What belongs in a security outsourcing versus direct-hire TCO comparison?
Comparing a security vendor’s monthly fee per post with one employee’s monthly wage omits both the operating requirement and much of the economic cost.
One post operated during weekday business hours is not equivalent to one post staffed every day for 24 hours, and paid handover time can add coverage hours at every shift change.
Direct hire can require base wages, actual night, overtime, holiday, or other allowances, employer burden, a retirement-benefit planning reserve, recruiting and screening, training, uniforms, equipment, supervision, emergency cover, safety and health work, and internal roster and complaint-management time.
Outsourcing can require transition work, post fees, head-office and site management, patrol and monitoring equipment, legally permitted work within the vendor’s licensed and contracted scope, annual add-ons, non-recoverable VAT, retained internal oversight, and an expected SLA-loss budget.
This calculator applies the same concurrent post count, operating days, operating hours, shifts, and paid handover scope to both options.
It calculates continuous FTE from post-service capacity, rounds that requirement up for the direct-hire cost plan, and accumulates nominal KRW TCO for a horizon from one to 120 months.
Results include monthly and annualized savings, monthly cost per post, cost per actual service hour, break-even vendor and wage rates, a continuous-FTE post-count threshold, horizon sensitivity, and any cumulative-cost crossover.
Korea-specific 2026 boundary
This English experience models facility-security operations in Korea, in KRW, using the 2026 rule year and primary sources checked on August 4, 2026.
The KRW 10,320 hourly minimum wage is a reference warning only.
The calculator does not determine wage inclusion, working-time legality, surveillance or intermittent-work approval, vendor licensing, deployment procedure, worker dispatch, contractor safety duties, VAT exemption or recovery, or whether a multi-family housing task is permitted.
- General-affairs and facilities teams planning security at offices, factories, logistics centers, hospitals, or retail sites
- HR and finance teams comparing an existing direct-hire roster with a vendor transition proposal
- Procurement teams checking whether backup staffing, training, equipment, and supervision are included in a written quote
- Multi-family housing managers who must separate facility security from narrowly permitted ancillary work
- Decision-makers testing how more posts, longer hours, wage changes, and vendor escalation alter a multi-year budget
Normalize the facility-security scope first
A defensible comparison starts with a written scope covering access control, patrols, incident escalation, coordination with the fire or control room, visitor handling, records, and reporting.
If the vendor quote includes absence cover and supervisor visits but the direct-hire plan omits buffer capacity and supervision, the price difference reflects scope as well as operating model.
Conversely, a vendor quote containing additional work cannot be compared with a direct-hire base-security plan unless that work is permitted by law, within the vendor’s licensed scope, included in the contract, and valued on both sides.
Posts and hours
Align concurrent posts, operating days, start and finish times, breaks, and the actual period in which security service must be provided.
Shifts and handover
Align shifts per day, paid overlap per handover, log transfer, key control, and equipment transfer.
Backup and supervision
Align leave, training and vacancy buffers, emergency coverage, the site lead, and the vendor supervisory scope.
Equipment and liability
Align radios, patrol tools, monitoring, uniforms, PPE, insurance, confidentiality, subcontracting, and incident reports.
The starting prices are not market averages
The KRW 15,000,000 monthly fee per post, 12% employer burden, and every other starting amount are editable illustrations used to exercise the formula.
They are not Korean market averages, recommended wages, standard staffing, vacancy probabilities, or SLA-loss rates.
Replace them with current rosters, payroll records, company notices, internal work logs, and written quotes for the same scope.
Prepare the inputs from traceable records
Inputs and source records for a Korean security outsourcing and direct-hire TCO comparison| Area | Inputs | Preferred evidence |
|---|
| Shared operation | Posts, days, operating hours, shifts, handover, capacity, paid hours, and buffer | Roster, post orders, duty logs, access and patrol records, and vacancy history |
| Direct wages | Base wage, paid hours, actual premium allowances, and planned wage increase | Employment agreements, time records, payroll, and the 2026 minimum-wage notice |
| Direct overhead | Employer burden, retirement planning, recruiting, training, equipment, cover, safety, and oversight | Insurance notices, benefit ledgers, purchase records, and internal work logs |
| Vendor charges | Transition, post, management, monitoring, permitted additional work, annual add-ons, escalation, and VAT | Written quote from a licensed vendor with a facility-security scope and price schedule |
| Internal time and loss | Management or retained hours, vacancy loss, and SLA loss | Incident and complaint records, probability-weighted budget, and an internal hourly-cost basis |
The calculator does not invent a vacancy probability, SLA failure probability, or loss amount.
