Every Series A CTO eventually sits down and does this math. Usually around the time the board asks why the Q2 features are running late. The question seems simple: is it cheaper to hire an engineer or work with an offshore development team? The answer is more complicated than a salary comparison — and most CTOs who run this calculation get it wrong, usually by underestimating the true cost of a hire and overestimating the coordination overhead of a well-run external team.
The True Cost of a Senior Engineer Hire at Series A
When a Series A company posts a role for a senior software engineer, the number in the job description is not the number that shows up on the burn rate.
A senior engineer at a US-based Series A company earns $150,000–$190,000 in base salary. Add to that:
Employer payroll taxes: approximately 8% of base salary, or $12,000–$15,000 per year.
Health, dental, and vision insurance: $6,000–$12,000 per year per employee depending on plan and dependent coverage.
Equipment: MacBook Pro, monitors, peripherals — roughly $3,500–$5,000 upfront, amortized over three years.
Recruiting cost: If you use a recruiter (and most Series A companies do for senior technical roles), expect 15–20% of first-year salary as a fee. That's $22,500–$38,000 per hire.
Onboarding and ramp time: A senior engineer at a new company is genuinely productive in month three or four. At $15,000/month fully loaded, that's $30,000–$45,000 in cost before you see full return.
Equity: Stock options are a real cost — they dilute existing shareholders and carry real dollar value.
When you add this up, a senior engineer hire at a Series A company costs between $230,000 and $290,000 fully loaded in year one. That number drops in year two and three as recruiting and ramp costs fall away, but year one is expensive.
The Time Cost Nobody Factors In
The calculation above assumes you found the right person quickly. You usually don't.
The average time to hire a senior software engineer in the US is 45–90 days from job posting to offer acceptance. Then notice periods — typically two to four weeks. Then ramp time.
Best case: you find the right person in 45 days, they start in 60, and they're genuinely productive in month four. That's four months from decision to output.
For a Series A company with Q2 board milestones, four months is often the entire window.
What an Embedded Offshore Team Actually Costs
The number quoted for offshore engineering is often misleading in both directions — either too low (body-shop rates that come with quality problems) or too high (enterprise consulting rates bloated with account management layers).
For a genuinely capable embedded offshore team working in your timezone with strong communication standards and production-grade code quality, expect to pay $8,000–$20,000 per month per engineer equivalent, depending on seniority and engagement structure.
For a three-engineer embedded team working as a sprint-based extension of your existing team, a realistic engagement runs $25,000–$40,000 per month.
That's $300,000–$480,000 per year — comparable to two US senior engineers, but with no recruiting cost, no ramp period, no equity dilution, and a two-to-four week start time rather than four months.
The Comparison
| 2 Senior Engineer Hires | Embedded 3-Engineer Team | |
|---|---|---|
| Year 1 cost | $460,000–$580,000 | $300,000–$480,000 |
| Time to productive output | 4–5 months | 2–4 weeks |
| Recruiting cost | $45,000–$76,000 | None |
| Ramp cost | $60,000–$90,000 | Minimal |
| Equity dilution | Yes | No |
| Flexibility | Low | High |
| Risk if it doesn't work | High (6–12 months sunk) | Low (exit clause) |
The cost differential in year one is meaningful. The time-to-output difference is the more important number for most Series A companies.
When Offshore Doesn't Work
This comparison only holds if the offshore team is actually good. Low-cost arrangements — body shops charging $15–$25/hour — often don't produce production-grade code and require significant oversight from your internal team. The coordination overhead eats the cost savings and more.
The arrangements that don't work: a ticket goes into a system, someone executes it without context, a PR comes back a week later that misses the intent of the requirement, your senior engineer spends two hours reviewing and rewriting. You've added cost, not saved it.
The arrangements that do work: an embedded team in your Slack, attending your standups, with direct access to your lead engineer for questions. Code quality standards set upfront. Documentation a requirement, not an afterthought. The team understands the product, not just the ticket.
The distinction is not about geography. It's about how the engagement is structured.
When to Hire vs When to Use an External Team
Hire internally when:
- •The work is in your core product differentiation and requires deep long-term context
- •You're building the team that will own the product for the next five years
- •You have time — the work is important but not urgent
Use an external team when:
- •You need output in the next one to three months, not four to six
- •The work is well-defined and doesn't require the deepest product context
- •You want to test a new feature before committing to permanent headcount
- •Your board milestones depend on shipping something specific in a fixed window
Most Series A companies need both. The mistake is treating it as either/or.
The Board Question
At some point in your Series B prep, your board will ask about engineering team composition. The question they're really asking is: do you have the capacity to execute against the plan you're showing us?
"We've structured our engineering for this stage — internal team owns core product, we're using an embedded partner for three specific sprint streams to hit Q2 milestones" is a more credible answer than "we're hiring but haven't closed anyone yet."
The CFO on your board will also appreciate the burn rate math. Two senior FTEs at $240K loaded equals $480K per year with a six-month ramp. A three-engineer embedded team at $35K per month equals $420K per year, starting in two weeks, no ramp. The numbers are close. The flexibility is not.
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