When a company asks me to compare a nearshore team in Latin America with an offshore team in India or the Philippines, they usually arrive with a spreadsheet that has one row per option and one number per row: the hourly rate. Offshore wins that comparison every time. If the rate told the whole story, nobody would hire in Bogotá or Caracas, and nobody would hire in Austin either.
Offshore usually costs less per hour. Nearshore LatAm usually costs less per finished feature when the work needs same-day conversation, because Bogotá, Lima, Caracas and Mexico City share most or all of a New York working day and Bangalore shares none of it. For well-specified work that nobody needs to discuss, the rate gap decides. For judgment-heavy work, the overlap is worth more.
My company, Softronic, places Latin American engineers inside client teams, so read this knowing I have a side. I’ll make the case with things you can check yourself, and I’ll say where offshore is the better call.
Start with numbers you can verify
Most “cost by region” tables on vendor blogs are estimates with no traceable method, so I’m sticking to figures with a public source.
The US Bureau of Labor Statistics puts the median annual wage for software developers at $135,980 as of May 2025. That’s the wage alone. The BLS Employer Costs for Employee Compensation release for June 2026 says wages and salaries make up 70% of what private employers spend on compensation, with benefits covering the other 30%. Use that ratio as a rough guide and a median US developer costs their employer around $194,000 a year in compensation, before recruiting fees, equipment or anyone’s time managing them. It’s an all-industry average applied to one occupation, so treat it as a ballpark.
My own prices are published. A full-time senior placement costs $6,000 to $8,000 a month for US and international clients, or $72,000 to $96,000 a year, with payroll, local taxes and labor compliance handled on my side. It isn’t a perfect comparison (a median developer against a senior profile), but it shows the size of the gap.
I’m not going to publish per-country salaries for India, Poland or Colombia. The public data I found comes either from self-reported surveys with thin samples per country or from vendors with a stake in the answer. If a vendor quotes you a rate, ask what it includes and what it would cost to replace that person in month four.
What the rate covers, and what it leaves out
The rate gap between offshore and nearshore is real. The rest of the bill arrives later, in places a rate card doesn’t show:
| Cost | In the quoted rate? | Where it shows up | How to measure it |
|---|---|---|---|
| Engineer’s pay | Yes | The invoice | Compare quotes for the same seniority |
| Payroll, local taxes, labor compliance | Depends on the vendor (included in my placements) | The invoice, or a separate fee | Ask what the monthly figure covers |
| Waiting across time zones | No | Tickets that take days instead of hours | Count shared working hours per city (table below) |
| Rework | No | Your senior people reviewing and correcting | Log those hours for a month |
| Turnover | No | Weeks of ramp-up for each replacement, and lost context | Ask how many people the vendor has placed, and for how long |
| Reassignment | No | Your engineer moved to a client who pays more | Ask whether they can reassign without your approval |
| IP chain | No | A gap found during fundraising or a sale | Ask for the engineer-to-vendor assignment clause |
Time zones decide how fast a question gets answered
This is the part of the comparison I’m most sure about, because it’s arithmetic.
India runs on IST, which is UTC+5:30 with no daylight saving time. That puts Bangalore 9.5 hours ahead of New York in summer and 10.5 hours ahead in winter. Follow one ticket:
- A product manager in New York writes a ticket at 4 p.m.
- The engineer in Bangalore picks it up the next morning, which is around midnight in New York.
- By midday in India they hit an ambiguity and post a question. The PM is asleep.
- The PM answers first thing in the morning, after the engineer has gone home. The engineer reads the answer when their next day starts.
That one question cost the engineer a full working day. A ticket with two or three unclear points can lose two or three days, and nobody was slow. The two people who needed to talk were just never awake at the same time.
Now the same ticket with a team in Latin America. Bogotá and Lima (UTC-5), Caracas (UTC-4), Mexico City (UTC-6 since Mexico dropped daylight saving time in 2022) and Buenos Aires (UTC-3) keep the same clock all year. For a company on the US East Coast, most or all of the working day overlaps. The question goes out at 11 a.m. and gets answered at 11:20. Eastern Europe sits in the middle: Warsaw leaves a couple of shared hours in your morning.
