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 Australian Angle: Why the Math Hits Even Harder Down Under
Sydney and Melbourne founders run into a version of this problem that's arguably sharper than the US case above, for one simple reason: Australia has a much smaller senior engineering talent pool chasing the same roles, and the fully loaded cost of a local hire climbs faster once you add the country's mandatory on-costs.
A senior software engineer in Australia earns an average base of roughly AUD $150,000–$163,000 nationally, with Sydney running hotter — average around AUD $175,000–$181,000, and top earners at Sydney product companies clearing AUD $215,000–$230,000. Melbourne sits a little behind Sydney, typically AUD $138,000–$161,000 for the same seniority band.
On top of base, Australian employers carry on-costs that US employers don't:
Superannuation Guarantee: a mandatory 11.5% of ordinary earnings on top of salary — non-negotiable, and rising incrementally each year.
Payroll tax: state-based, typically 4.75%–6.85% depending on the state and once total headcount payroll crosses each state's threshold (NSW, VIC, and QLD all apply this differently).
Workers' compensation insurance: roughly 1%–2% of payroll, mandatory in every state.
Recruiter fees: Australian tech recruiters typically charge 15%–25% of first-year package, often at the higher end for senior and specialist roles given how thin the local senior pool is.
Add it up and a senior engineer hire in Sydney lands around AUD $210,000–$270,000 fully loaded in year one — a very similar shape to the US number, but drawn from a noticeably smaller local candidate pool, which is exactly why time-to-hire tends to run longer in Australia than in the US. Multiple recent market reports describe the senior contractor pool in Australia as roughly eight times thinner than Europe's, and that scarcity shows up directly in how long a req sits open.
Run the same comparison in AUD terms: two Sydney senior hires cost roughly AUD $420,000–$540,000 fully loaded in year one, including a four-to-six month hiring and ramp window. A three-engineer embedded offshore team, working in AEST-overlapping hours, runs roughly AUD $340,000–$540,000 per year, starting in two to four weeks with no super, no payroll tax, no workers' comp, and no recruiter fee. For an Australian Series A board looking at a tight burn rate and a thin local senior market, that's often the more defensible plan — not because local engineers aren't worth it, but because the calendar rarely cooperates with a four-to-six month hiring runway.
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.
At Ontoborn, we have been the long-term software partner for enterprises, universities, and growing businesses for over a decade. We do not just build and move on. We stay.
If you are looking for a partner — not just a vendor — we would like to talk.
Ontoborn Technologies is a custom software development and maintenance company trusted by enterprises, universities, and growing businesses for over a decade. We build software that lasts — and stay with you after launch.
Ready to talk?
No sales pressure — just an honest conversation about your software.
Talk to Our Team →Ontoborn Technologies — custom software trusted by enterprises, universities, and growing businesses.
Back to All Articles