Enter a monthly amount only when the organization has already probability-weighted or budgeted it; otherwise use zero.
Separate post-service capacity from paid hours
The two time inputs have different jobs and must not be merged.
Monthly post-service capacity per FTE is the time one person can be rostered to provide coverage at a post and is the denominator of the continuous-FTE calculation.
Monthly paid hours per FTE are used in the base-wage calculation.
Neither input determines whether the roster, breaks, waiting time, or total working time complies with Korean labor law.
1Average weeks per month
365 ÷ 7 ÷ 12, or approximately 4.345238 weeks.
Base coverage hours
posts × operating hours per day × operating days per week × average weeks per month.
Paid handover hours
posts × shifts per day × handover minutes ÷ 60 × operating days per week × average weeks per month.
Buffered required hours
base coverage plus paid handover, multiplied by one plus the coverage-buffer rate.
Continuous FTE
buffered required hours ÷ monthly post-service capacity per FTE.
Planned direct headcount
continuous FTE rounded up to a whole person.
Monthly base wages
planned headcount × monthly paid hours per FTE × base hourly wage.
The illustrative service-capacity default is 40 hours multiplied by 365 ÷ 7 ÷ 12, approximately 173.8095 hours per month.
The illustrative paid-hours default is 209 hours per month.
Replace both values independently from the actual roster and payroll basis instead of assuming that all paid time can cover a post.
The coverage buffer plans for leave, training, recruiting gaps, and short vacancies; it does not expand the contracted service-hour denominator used for cost per service hour.
How nominal TCO is accumulated
Direct hire
- Planned headcount multiplied by paid hours and base wage
- Entered monthly premium allowances per FTE
- User-entered employer burden on base wages and allowances
- Optional planning reserve equal to one-twelfth of wages and allowances
- Training, uniforms, equipment, supervision, emergency cover, and safety and health budgets
- Internal management time and user-budgeted vacancy loss
- Recruiting and screening cost multiplied by planned headcount at the start
Licensed vendor
- Posts multiplied by the first-year monthly service fee per post
- Management, equipment and monitoring, and legally permitted contracted additional work
- Annual add-ons allocated over 12 months
- Non-recoverable VAT on external vendor charges
- Retained internal hours valued at the internal hourly cost
- User-budgeted SLA loss and the initial transition cost
Direct wage escalation compounds every 12 months on base wages, allowances, and the employer burden and planning reserve linked to those wages.
Training, equipment, supervision, emergency cover, safety, internal management, and vacancy loss remain nominally fixed.
Vendor escalation compounds every 12 months on post fees, management, equipment and monitoring, and permitted additional-work fees.
Transition, annual add-ons, retained internal time, and SLA loss remain nominally fixed.
How non-recoverable VAT is modeled
Enter transition, post, management, equipment, permitted additional work, and annual add-on charges before VAT.
Then enter only the percentage from 0% to 10% that becomes a real cost because it is not exempt or recoverable in the organization’s circumstances.
The VAT amount equals the entered rate multiplied by transition, post, management, equipment and monitoring, permitted additional work, and annual add-ons after their applicable escalation.
Retained internal time and SLA expected loss are not vendor supplies and do not enter this VAT base.
Tax status is not automated
Value-Added Tax Act Article 30 provides the general 10% rate, while Article 38 concerns deductible input tax.
Restriction of Special Taxation Act Article 106 can be relevant to a possible exemption for qualifying multi-family-housing security services.
The calculator does not determine taxability, qualification for an exemption, allocation between taxable and exempt activity, or input tax recovery.
