subject is written for an American buyer, with American salaries, American law and an American idea of what counts as near.

This guide is written for the Australian buyer. It covers what an Australian developer costs in 2026 with the 12% super guarantee and payroll tax, what a senior engineer in the Philippines, Indonesia, Vietnam, Malaysia, India or New Zealand costs against that, what the 2024 Fair Work changes mean for overseas contractors, and why Australian privacy law makes you liable for what your offshore supplier does with personal information. The short version on that last point: unlike a British company sending data to Poland, no destination gives an Australian company a free pass.

The short answer: senior developers in the Philippines and Indonesia cost under A$400 a day at the median, roughly half an Australian contractor and less than half a fully loaded permanent hire at around A$839 a day. Contract an offshore company rather than individuals to stay clear of sham contracting and Fair Work risk, put privacy controls in the contract because APP 8 and section 16C leave you liable for your supplier, and if you are APRA-regulated, consult APRA before offshoring under CPS 230.

What An Australian Developer Actually Costs In 2026

Software engineer salary in Australia

For software engineer salary Australia benchmarks, the most recent government figure, from Jobs and Skills Australia using ABS data from May 2023, puts median full-time earnings for software and applications programmers at A$2,496 a week, about A$129,800 a year. It is dated, and market data since then runs higher: SEEK figures reported in 2026 put the average software engineer at A$105,000 to A$125,000 and senior engineers at A$140,000 to A$170,000.

Super guarantee and Payday Super

On-costs are heavier than in most comparable countries. The superannuation guarantee rose to 12% of ordinary time earnings from 1 July 2025. From 1 July 2026, Payday Super requires employers to pay super with each pay run, within seven business days, rather than quarterly, and the maximum contribution base became an annual A$270,830. It does not change the cost of an employee, but it removes the cash-flow float that quarterly payment used to give, which is one more reason finance teams look harder at headcount.

Payroll tax in NSW and Victoria

Payroll tax applies above state thresholds: in New South Wales, 5.45% on wages above A$1.2 million; in Victoria, 4.85% above A$1 million, with surcharges for the largest employers. Super counts as wages for payroll tax. Add workers compensation premiums on top.

The fully loaded number

Run the arithmetic on a senior developer earning A$155,000 at an NSW employer past the payroll tax threshold. Super adds A$18,600, payroll tax about A$9,460 and workers compensation roughly A$1,500, for a total of about A$184,600. Over 220 working days that is roughly A$839 a day, before recruitment, equipment, office space or management time. At the A$130,000 median, the same calculation gives about A$704 a day. A smaller employer below the payroll tax threshold saves the payroll tax line.

For a like-for-like contract comparison, Lemon.io’s published data puts a senior Australian developer on a remote contract at a median of US$63 an hour, about A$90 an hour or A$720 for an eight-hour day at the 29 September 2026 exchange rate of 0.70.

What Offshoring Actually Costs

The table below uses Lemon.io’s senior developer contract rates where Lemon publishes them, so those rows share one methodology with the Australian figure. Lemon does not publish country rates for Vietnam, Malaysia or India, so those rows use Index.dev’s regional senior full-stack figures instead and should be read as a guide rather than a like-for-like number. All are converted at A$1.4286 per US dollar and shown as an eight-hour day. These are developer rates, not agency rates.

Destination	Senior developer, per day (AUD)	Saving vs A$720 Australian contractor	Time difference from Sydney
Philippines	A343toA457 (median about A$389)	Roughly 37% to 52%	2 hours behind (3 in summer)
Indonesia	A251toA537 (median about A$366)	Roughly 25% to 65%	3 hours behind (4 in summer)
Vietnam and Malaysia (regional figure)	A366toA571	Roughly 21% to 49%	2 to 3 hours behind (3 to 4 in summer)
India (regional figure)	A389toA594	Roughly 18% to 46%	4.5 hours behind (5.5 in summer)
New Zealand	A286toA606 (median about A$400)	Roughly 16% to 60%	2 hours ahead

Two things to take from that. Against an Australian contractor, the saving at developer level is roughly half at the median, and against a fully loaded permanent senior hire at around A$839 a day, it is more than half. Unlike Canada or New Zealand, the Australian cost case for offshoring is strong, because Australian salaries and on-costs are high.

The second is the agency multiple. A supplier that manages the team, runs QA, carries delivery risk and gives you a single contract bills a substantial multiple of the developer rate, commonly one and a half to two times. That still usually leaves a real saving from Australia, but it is the line to interrogate. Ask any prospective supplier what share of the day rate reaches the engineer. A serious partner will answer.

Contractor Rules After Closing Loopholes

Australia changed its employee test in 2024, and the change matters for anyone working with contractors, offshore or not.

The whole of the relationship now counts

From 26 August 2024, section 15AA of the Fair Work Act requires the question of whether someone is an employee to be decided on the real substance, practical reality and true nature of the whole relationship, not just what the contract says. That reverses the contract-first approach the High Court took in 2022. A contractor earning above the contractor high income threshold, A$183,100 from 1 July 2025, can opt out of the new test.