Here’s the same arithmetic in one table. New York is on EDT (UTC-4) from March to November and on EST (UTC-5) the rest of the year. The shared-hours columns assume both teams work 9 to 5 local time.
| City | UTC offset | vs New York, Mar–Nov | vs New York, Nov–Mar | Shared hours, Mar–Nov | Shared hours, Nov–Mar |
|---|---|---|---|---|---|
| Bogotá / Lima | UTC-5 | 1 h behind | Same time | 7 | 8 |
| Caracas | UTC-4 | Same time | 1 h ahead | 8 | 7 |
| Mexico City | UTC-6 | 2 h behind | 1 h behind | 6 | 7 |
| Buenos Aires | UTC-3 | 1 h ahead | 2 h ahead | 7 | 6 |
| Warsaw | UTC+1, UTC+2 in summer | 6 h ahead | 6 h ahead | 2 | 2 |
| Bangalore | UTC+5:30 | 9.5 h ahead | 10.5 h ahead | 0 | 0 |
Europe and the US change their clocks on different weekends, so for a few weeks in March and around the end of October the Warsaw gap is five hours. People can shift their day by an hour or two to widen the overlap. Shifting it by ten isn’t something anyone keeps up for long.
How much this matters depends on the kind of work. If your roadmap breaks down into well-specified tickets that one person can finish without asking anyone anything, the gap costs you little. If your engineers spend the day making judgment calls with product, debugging production issues with support, or arguing about architecture, every exchange that crosses the gap costs a day instead of a few minutes. For most growing software companies, that second kind of work is the bulk of it.
Rework is where the cheap hour gets expensive
Rework comes from misunderstanding more often than from lack of skill. I’ve seen how it happens from the receiving end, when a client brings me a system someone else built: an engineer who can’t ask a quick question makes a reasonable guess, builds on top of it, and finds out three days later the guess was wrong. The fix often lands on your most expensive person, because they’re the one awake when the bug shows up.
So when you compare quotes, compare what a finished feature costs, including the hours your own senior people spend reviewing and correcting it. That number will tell you more than any rate card.
Turnover restarts the clock
It takes an engineer weeks to become useful in a codebase they didn’t write. Every time someone leaves, you pay for that ramp-up again, and whatever context they had usually leaves with them.
Some outsourcing models make this worse by design. When a vendor’s margin depends on keeping everyone billable, the engineer you think is dedicated to you can be moved to a client who pays more. So the question I’d put to any vendor first is whether they can reassign your engineer without your approval, because a reassignment costs you the same ramp-up as a resignation. The rest of the questions worth asking are in my checklist for evaluating a nearshore partner, and why I don’t publish a retention percentage is in the post on retention.
Check the IP chain early
If you ever raise money or sell the company, someone will ask whether you own your code, and with any remote team, offshore or nearshore, the weak link is usually whether each engineer assigned their rights to the vendor. Ask for that clause before the first commit and have your lawyer read it (I’m not one); the checklist linked above walks through the whole chain.
When is offshore the right call?
There are situations where I’d tell a client to go offshore:
- The work is well specified and doesn’t need same-day conversation: data labeling, migrations with clear rules, a backlog of tests to write, batch jobs.
- You have a senior person on your side who writes detailed specs and reviews every pull request. In that setup you’re paying for that person’s judgment plus cheaper execution, and it can work well.
- The team owns a separate part of the product with a clean interface to yours and can ship and support it in its own hours.
If your work looks more like the other list (judgment calls, production incidents, constant back-and-forth with product), what you’re buying is overlap, and it’s worth more than the difference in rate.
The one number to collect first
Before you compare quotes, spend a month logging how many hours your senior people spend reviewing, clarifying and fixing work that comes from outside the team. Put that next to the shared-hours table and the rate difference will look different, in one direction or the other. If the answer points to LatAm, here’s how I place engineers.
Updated September 23, 2026: rewritten, and figures I couldn’t back up were removed.