Use zero only when the relevant vendor charges produce no non-recoverable VAT after tax and accounting review.
Worked example using the editable defaults
The illustration uses two posts, seven operating days per week, 24 operating hours per day, three shifts, and 15 paid handover minutes per shift for 36 months.
Monthly base coverage is 1,460 hours and paid handover is 45.625 hours, for 1,505.625 actual service hours.
A 15% buffer produces 1,731.46875 required hours.
Dividing by the illustrative 173.8095 monthly post-service capacity gives 9.961875 continuous FTE, so direct-hire cost uses 10 planned people.
Paid hours remain a separate 209 hours per planned person for base wages.
Thirty-six-month direct-hire and outsourced facility-security TCO in the default illustration| Metric | Direct hire | Outsourcing | Interpretation |
|---|
| 36-month nominal TCO | KRW 1,253,260,416 | KRW 1,118,500,000 | Outsourcing is lower by KRW 134,760,416 |
| Monthly average TCO | KRW 34,812,789 | KRW 31,069,444 | Monthly average saving is KRW 3,743,345 |
| Monthly average per post | KRW 17,406,395 | KRW 15,534,722 | Total divided by two posts and 36 months |
| TCO per service hour | KRW 23,122 | KRW 20,636 | Uses actual coverage and handover, not buffered hours |
With the default 0% non-recoverable VAT input, outsourcing is about 10.75% lower and there is no cumulative-cost reversal within 36 months.
At a 10% non-recoverable VAT input, outsourced VAT cost is KRW 111,130,000 and outsourced TCO becomes KRW 1,229,630,000.
These outputs are formula illustrations, not a claim about a typical Korean security contract.
Interpret the three break-even results carefully
First-year monthly vendor fee per post
The default threshold is approximately KRW 16,871,672 per post per month.
Holding every other input constant, outsourcing is nominally lower below that first-year fee.
The coefficient includes post count, every monthly vendor escalation factor, and one plus the non-recoverable VAT rate.
At a 10% non-recoverable VAT input, the threshold becomes approximately KRW 15,298,364.
Direct-hire base hourly wage
The default threshold is approximately KRW 8,832 per hour, below the 2026 reference minimum wage of KRW 10,320.
A threshold below the legal reference is not a lawful or practical wage recommendation.
It signals that changing only the base wage within the lawful range is insufficient under the current staffing, allowance, overhead, and vendor assumptions.
Post count on a continuous-FTE planning line
The default continuous model has no positive finite threshold and reports outsourcing as lower across the analyzed positive range.
This one indicator deliberately uses continuous FTE to produce a linear planning comparison.
Actual direct hiring rounds headcount up and therefore creates a step-shaped cost curve.
Re-enter one, two, three, or other whole post counts to verify the real rounded-headcount result near any planning boundary.
A practical decision workflow
- Freeze the scope — write post orders, operating hours, shifts, paid handover, reporting, equipment, and backup requirements
- Separate capacity and payroll — derive post-service capacity from the roster and paid hours and allowances from payroll records
- Collect company-specific burden — use actual insurance notices, benefits, training, uniforms, PPE, supervision, safety, and management records
- Request licensed-vendor quotes — require facility-security scope, deployment, training, backup, SLA, equipment, liability, and escalation terms in writing
- Separate supply value and VAT — enter external vendor charges before VAT and only the percentage that becomes non-recoverable cost
- Stress the assumptions — vary capacity, buffer, wage, allowances, vendor fee, and both escalation rates, then review thresholds and horizons
- Document non-cost controls — evaluate licensing, security control, direction and supervision, safety, service quality, privacy, incidents, and exit handover
Korean legal and contract checks for 2026
License and facility-security scope
Security Services Industry Act master serial 268091, effective January 8, 2026, was checked for Articles 2, 4, 7, 7-2, 13, and 18.
Article 2 defines the licensed business and guards employed by a licensed security business; the calculator does not automatically classify a directly hired worker as a statutory security guard.
Check the Article 4 license requirements, Article 7 duties and limits, and Article 7-2 prohibition on outsourcing security work to an unlicensed party and improper involvement in vendor hiring.
