The US technology talent market is expensive in ways that only become fully visible when someone adds them 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, 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 and market expansion.
The ful cost of a US software engineer
The average base salary for a senior software engineer in the US varies significantly by geography: $155,000 in Austin, $185,000 in New York, $210,000 in San Francisco, approximately $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): $12,692
Overhead:
- Equipment (laptop, peripherals, software): $4,000–$7,000
- Office space or remote stipend: $3,000–$15,000
- HR administration: $2,000–$5,000
- Management overhead: $5,000–$10,000
Recruiting Cost (amortized):
- Recruiting fees or internal recruiter time: $20,000–$45,000
- Interview time (engineering team): $5,000–$15,000
- Onboarding and ramp time: $10,000–$25,000
- TOTAL TCOE RANGE: $264,000–$351,000 per year
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 (SHRM, 2025). For a senior engineer at $300,000 TCOE, a 4-month ramp period represents approximately $100,000 in cost for partial productivity. First-year total cost reaches $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 work more carefully, and re-explaining context.
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 a role generating $300,000 in annual product development value, a 7-month time-to-fill represents approximately $175,000 in unrealized value.
This opportunity cost is almost never included in hiring cost analyses but it is the most significant financial argument for nearshore alternatives, where Cafeto typically places a qualified senior engineer in 3-6 weeks.
Difference: 7 months (US hiring) vs. 6 weeks (nearshore) = 5.5 months of recovered value = approximately $137,500 per role.
The attrition 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.
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)
- 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: $0 (Cafeto handles this within our service)
- Difference in annual attrition cost: $202,500–$240,000 per year
The full cost of domestic IT hiring, when honestly assembled, is substantially higher than the salary line suggests. For a 10-person US engineering team, total annual impact regularly exceeds $3.5 million. The nearshore alternative is not a quality compromise. It is a talent access decision: securing highly skilled, senior-level professionals from Colombia’s mature engineering ecosystem at a total engagement cost that makes previously unaffordable capabilities viable and directs the investment difference into additional headcount, faster product development, or strategic business expansion. The math is available to every engineering leader who chooses to do 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.
- SHRM. (2025). SHRM HR benchmarking reports 2025.
- HireWithNear. (2026). US companies hiring in Latin America. https://www.hirewithnear.com
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