How to forecast hiring costs by country and build a realistic budget

Hiring in a new location usually starts with a deceptively simple question: what will it actually cost?

Truthfully, that question gets complicated fast. 

You likely compare a few possible markets or try to build a reliable forecast for a specific city. One looks cheaper on salary. Another has stronger talent availability. 

But Finance wants to know what each option will actually cost.

That’s where salary comparisons stop being enough.

To forecast hiring costs as accurately as possible, you need:

• The full cost of employment: Including employer taxes, statutory contributions, benefits, equity schemes, and other market-specific costs, not just base salary.
• Up-to-date local total compensation benchmarks: Especially if you’re hiring in a competitive or fast-growing market where pay can move quickly.

This guide shows you how as we dig into: 

• Benchmarking roles against reliable local compensation data
• Calculating the total employment cost for your planned hires
• Comparing markets and turning the forecast into a clear budget recommendation.

What should you include when forecasting hiring costs in a new market?

Start by estimating the expected cost per hire to forecast hiring costs in a new market accurately, then multiply that by the number of people you plan to hire.

Your cost per hire should include:

• Compensation costs: Base salary, variable pay or bonuses, equity where relevant, and benefits.
• Employment costs: Employer taxes and social contributions, pension requirements, and any other statutory employment costs in that market.
• Additional expansion costs: Relocation packages for established employees you plan to move to a new market and, if you are opening a physical location, office-related costs.

Keep in mind, equity can need particular attention here. 

Many countries have tax-efficient schemes or structures for employee equity, such as EMI in the UK. So you’ll need to understand which approach makes sense locally, as this can materially affect both company and employee costs.

From there, calculate your basic forecast this way:

Expected cost per hire × planned headcount = estimated hiring cost

How to forecast the cost of hiring in a new market in 5 steps

Calculating the total cost of employment by country is less about finding one salary number and more about building a realistic view of the full costs in a new location. 

The steps below take you from defining the roles you expect to hire through to benchmarking local pay to turning the data into a budget recommendation for Finance or leadership: 

Step 1: Define the roles and headcount you plan to hire

Map out exactly who you expect to hire, at what level, where, and when. 

You’ll use these details to benchmark the right salaries, estimate employer costs, and calculate the total cost of your planned hires.

For each phase of your expansion into the new market, specify:

• Roles: The job families or positions you expect to hire.
• Levels: The seniority required for each role (mid-level, senior, or manager).
• Number of hires: How many people you expect to add at each stage.
• Potential locations: The country or locations where those hires will be based.

Here, it’s useful to model headcount in phases rather than as one end-state number. 

You might, for example, start with a small technical team in Spain, then build that out into a much larger local office over the next few years. 

Say, 5 Senior Software Engineers + 2 Engineering Managers initially. Then 12 Software Engineers + 4 Engineering Managers, with additional local hires across functions such as People, Sales, or Operations.

Forecasting each stage separately gives you a clearer view of not just the cost of the first hires, but how your total employment costs will change as the local team scales.

Step 2: Benchmark against local compensation data

Next, understand what your selected roles actually cost in the local market today.

You’ll want to use: 

• Reliable, up-to-date benchmarks: Salary levels can shift quickly as demand for certain skills changes, new employers enter a market, or competition for talent increases. If the underlying compensation data is outdated or based on a poor sample size, your forecast can quickly become unrealistic.
• Local benchmarks where possible: Rather than using benchmarks driven from geographic differentials (which take a salary benchmark from one market and adjust it up or down by a set percentage for another location), use data showing what comparable employers are actually paying for the same role locally. Geographic differentials are often useful when local data isn’t available, but they are still an approximation.

To this end, go to Explore the Market on the left-hand navigation bar in Ravio, then select Compensation Benchmarks to see real-time European tech benchmarks. 

From here, filter by the following to find benchmarks that reflect the roles, location, and type of companies you’re hiring against. 

• Position: Choose the relevant job family and specific role.
• Location: Select the country or city you are hiring in.
• Market: Narrow the data further using a relevant market segment, such as Fintech or <100 headcount.

Then, set the target percentile based on your compensation philosophy, so the benchmark reflects how competitively you intend to pay. For example, at the market median or above it.

And if you’re comparing costs across markets, use the coin icon in the top-right corner to view the benchmarks in either your company currency or the local currency of the market you’re hiring in.

Step 3: Calculate the total employment cost per hire

Once you have the salary benchmark, calculate the total cost per hire – not just salary, but the wider employment costs the business will pay.

Review the wider employment costs that apply in your target hiring market, including:

• Employer taxes and social contributions: Use official government tax, social security, or employment authority websites.
• Mandatory pension or insurance contributions: Check government guidance or the relevant statutory scheme website.
• Statutory benefits and leave costs: Use local employment legislation or official government guidance.
• Variable pay, equity, benefits, or relocation costs: Add these where they form part of the package you expect to offer. You can find them in the same workflow where you find your salary benchmarks in Ravio.

Using official sources matters here because these costs vary by country and can materially change the total cost of a hire.

Step 4: Gather data on hiring rate to gauge talent demand

Current salary benchmarks tell you what talent costs today. 

