The most common version of this comparison: a senior engineer in Mexico costs $75/hour through a nearshore agency. A senior engineer in the US costs $190,000 per year in salary. Therefore nearshore saves 60 percent. This is approximately correct and also incomplete in ways that matter for the decision.
Base salary for a senior software engineer in a major US market: $160,000 to $210,000. Add: Benefits — typically 25 to 35 percent of base salary. Recruiting cost: 15 to 20 percent of first-year compensation. Equipment and tooling: $5,000 to $15,000 in year one. Onboarding cost: 3 to 4 months at 50 to 70 percent productivity. Total first-year cost of a US senior engineer hire: $235,000 to $365,000.
Agency rate for a senior engineer in Mexico: $65 to $95/hour. At $75/hour: $150,000/year. At $85/hour: $170,000/year. No recruiting cost. No benefits administration. Replacement within 2 to 4 weeks if the fit is wrong. Onboarding ramp: 4 to 8 weeks at partial productivity rather than 3 to 4 months.
The cost of augmentation is roughly flat over time. The cost of a full-time hire is high in year one and lower in subsequent years. The crossover point: augmentation is more cost-effective for the first 12 to 18 months. Full-time hiring becomes more cost-effective for roles that will last 24 months or more.
Management time: augmented engineers require direct management from your team. Context ramp: 4 to 8 weeks before an augmented engineer is fully productive. Retention risk: good contracts define minimum notice periods and replacement commitments.
Use cost as a constraint, not as the deciding factor. The real questions: how long will this role exist, and how much does institutional knowledge matter?
Axented's team augmentation engagements are structured around clear contracts, defined replacement commitments, and engineers who have been through our vetting process. → axented.com/team-augmentation
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