Training, roster, and deployment
Enforcement Decree master serial 280451 and Enforcement Rule master serial 264977 were checked with the Act.
For covered general security guards, Enforcement Rule Annex 2 provides a 24-hour induction course and the rule provides two hours of monthly duty training.
Use those figures to check whether a quote omits training or replacement time, not to impose guard-law status automatically on directly hired staff.
Confirm any exemption history, training responsibility, guard roster, deployment notice or permission, and duty-record requirement with the vendor and competent procedure.
Working time, premium pay, and retirement benefits
Labor Standards Act master serial 265959 was checked for Articles 50, 56, and 63, effective October 23, 2025.
Review actual working and waiting time and overtime, holiday, and night-work premiums rather than deriving them from shift count.
A surveillance or intermittent-work exclusion under Article 63 requires the employer’s approval from the Minister of Employment and Labor; a security job title alone is insufficient.
Ministry of Government Legislation interpretation 15-0344 states that the night-work premium still applies to an approved worker,
so approval is not a reason to force the allowance input to zero.
The Act on the Guarantee of Employees’ Retirement Benefits, master serial 284455, Articles 4 and 8, effective July 1, 2026, governs actual service and average-wage settlement.
The calculator’s one-twelfth reserve is a budget device, not statutory severance.
Contractor safety and temporary-agency boundary
Occupational Safety and Health Act master serial 283449 is the current version effective August 1, 2026, as checked on August 4.
Review the principal contractor’s duties under Articles 63 and 64, including applicable safety and health measures, coordination, inspections, and training support.
Separate lawful safety coordination from routine personnel and work direction over vendor employees.
The Act on the Protection, etc. of Temporary Agency Workers, master serial 286257, Article 2, effective May 26, 2026, defines a worker-dispatch structure by work under the user company’s direction and orders.
Have a Korean labor professional review the actual command, reporting, evaluation, and substitution structure.
Multi-family housing ancillary work is a narrow exception
Multi-Family Housing Management Act master serial 284009, Article 65-2, addresses limited management work by security guards deployed by a licensed business, proper remuneration, respect for human rights, and improper instructions.
Enforcement Decree master serial 287261, Article 69-2, effective July 1, 2026, must not be expanded to ordinary commercial sites or every vendor contract.
Enumerated ancillary categories
- Assistance with cleaning and similar beautification work
- Monitoring and organizing the separated disposal of recyclable resources
- Posting notices and placing mail into mailboxes
- Parking management and parcel storage within the scope of preventing danger at major facilities and locations
The calculator does not determine whether an entered additional task falls within this list.
Describe every task in the work order and contract, confirm that it is permitted by law and within the vendor’s licensed scope, and review whether any instruction is improper.
What the calculator deliberately excludes
- Personal protection, escort security, special security, collective-civil-complaint sites, or a standalone machine-monitoring comparison
- Vendor search or recommendation and automated license, qualification, disqualification, training-exemption, or deployment determinations
- Automatic working-day, break, holiday, overtime, night, holiday-premium, or overlapping-premium calculations
- Automatic surveillance or intermittent-work approval analysis
- Individual social-insurance coverage, remuneration bases, caps, workers’ compensation industry rates, or final retirement-benefit settlement
- Legal conclusions on genuine contracting, worker dispatch, safety duties, or permitted multi-family housing work
- Probabilities or loss values for theft, fire, complaints, incidents, or service gaps
- CCTV or access-control specifications, privacy compliance, or a security diagnosis
- VAT taxability, exemption, allocation, or input-tax recovery determinations
- Corporate or income tax, present-value discounting, financing cost, accounting provisions, or market-rate forecasts
Results are nominal planning costs, not Korean legal, labor, tax, accounting, security, or occupational-safety advice and not a warranty that a contract is lawful.
Frequently asked questions
Why are service capacity and paid hours separate?
Post-service capacity is the operating denominator for continuous FTE, while paid hours are the payroll basis for base wages. The illustrative 173.8095 and 209 hours must be replaced independently from the actual roster and payroll.
