Service Model Comparison
Nearshore contractors vs full-time employees: which is better for software development?
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For nearshore software development, the choice between contractors and employees depends on your situation.
Nearshore Contractors (via Staff Aug)
•No local entity required
•Flexible scaling
•Provider handles compliance
•Monthly rate, no benefits overhead
•Easier to end engagement
Direct Employees (via EOR or Entity)
•More control over employment
•Can offer equity
•Higher commitment signal
•Significant compliance burden
•Harder to terminate
Cost comparison (LATAM senior developer):
| Model | Monthly Cost | Setup Cost |
|---|---|---|
| Contractor | $7,000-9,000 | None |
| EOR Employee | $9,000-14,000 | Minimal |
| Own Entity | $6,000-8,000 | $20-50k + ongoing |
When contractors make sense:
•First 1-3 years of international hiring
•Uncertain long-term needs
•No local entity
•Want flexibility
•Testing the waters
When employees make sense:
•5+ year commitment
•Core team members
•Need to offer equity
•Have/will create local entity
•Regulatory requirements
Common path:
1.Start with contractors (test fit, no commitment)
2.Convert top performers after 18-24 months
3.Establish entity once you have 10+ people
BEON.tech offers contractor-based staff augmentation with contract-to-hire options for companies wanting to eventually employ directly.
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