"We'll just hire engineers" sounds cheaper than working with a partner. Then you add up everything a salary doesn't show, and the picture changes — which is part of why the IT and software outsourcing market sits around $613 billion in 2025.
The salary is the tip of the iceberg
A fully-loaded in-house engineer costs far more than their salary line:
- Recruiting: weeks of leadership time, plus agency fees.
- Ramp-up: months before a new hire is fully productive.
- Benefits, equipment, overhead: routinely 1.25–1.4× base salary.
- Bad-hire risk: the US Department of Labor puts the cost of replacing a bad hire at *at least* 30% of first-year salary; SHRM's range runs from 50% up to 200%.
- Bench risk: when the backlog dips, you still pay full-time salaries.
When in-house wins
- Core, long-horizon product work that is your business.
- Deep domain knowledge you need to own permanently.
- Stable, predictable demand that keeps a team busy for years.
When a partner wins
- You need to move now — a partner can shortlist in days, not the months hiring takes.
- Variable or project-based demand — scale up and down without layoffs.
- Skills you need once — AI, security, a specific platform — without a permanent headcount bet.
- You want someone who has already shipped at your scale to carry the delivery risk.
The honest answer: usually both
The strongest setup we see is a lean in-house core for product ownership, plus a flexible partner for surge capacity and specialist skills. You keep the knowledge that matters and buy speed where you need it.
Compare fully-loaded cost to fully-loaded cost. Salary-vs-rate is not the real comparison.
Weighing the two for a specific role or project? Give us the details and we'll lay out a candid build-vs-partner comparison — headcount math included.
Sources
Written by ivector
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