Every company evaluating engineering options eventually hits the same comparison: do we hire in-house, go nearshore, or go offshore? Most comparisons stop at hourly rates.
Hourly rate is the least important number in this decision.
What actually matters is fully loaded cost including management overhead, realistic time-to-productivity, turnover risk and its downstream cost, and the collaboration tax that comes with time-zone distance.
In-House Engineering
What it costs
Base salary: $130,000-$160,000 for a senior engineer in most US markets. Higher in NYC, SF, and Seattle.
Benefits and employer taxes: 25-30% on top of base. Health insurance, 401k match, payroll taxes, unemployment insurance. Add $32,500-$48,000.
Equity: For early-stage companies, equity grants are a real cost even if not cash. For a senior engineer, a grant of 0.1-0.25% with a 4-year vest is common.
Recruiting: Internal recruiter time or agency fees (15-25% of first-year salary), plus interview time from senior engineers.
Fully loaded annual cost: $180,000-$225,000 per senior engineer.
Per month: $15,000-$18,750.
What people miss
Time to hire: 4-6 months before someone starts writing production code.
Ramp time: Another 60-90 days before full productivity.
Turnover: Attrition restarts recruiting and onboarding costs, often $40,000-$80,000 per departure.
Management overhead: Performance management, career development, and HR process load on internal leaders.
When it makes sense: Core long-term roles, leadership positions, and deeply embedded organizational knowledge.
Offshore Engineering
What it costs
Headline rates: $25-$60/hour depending on country and seniority. A full month of work is roughly $4,000 to $9,600.
What people miss
Collaboration tax: Minimal time-zone overlap can add 1-2 days to decision loops.
Management overhead: More context-setting, longer review cycles, slower issue resolution.
Communication risk: Nuance loss on product decisions handled asynchronously.
Hidden costs: Extra tooling, overlap scheduling constraints, and quality control burden.
Quality variance: Wide talent variance means more vetting and oversight.
Realistic loaded cost: Often closer to $6,000-$14,000/month when operational overhead is included.
When it makes sense: Work that tolerates async cycles and organizations with strong offshore management discipline.
Nearshore Engineering (LATAM)
What it costs
Typical rates: $35-$65/hour depending on seniority and role.
Part time: from $3,200 a month. One senior engineer on one process at a time.
Full time: from $6,400 a month. Build fast across many systems.
Scoped builds: A fixed price after we see the process. The team is PM, Tech Lead, Developer, with AI assisted QA (automated tests, CI, code review).
What you get vs offshore
Real-time collaboration: Strong business-hour overlap with US teams enables same-day decision cycles.
Lower async tax: Standups, scope changes, and architecture questions happen live.
Built in delivery support: Pods include PM, Tech Lead, Developer, with AI assisted QA, which lowers the management load on your team.
Real cost comparison
| Model | Fully loaded monthly cost | Time to productive | Management overhead | Turnover risk |
|---|---|---|---|---|
| US in-house (1 senior engineer) | $15,000-$18,750 | 7-9 months | High | High (expensive) |
| Offshore (1 developer) | $6,000-$14,000 (realistic) | 2-4 weeks | High | Medium |
| Nearshore full time pod | From $6,400 | about 2 weeks | Low (managed) | Low |
For many teams, the nearshore pod comparison versus a single US senior hire is the deciding factor: broader delivery capacity at similar or lower monthly cost.
How to Choose
Choose in-house when:
- You need deep long-term organizational context and leadership ownership.
- Compliance requirements force employee-only or US-based staffing.
Choose offshore when:
- Budget is primary and async collaboration will not break delivery.
- Your team is already strong at managing distributed async workflows.
Choose nearshore when:
- You need delivery velocity without a long recruiting cycle.
- Your product team depends on live sprint collaboration.
- You want managed delivery accountability, not contractor micromanagement.
If you want a model recommendation based on your current roadmap and constraints, book a 20-minute strategy call.
Frequently Asked Questions
Is nearshore development cheaper than hiring in-house?
Usually yes on a fully loaded basis, often by 40-60%, while preserving collaboration speed in US business hours.
What is the practical difference between nearshore and offshore?
The biggest difference is real-time collaboration. Nearshore teams overlap heavily with US schedules; offshore teams often do not.
Is offshore always cheaper in practice?
Not always. Headline rates are lower, but loaded cost often rises after management overhead and cycle-time delays are included.
How fast can nearshore teams start?
Managed nearshore pods can often begin in 10-14 days, far faster than typical US recruiting timelines.