Is 209 hours the statutory monthly schedule for every security worker?
No. It is an editable payroll illustration. The calculator does not determine actual working time, waiting time, breaks, paid treatment, or the legality of a roster.
Does a security title automatically mean approved surveillance or intermittent work?
No. Labor Standards Act Article 63 requires the employer to obtain the relevant ministerial approval and the actual duties and approval scope must be reviewed. Night-work premiums can still apply.
Is the default 12% employer burden an official combined insurance rate?
No. Coverage, remuneration bases, caps, long-term-care charges, employment insurance, workers’ compensation classification, and benefits vary. Use actual employer notices and records.
Does the one-twelfth reserve calculate statutory severance?
No. It is a planning reserve based on wages and allowances. Actual benefits depend on covered service, average wage, and the retirement plan under the applicable law.
How should VAT be entered?
Enter external vendor charges before VAT, then enter only the non-recoverable rate from 0% to 10%. The calculator does not decide taxation, exemption, or input-tax recovery, including a possible multi-family-housing security-service exemption.
Why can the wage threshold fall below KRW 10,320?
The threshold is an economic equation, not a lawful wage recommendation. A lower value signals that staffing, non-wage costs, or vendor terms must change rather than suggesting a wage below the 2026 reference.
Why can the post-count threshold differ from whole-post results?
That indicator alone uses continuous FTE to create a linear planning line. Actual direct-hire cost rounds headcount up, so enter nearby whole post counts and recalculate.
Can the lower-cost result be used as an automatic recommendation?
No. Verify licensing, legal scope, deployment, training, command structure, contractor safety, backup staffing, SLA, equipment, insurance, confidentiality, subcontracting, escalation, termination, and handover separately.
Primary sources and update anchors
Current status, master serials, and effective dates were checked through Korea’s National Law Information Center OPEN API on August 4, 2026.
The formula uses KRW 10,320 only as the 2026 base-wage reference and caps the non-recoverable VAT input at the 10% general rate.
The 24-hour induction and two-hour monthly duty-training figures are checklist values for covered general security guards, not automatic direct-hire cost or status rules.
- 2026 Minimum Wage Notice, Ministry of Employment and Labor Notice No. 2025-47, effective January 1, 2026
- Security Services Industry Act Articles 2, 4, 7, 7-2, 13, and 18, law ID 000980, master serial 268091
- Security Services Industry Act Enforcement Decree Articles 17 and 18, law ID 002146, master serial 280451
- Security Services Industry Act Enforcement Rule Articles 12 and 13 and Annex 2, law ID 006221, master serial 264977, Annex serial 16611073
- Labor Standards Act Articles 50, 56, and 63, law ID 001872, master serial 265959
- Act on the Guarantee of Employees’ Retirement Benefits, Articles 4 and 8, law ID 009883, master serial 284455
- Occupational Safety and Health Act Articles 63 and 64, law ID 001766, master serial 283449, effective August 1, 2026
- Act on the Protection, etc. of Temporary Agency Workers, Article 2, law ID 000122, master serial 286257
- Multi-Family Housing Management Act Article 65-2, master serial 284009, and Enforcement Decree Article 69-2, master serial 287261
- Value-Added Tax Act Articles 30 and 38, law ID 001571, master serial 276117, effective January 2, 2026
- Restriction of Special Taxation Act Article 106, master serial 280409; possible multi-family-housing security-service exemption is not automated
Recheck the next minimum-wage notice, amended statute versions, company notices, VAT treatment, and final vendor contract before an actual decision.
Replace the illustration with real rosters, payroll, and written quotes
Gather recent coverage hours, paid hours, vacancies, payroll, allowances, employer notices, training, equipment, backup, safety, and internal oversight records, then request quotes for the same licensed facility-security scope.
Total cost, unit cost, rounded headcount, break-even rates, VAT, and horizon sensitivity together provide a stronger decision and negotiation record than one headline monthly price.
When the cost difference is small, give greater weight to licensing, security control, command structure, safety, backup coverage, service quality, liability, and exit handover.