Most nearshore budgets are built from one number — the monthly rate — and then miss by ten percent, which is exactly enough to make someone uncomfortable in month four. The rate is not wrong; it is just not the whole budget. Here is the rest of it.
Start with the fee line
A squad of three at our published rates — one tech lead, two senior engineers — is $6,400 + $4,900 + $4,900 = $16,200 a month, or $194,400 for twelve months. Two seniors alone are $9,800 a month, $117,600 a year. Those figures are flat and all-inclusive: no recruiting fee, no payroll, no benefits administration. Pricing has the per-level numbers and the calculator does the arithmetic for your mix.
That line is the easy one because it is contractual and it does not move. What follows is the part that is real but not on any invoice.
The three lines teams forget
1. The ramp month
A senior engineer joining an undocumented code base produces partial output for somewhere between two and six weeks, depending on how much of your system is written down. You pay the full rate during that period, and you should — reading code is the work. But if your plan assumes twelve months of full velocity, you have quietly over-committed by roughly one month of capacity per hire.
Budget it honestly: eleven productive months per engineer in year one, twelve after that. The number that shrinks the ramp is not the engineer's; it is yours — a README that actually runs, an owner who answers questions the same day, and access granted before day one rather than during week two. The onboarding guide covers the checklist that turns six weeks into two.
2. Seats and access
Every engineer needs the same seats an employee needs, and they are usually forgotten because they are small individually: source control, CI minutes, the observability tool, the design tool, the project tracker, a password manager seat, whatever your SSO charges per user. For a typical mid-size stack this runs on the order of $150 to $400 per person per month depending on how many paid tools you run — call it $2,000 to $5,000 a year per engineer.
It is not a large number. It is a number that arrives as a surprise when procurement asks why the tooling bill moved, which is a worse conversation than the one you could have had in advance.
3. The replacement buffer
Somebody will not work out, or will leave, or your roadmap will change under them. A sensible plan holds one month of one seat as a buffer — around $4,900 for a senior — to cover the overlap when a seat turns over. With a free replacement in the first thirty days, an early miss costs you the calendar rather than the money; a miss in month seven costs both. The piece on replacements covers how to see it coming in week two instead of month three.
Putting it together
| Line | Two seniors | Lead + two seniors |
|---|---|---|
| Monthly fees × 12 | $117,600 | $194,400 |
| Seats and tooling | ~$6,000 | ~$9,000 |
| Replacement buffer (1 seat, 1 month) | $4,900 | $4,900 |
| First-year plan | ~$128,500 | ~$208,300 |
| Capacity assumed | 22 productive months | 33 productive months |
Seats and buffer are estimates for a typical stack, not quotes; the fee line is the published rate. The point of writing them down is not precision — it is that the plan stops pretending they are zero.
What is genuinely not in this budget
- Recruiting fees. There are none. An agency retainer or a 20 percent placement fee on a $160,000 local hire would add roughly $32,000 to the equivalent domestic plan.
- Payroll taxes and benefits. Engineers are contracted by the studio, not by you. No U.S. payroll line, no benefits enrolment, no Brazilian entity.
- Severance exposure. Month-to-month with thirty days notice; the notice period is the whole exit cost.
- Currency risk. The rate is in dollars and does not move with the real.
Comparing it to the domestic plan honestly
The fair comparison is loaded cost against loaded cost. A senior software engineer in the United States has a median annual wage of $135,980 according to the Bureau of Labor Statistics, and the loaded figure — payroll tax, benefits, equipment, the employer's share of everything — typically runs well above that. Add a recruiting fee in year one and a six-to-twelve-week search during which the work is not happening at all.
Against that, $58,800 a year for a dedicated senior is a large gap, and it is the gap that makes the model work. But the honest framing is not "one third of the cost" — it is "a materially lower loaded cost, a shorter time to start, and an exit that costs thirty days." The rate index shows the methodology behind every figure, including which parts are official and which are our estimate.
The comparison that actually trips people up
Teams rarely compare nearshore against a domestic hire — that arithmetic is obvious. They compare it against a freelancer at $45 an hour, and that comparison is the one that misleads, because the two are not the same product.
A freelancer at $45 an hour for 160 hours is $7,200 a month, which looks worse than $4,900 until you notice that the freelancer is usually part-time, shared across clients, and has no replacement guarantee. The number that matters is not the hourly rate; it is the cost per unit of dedicated, continuous capacity, plus what it costs you when that capacity disappears with a week's notice.
Where a freelancer genuinely wins is a bounded piece of work with a clear finish: a migration, an integration, a design system. Where a dedicated engagement wins is anything with a roadmap attached, where context compounds and losing the person costs more than the rate ever did. Budget for the one you actually need rather than the one with the smaller headline number.
A note on how the money is invoiced
One invoice per engineer per month, in advance, due on the fifth. Partial first and last months are prorated by calendar day, so a start on the twentieth costs you twelve days and not a full month. If your finance team wants the paperwork side before the first payment, the piece on W-8BEN-E and 1099s covers what they will ask for.
Build the plan with eleven productive months, the seats line, and a one-seat buffer. That budget survives contact with month four, which is more than most of them do.