The US technology talent market is expensive in ways that only become fully visible when someone adds them all up. Most engineering leaders know their team’s salaries. Fewer know the full Total Cost of Employment (TCOE) and almost none have calculated the complete impact including recruiting costs, time-to-productivity ramp, benefit overhead, and the opportunity cost of roles that remain unfilled for months.

When these numbers are assembled honestly, they produce a picture that explains and justifies the dramatic shift in US tech company hiring strategy toward nearshore development partnerships. This is not a cost-cutting exercise. It is a capital efficiency exercise: acquiring the same engineering output for significantly less capital, and redirecting the difference into product velocity, market expansion, and new technical capabilities.

This article builds the complete picture, line by line, so you can make the decision with full information.

The full cost of a US software engineer

The average base salary for a senior software engineer in the US varies significantly by geography: approximately $155,000 in Austin, $185,000 in New York, $210,000 in San Francisco, and around $130,000 in mid-market cities (Levels.fyi, 2025; Glassdoor, 2025).

TCOE breakdown for a senior engineer at $165,000 base:

Compensation direct:

• Base salary: $165,000

• FICA employer contribution (7.65%): $12,622

• Federal unemployment (FUTA): $420

Benefits:

• Health insurance, employer share (family plan): $15,000–$22,000

• Dental and vision: $1,500–$2,500

• 401(k) employer match (4%): $6,600

• Life and disability insurance: $1,500–$3,000

• PTO (20 days, valued): $12,692

Overhead:

• Equipment (laptop, peripherals, software licenses): $4,000–$7,000

• Office space or remote work stipend: $3,000–$15,000

• HR administration: $2,000–$5,000

• Management overhead (engineering lead time): $5,000–$10,000

Recruiting cost (amortized over 2-year average tenure):

• Recruiting fees or internal recruiter time: $20,000–$45,000

• Interview time (engineering team at $150/hour): $5,000–$15,000

• Onboarding and ramp time (60–90 day productivity gap): $10,000–$25,000

Total TCOE range: $264,000–$351,000 per year

This number surprises most engineering leaders because it’s never presented as a single figure. The salary is visible; the rest is distributed across HR, finance, facilities, and IT budgets, making it invisible at the point of the hiring decision.

Reference: Levels.fyi. (2025). Software engineering compensation data. https://www.levels.fyi

The time-to-productivity cost

Senior engineers reaching full productivity in a new role requires 3–6 months of ramp time (SHRM, 2025). This is the period during which the engineer is learning systems, building context, and delivering partial output relative to their eventual contribution.

For a senior engineer at $300,000 TCOE, a 4-month ramp period represents approximately $100,000 in cost for sub-capacity productivity. The first-year total cost rises to $350,000–$450,000.

This also excludes the disruption cost to the existing team: senior engineers who spend time onboarding the new hire, reviewing their early-stage code more carefully, and re-explaining architectural context that the new hire could not have known.

The ramp cost is not unique to US-based hiring. But combined with the base TCOE premium, it creates a first-year cost that few companies would accept if they saw it on a single invoice.

Reference: SHRM. (2025). SHRM HR benchmarking reports 2025.

The time-to-hire opportunity cost

The average time-to-fill for a senior software engineering role in the US is 6–9 months (LinkedIn Talent Insights, 2025). For specialized roles AI Integration Engineers, senior DevOps architects, QA automation specialists it can exceed 12 months.

For a role generating $300,000 in annual product development value, a 7-month time-to-fill represents approximately $175,000 in unrealized value. This is the product not built, the feature not shipped, the customer need not addressed during the period the role remained open.

Through Cafeto’s nearshore model, a qualified senior engineer in Colombia or Mexico is typically placed within 3–6 weeks. The difference: 7 months (US) vs. 6 weeks (nearshore) = approximately 5.5 months of recovered value per role.

For a company filling three senior roles simultaneously, this time-to-hire advantage represents $275,000–$400,000 in recovered product velocity per year before any salary savings are counted.

Reference: LinkedIn Economic Graph. (2025). LinkedIn talent insights: Software engineering hiring trends 2025.

The atrition multipler

US tech industry voluntary attrition averages 13–18% annually (Deloitte, 2025; LinkedIn Economic Graph, 2025). For a 10-person engineering team, this means replacing 1–2 engineers per year every year.

Annual attrition cost for a 10-person US team at 15% attrition:

• 1.5 replacements per year

• Recruiting cost per replacement: $35,000–$60,000

• Ramp cost per replacement: $100,000 (4-month ramp at $300K TCOE)

• Total attrition cost: $202,500–$240,000 per year

For a comparable 10-person Cafeto nearshore team at 7% attrition:

• 0.7 replacements per year

• Recruiting cost: Included in Cafeto’s service

• Annual attrition cost difference: $140,000–$175,000 in Cafeto’s favor

Over a 3-year engagement, the attrition differential alone represents $420,000–$525,000 in avoided cost entirely separate from the TCOE savings.

What smart companies are doing instead

The companies that have done this math are restructuring their talent strategy in a consistent direction: a core US team of leadership and product management, paired with a nearshore Colombia and Mexico team that provides engineering execution.

The capital freed by this model is not being pocketed. It is being deployed:

SCALE FASTER: The savings per nearshore engineer ($85,000–$165,000 per year) fund additional engineers. The team of five becomes a team of seven for the same total budget.

BUILD PREVIOUSLY UNAFFORDABLE CAPABILITIES: AI integration practices, dedicated QA automation teams, Product Discovery functions these capabilities are often cut from domestic hiring budgets. Nearshore economics make them viable.

INVEST IN PRODUCT VELOCITY: McKinsey (2025) reports that companies achieving 10% faster time to product-market fit generate, on average, 30% higher revenue over a five-year horizon. Nearshore Colombia with the same time zone as the US East Coast provides the real-time collaboration required for this velocity.

Conclusion

The full cost of domestic IT hiring, honestly assembled, is substantially higher than any single salary line suggests. For a 10-person US engineering team, total annual impact regularly exceeds $3 million. The nearshore alternative is not a quality compromise it is a talent access decision that secures senior Colombian and Mexican engineers at a total engagement cost that makes previously unaffordable capabilities viable, and directs the capital difference into the product investment that drives competitive advantage.

The math is available to every engineering leader who chooses to run it.

Bibliography

• Deloitte. (2025). Human capital trends report 2025. Deloitte Insights.

• Glassdoor. (2025). Software engineer salary data 2025. https://www.glassdoor.com

• Levels.fyi. (2025). Software engineering total compensation database. https://www.levels.fyi

• LinkedIn Economic Graph. (2025). LinkedIn talent insights: Software engineering hiring trends 2025.

• McKinsey & Company. (2025). The economic potential of generative AI. McKinsey Global Institute.

• SHRM. (2025). SHRM HR benchmarking reports 2025.

• HireWithNear. (2026). US companies hiring in Latin America. https://www.hirewithnear.com

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