Sham contracting and the reasonable belief test

Sham contracting means presenting what is really employment as an independent contracting arrangement. The defence has changed: an employer now has to show it reasonably believed the worker was a contractor, rather than simply that it did not know and was not reckless. Combined with the whole-of-relationship test, that makes the contractor vs employee question harder to win on paperwork alone.

When you contract a foreign company

When you buy services from a company in Manila or Ho Chi Minh City, the engineers are that company’s workers. You are not paying wages to anyone in Australia, so the Fair Work Act, super guarantee and payroll tax do not naturally reach the arrangement. The super guarantee’s extended definition of employee, which catches individuals paid mainly for their labour, does not apply where the work is contracted through a company. And NSW’s own payroll tax ruling exempts wages for work performed in another country for six months or more.

When it gets harder

The risk is contracting individuals directly and running them like staff. The Fair Work Commission’s decision in Pascua v Doessel Group, upheld by the Full Bench in 2025, is the case every Australian buyer should know. A paralegal in the Philippines, labelled a contractor but working Brisbane hours under the firm’s direction, was found to be an employee of the Australian firm and awarded compensation for unfair dismissal. The Full Bench left open how far the Act reaches work done wholly offshore, which is itself a reason for caution.

The practical lesson is the same as in every market: the engagement model matters more than the destination. A supplier that employs and manages its own people is a clean arrangement. A set of named individuals who answer to your team leads, on your hours, invoicing you personally, is not.

Privacy: You Stay Liable For Your Supplier

This is where the Australian position differs most from the UK or EU one.

How APP 8 works

Under Australian Privacy Principle 8, before disclosing personal information to an overseas recipient, an organisation must take reasonable steps, usually contractual, to ensure the recipient does not breach the APPs. Section 16C then makes the Australian organisation accountable for any breach by that recipient, even if it took reasonable steps. That is a stricter position than in most jurisdictions: the liability follows the data.

There are exceptions, including where the recipient is bound by a substantially similar law or scheme, where the individual gives informed consent, or where the disclosure is required by law. The 2024 Privacy and Other Legislation Amendment Act added a mechanism for the government to prescribe countries and binding schemes with adequate protection, but as far as we can find, none had been prescribed as of September 2026. There is no Australian equivalent of the UK’s adequacy list, so no destination is automatically safe.

Use versus disclosure

One distinction helps. The OAIC’s guidance treats giving information to a contractor that handles it only on your behalf, under tight contractual control, as a “use” rather than a “disclosure”, which takes it outside APP 8. In that case you remain responsible under the other APPs anyway, so the practical upshot is the same: a strong contract, access controls, audit rights and breach notification terms.

Other recent changes

A statutory tort for serious invasions of privacy commenced on 10 June 2025, and from 10 December 2026 privacy policies must explain the use of personal information in substantially automated decisions. The small business exemption for businesses under A$3 million turnover still stands, because the second tranche of reforms has not been enacted, but most companies with an engineering team large enough to offshore are above it.

GST And Withholding

A foreign developer does not charge GST if you give them your ABN and confirm you are registered. The reverse charge under Division 84 of the GST Act then only applies where the purchase is not fully for a creditable purpose, which in practice means businesses making input-taxed supplies, most commonly financial services, or purchases partly for private use. A software business buying offshore development for its own products usually has nothing to account for.

On withholding, Australia’s foreign resident withholding regime covers a short list of prescribed payments, such as entertainment and sports, construction and installation, and casino junkets. Payments for software development performed offshore are not on it. If your contract bundles in a software licence, check whether any part of the payment could be a royalty, which has its own withholding rules.

APRA CPS 230, CPS 234 And Government Work

Two sets of rules deserve a mention because they change the answer for some buyers.

APRA CPS 230

APRA-regulated banks, insurers and super funds are covered by prudential standard CPS 230, in force since 1 July 2025. It requires a register of material service providers, due diligence and specific contract terms, notification to APRA within 20 business days of entering or materially changing a material arrangement, and consultation with APRA before offshoring involving a material service provider. Existing contracts had to comply by the earlier of renewal or 1 July 2026.

CPS 234 and government hosting

CPS 234 adds information security obligations for information assets managed by third parties, including notifying APRA of material incidents within 72 hours.

For government work, the Digital Transformation Agency’s Hosting Certification Framework requires certified hosting for PROTECTED-level data and whole-of-government systems. That affects where data can sit, which in turn limits what an offshore team can be given access to.

Choosing A Destination From Australia

Time zone is favourable across most of the region. Manila and Kuala Lumpur share Perth’s clock and sit two hours behind Sydney, three during Australian daylight saving, which runs from 4 October 2026 to 4 April 2027. Vietnam and Jakarta are an hour further behind. India is four and a half to five and a half hours behind Sydney, which still leaves a solid afternoon overlap. New Zealand is two hours ahead.

