Engineering charge rates in India are about 70% lower than in Australia. In a hybrid model, with leadership and key decisions kept local, a 2,400-hour electro-mechanical program falls from about $370,000 to $178,000. How to make it work.
Key numbers
A product company planned a new electro-mechanical device: a housing, a mechanism, an electronics board and embedded firmware, about 2,400 hours of engineering. Costed entirely with Australian engineers, the budget was around $370,000, more than the company could commit before proving the market. Restructured as a hybrid program, with Australian leadership and Indian delivery of detailed work, the budget fell to about $178,000. The device was developed, and the company kept control of every key decision.
India has one of the world's largest pools of mechanical, electronics and software engineers. For product companies, the difference in full-time-equivalent (FTE) charge rates is striking.
Charge rates compared
On these illustrative rates, a senior mechanical engineer costs about $165 an hour in Australia and $48 in India; an electronics engineer $175 versus $55; a CAD designer $115 versus $30. On average, Indian engineering costs about 70% less per hour than equivalent Australian engineering, around $45 an hour against $151.
What that means for a real program
Most programs do not, and should not, move everything offshore. A hybrid model keeps project leadership, customer contact and key design decisions in Australia, and delivers detailed CAD, electronics, firmware and test work through an Indian team.
In this example, project and design leadership stays in Australia at the same cost, about $62,000. Mechanical and CAD work falls from $118,000 to $38,000, electronics and firmware from $104,000 to $34,000, testing and validation from $46,000 to $18,000, and prototypes from $40,000 to $26,000. The total falls from about $370,000 to $178,000, a 52% reduction, while leadership stays local.
Making it work
The savings only hold if the work is well managed. The programs that succeed share a few practices:
- Australian leadership owns requirements, architecture and design reviews. Accountability for the product never leaves.
- Clear work packages, CAD standards and review gates, so delivered work fits together and meets the standard.
- Overlapping working hours for short daily stand-ups. India's time zone overlaps usefully with Australian afternoons.
- Strong NDAs, controlled access to design data and secure systems.
- Regular design reviews where the local team checks the work against the Design for Manufacture principles that decide production cost.
Combined with offshore tooling, as described in our tooling cost comparison, the savings across a full program can be substantial.
More than cost
The result is not just lower cost. With time zones working in your favour, design work can progress around the clock: a design review in Melbourne in the afternoon becomes updated CAD in India overnight, ready for review the next morning.
The questions to ask
- Which work requires local customer and market knowledge, and which is well-defined detailed engineering?
- Do we have the leadership capacity to define work packages and review deliverables?
- How will we protect intellectual property?
- How will we measure quality, not just cost?