Pairing them further with insights into how quickly new talent is entering your target market helps you gauge demand and how competitive hiring may become.

For instance, once seen as cheap outsourcing markets, talent in Eastern European countries is becoming increasingly expensive and will continue to do so, per our upcoming Compensation Trends 2027 report data.

Keeping a pulse on hiring trends also helps you sense-check whether the costs you’re forecasting today are likely to remain realistic over time.

So in this step, select Live Market Insights from within Explore the Market this time.

Set your location filter to the new country you’re hiring in, such as the UK.

Then compare or segment the market further by Job function, Industry, Funding stage, or Headcount to make the view more relevant to the companies and talent you’ll be competing with.

This’ll show you the Hiring rate metric, which gives you a 12-month view of the rate at which new talent is joining the market – helping you assess the level of hiring activity in that location.

Step 5: Use the data to set realistic budget expectations for open roles

Finally, to build your budget case for Finance or leadership, combine the total compensation for each role with wider employment costs, including employer taxes, statutory benefits, and any other costs you identified earlier.

Download the benchmarks from the top right corner of your dashboard, and add them to your hiring-cost modelling spreadsheet.

Alternatively, share a benchmark link directly from Ravio using the Share icon at the end of the benchmark row:

This makes it easier for you to align with hiring managers, recruiters, and other stakeholders on the pay data behind your recommendation for a specific role and level. 

Now, in your final recommendation, make the cost difference between the markets you’re considering easy to understand.

For example: 

Hiring the same team of five P3 Software Engineers would cost X in London, Y in Berlin, and Z in Barcelona. The difference is mainly driven by [salary levels/employer costs/other factors], so we recommend a hiring budget of [amount] for [preferred market/planned headcount].

This gives Finance and leadership both the number and the market evidence behind it.

How to evaluate whether a new hiring market makes financial sense

The market with the lowest salaries is not automatically the best place to hire.

A lower salary benchmark can be offset by higher employer costs, a smaller relevant talent pool, or the need to pay further above market to attract the people you need.

When comparing locations, look at:

• Total employment cost: Compare the full cost of each hire, not salary alone.
• Ability to hire at your target percentile: Check whether your planned budget supports the market position you target per your compensation philosophy. 
• Availability of relevant talent: Consider whether there is enough talent at the roles and levels you need to hire.
• Internal pay consistency: Assess whether local pay would create unintended differences with employees doing comparable work in the company.
• Alignment with your location-based compensation philosophy: Check whether the proposed packages fit how your company adjusts pay across different locations.
• Alternative locations: Compare the same planned team across the other markets you’re considering rather than evaluating one location in isolation.

Your hiring-cost forecast should inform your expansion decision, alongside the wider talent and business case – not make that decision on its own.

Forecast hiring costs in a new location with data you can defend

A good forecast gives you more than a budget estimate. 

It gives you a clearer view of how hiring costs compare across markets, what’s driving those differences, and how confident you can be in the data behind your recommendation.

From there, the decision comes down to how those costs sit alongside talent availability, your compensation approach, and the wider business case for expansion.

Ravio can help you keep the compensation side of that decision grounded in real-time benchmarks and hiring trends across the new locations you’re considering.

Book a demo.

FAQs

How do we get reliable salary benchmarks for a market we don’t currently hire in?

For hiring in new locations, use reliable, up-to-date benchmarks from your target hiring market to give you a stronger, data-backed basis for budgeting than unreliable free salary data or geographic differentials from another location. Tools like Ravio give you local compensation benchmarks for forecasting hiring costs, which you can filter by role, level, location, company type, and target percentile to compare against the most relevant slice of the market.

How far ahead should you forecast hiring costs in a new market?

Forecast far enough ahead to cover the phases of your hiring plan, rather than modelling only your first hires. Build separate forecasts for each planned stage of growth, then revisit them as salary levels, hiring demand, headcount plans, and employment costs change.

How can we model different hiring scenarios before committing?

Build separate scenarios by changing the inputs that materially affect cost: headcount, roles, levels, location, and target market percentile. Calculate the total employment cost for each case, then compare the outputs side by side to understand how different hiring plans change the required budget.

How can you keep your new hire forecast aligned with your existing pay bands and compensation philosophy?

Start with the market percentile your compensation philosophy targets, then benchmark each planned role and level against that position. Add employer taxes, statutory benefits, and other employment costs to calculate the total budget required to hire consistently with your existing pay approach.

How do we know whether a cheaper market is actually cheaper once total employment costs are included?

Compare the full employment cost per hire, not salary alone. Add employer taxes, social contributions, pensions, statutory benefits, variable pay, and other required costs to each market’s salary benchmark. A lower salary market can still cost more overall once these additional expenses are included.

How do we make sure we’re comparing like-for-like roles across different hiring markets?

Match roles by job scope and level, not title alone. Use the same job family, seniority, responsibilities, and target percentile across each market comparison. The best compensation benchmarking tools often support this. For example, Ravio maps your job architecture into a consistent job framework, making it easy to compare equivalent roles across locations without relying on job titles alone or manually mapping roles yourself.