The comparison is usually presented as a rate table: $150 an hour in the US, $60 in Latin America, $35 in South and Southeast Asia. That table has decided a great many bad decisions, because the rate is the one variable that does not predict the outcome.

Here is a model that does.

The real cost of in-house

A senior engineer in the US at $180,000 salary costs roughly $250,000 loaded — payroll taxes, benefits, equipment, software, and a share of the recruiting fee. Add the hiring lag: three to five months to fill a senior role, during which the work is not happening at all.

What you buy for that: full context retention, instant availability, and someone whose incentives are aligned with the company rather than a contract. What you cannot buy: elasticity. When the project ends, the salary does not.

In-house wins when the work is permanent, core to the business, and requires deep domain knowledge that takes months to build.

The real cost of nearshore

Latin America and Eastern Europe sit at roughly 40–60% of US loaded cost, with six to nine hours of daily overlap with US business hours depending on the pairing. That overlap is the entire product. It means a question asked at 10am is answered at 10:15am, not tomorrow.

The hidden costs are contractual rather than operational: which country's law governs the agreement, whether IP assignment is valid under that law, and whether you have any practical recourse if it is breached. These are solvable — but only if someone solved them before you signed.

Nearshore wins for most product work: it is the only option that combines meaningful cost reduction with a working feedback loop.

The real cost of offshore

At 20–35% of US cost, the savings are real and the engineering talent is often excellent. The cost is structural: with two to four hours of overlap at best, every clarification takes a day. On a project with fifty open questions — which is every project — that is fifty days of latency you did not budget.

The standard mitigation is heavy written specification, which works, but it converts your flexibility into documentation overhead. That trade is worth making for well-defined, stable scope. It is a bad trade during discovery and early product iteration.

Offshore wins for defined, stable, high-volume work: platform maintenance, test automation, established design systems, second-line support.

The three risks that never appear on an invoice

• Legal recourse. If your contract is governed by a jurisdiction where enforcement is slow or unpredictable, your remedy for a serious breach is functionally nothing. This is the single largest unpriced risk in offshore engagements.
• IP chain of title. It is not enough that your contract assigns IP. Every individual who wrote code must be under an agreement that validly assigns their work upward. Acquirers and investors check this. Many arrangements do not survive the check.
• Continuity. Rotating engineers means context is rebuilt every quarter at your expense. Ask for named people and notice periods, not headcount.

The structure that actually works

The best-performing arrangement we see is not a choice between the three — it is a deliberate split. Strategy, architecture and accountability contracted with a US entity under US law; engineering delivered by a senior distributed team with real timezone overlap. You get enforceable contracts, clean IP, and cost efficiency at the same time.

That structure only works if one party is accountable for the whole. Contracting the strategy from one vendor and the engineering from another moves the integration risk onto you, and you are the least equipped party to carry it.

You are not buying hours. You are buying the number of days between asking a question and shipping the answer.

LaunchWe is built as exactly that bridge: a US entity with professional liability insurance, US-law contracts and IP assigned on day one, delivering with senior engineers across overlapping timezones. If you are modelling this decision right now, we will walk you through the numbers for your case.