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 money. This calculation is missing most of the cost on both sides.
A $180,000 base salary senior engineer costs approximately $240,000–$260,000 all-in per year, or $115–125 per working hour.
The all-in cost of a nearshore senior engineer at $80/hour is approximately $85–90/hour or $170,000–180,000 per year assuming full-time equivalent hours.
When the engagement is long-term (2+ years), when the work is core to your product and requires deep institutional knowledge, and when you need someone to grow into leadership.
When you need to move faster than hiring allows, when the need is time-limited, when you need a specific skill set for a specific project, or when you are not sure yet whether the role is permanent.
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