If English fluency is critical

The Philippines and Malaysia stand out. On the 2025 EF English Proficiency Index, Malaysia ranks 24th and the Philippines 28th, both in the “high” band. Vietnam ranks 64th in the “moderate” band and Indonesia 80th in the “low” band. As everywhere, technology workers score above national averages, but for teams working directly with your product owners, the Philippines and Malaysia remove most of the friction.

If cost is the deciding factor

Indonesia and the Philippines have the lowest median senior rates in the table, both under A$400 a day. Indonesia’s range is very wide, so the specific supplier matters more than the country.

If you want the deepest talent pool

India, comfortably, with Vietnam the fastest-growing alternative in Southeast Asia. Both have mature outsourcing sectors and suppliers able to scale teams quickly across a wide range of stacks.

If you want the same legal and business culture

New Zealand. It is not much cheaper at the median, but it offers the same working hours, a similar legal system, and a privacy regime the EU regards as adequate. It suits companies that want extra capacity rather than a lower rate.

If you work in Perth

Manila, Kuala Lumpur and Singapore are on the same clock all year, which makes the Philippines and Malaysia especially easy for Western Australian teams.

Engagement Models, And Which Ones Create Problems

Model	What you get	Employment risk	Typical cost position
Outsourced delivery (fixed scope or managed team)	Supplier owns delivery, staffing and management	Lowest, if the supplier really manages its people	Highest day rate, least overhead for you
Employer of Record	Engineer employed in their own country, you direct the work	Low, the engineer is someone’s employee	Developer cost plus a monthly fee per person
Direct contractor	You contract an individual overseas	Highest, as Pascua v Doessel shows	Lowest headline cost, most admin and risk

Most Australian buyers building an offshore team settle on outsourced delivery for defined projects and an Employer of Record for long-term people who sit inside their own team. If you are considering the EOR route, our guide to how a global Employer of Record works and our roundup of global Employer of Record and PEO providers cover the costs and the main vendors.

Frequently Asked Questions

How much does offshoring save an Australian company?

At developer level, senior engineers in the Philippines and Indonesia cost roughly half what an Australian contractor does, and less than half a fully loaded permanent senior hire at around A$839 a day. Agency rates reduce the saving, but from Australia a meaningful gap usually remains.

Am I responsible if my offshore supplier mishandles personal information?

Usually yes. Section 16C of the Privacy Act makes the Australian organisation accountable for an overseas recipient’s breach of the APPs, even if it took reasonable steps, unless an exception applies. No countries have been prescribed as adequate, so contracts and controls do the work.

Can an overseas contractor be treated as my employee?

Yes, if you engage the individual directly and run them like staff. Pascua v Doessel Group found a Philippines-based worker was an employee of the Australian firm. Contracting a company that employs and manages its own people avoids the question.

Do I pay GST on offshore development services?

Not usually. Give the supplier your ABN. The reverse charge applies only where the purchase is not fully for a creditable purpose, such as for businesses with input-taxed supplies.

What is the difference between nearshore and offshore for an Australian company?

Mostly vocabulary. The same destinations, chiefly the Philippines, Vietnam, Malaysia and Indonesia, are called offshore in Australia and nearshore elsewhere because of the short time difference. India is further in hours but still overlaps most of the working day.

Does Payday Super apply to offshore developers?

No. Payday Super changes when you pay super for your Australian employees. Engineers employed by an offshore company are that company’s workers, and the super guarantee does not reach work contracted through a company.

Is outsourcing to the Philippines worth it for software development?

For many Australian companies, yes. The Philippines combines senior rates under A$400 a day at the median, high English proficiency and a two-hour gap to Sydney, the same clock as Perth. The main risks are the engagement model and privacy controls, not the destination.

Does APRA need to know if we offshore development?

If you are APRA-regulated and the supplier is a material service provider, yes. CPS 230 requires you to consult APRA before offshoring involving a material service provider and to notify it of material arrangements.

The Bottom Line

For an Australian company, the cost case for offshoring software development is stronger than in almost any other buyer market, because Australian salaries and on-costs are high and the region’s main destinations sit within two or three hours. Senior engineers in the Philippines and Indonesia cost under A$400 a day at the median against about A$720 for an Australian contractor and around A$839 for a fully loaded permanent hire.

What decides whether it works is less about the country and more about the structure. Contract a company, not a collection of individuals, so the Fair Work question never arises. Put real privacy controls in the contract, because under section 16C the liability stays with you. And interrogate the day rate, because the gap between what a supplier bills and what the engineer is paid is where the saving goes.

If you are drawing up a shortlist, start with our roundups of top nearshore software development companies and top software development companies in Australia, and see our guide to nearshore software development for UK companies for how the same decision looks from Europe.

This guide is general information, not tax or legal advice. Rates were converted at AUD/USD 0.70 on 29 September 2026.