Nearshore vs Offshore, Agency vs Marketplace: How to Choose a Developer Hiring Model

Last updated: November 2026

For one senior engineer on your own payroll, use a specialist agency or run your own outreach; for five or more hires of the same role, an embedded recruiter (RPO) usually costs less. If you don't have an entity where the developer lives, contract hiring (also called staff augmentation) gets someone working fastest, and nearshore beats offshore whenever your team needs real overlap in working hours.

I run a tech recruitment agency, so you'd expect me to say "use an agency". Often that's the wrong answer. This guide compares the six ways companies in Europe and the US hire software developers, with what each one costs, how fast it is, who employs the developer and when not to use it. Where a model isn't ours, I say so.

Key takeaways

• Job posts work for junior and mid-level roles. Senior engineers rarely apply to job posts, so for senior roles you need outreach, from your own team or a partner.
• Freelance marketplaces are fastest for short, well-defined projects, and weakest for long-term team members who need to own a product.
• A specialist agency fits one to four senior hires onto your payroll. You pay a one-time fee when someone is hired, and only then.
• RPO (an embedded recruiter) fits five or more hires, or several months of continuous hiring, because you pay for time, not per hire.
• Contract hiring (staff augmentation) and EOR fit companies without a local entity. The developer works in your team, and someone else employs them.
• A nearshore development company fits when you want to buy a delivered product or team, managed by the vendor, rather than add people to your own team.

The six hiring models compared

Choose by situation

• "We need one senior backend engineer, and we have an entity." Start with your own outreach if you have a recruiter with time. If you don't, use a specialist agency: you only pay if you hire.
• "We're hiring five engineers for the same role this quarter." Embed a recruiter (RPO). Five placement fees usually cost more than a recruiter's hours for the same period.
• "We want to hire in Portugal, Brazil or Poland, but have no company there." Use contract hiring, also called staff augmentation: the partner employs the developer, and they work in your team. If you've already found the person, an Employer of Record (EOR) just handles the employment.
• "We need a feature built in eight weeks, and then we're done." A freelance marketplace or a development company is a better fit than a permanent hire.
• "We want a whole team, and we don't want to manage it." That's a nearshore development company (managed services), not hiring.
• "It's a junior role." Post the job yourself. You don't need an agency for it, including us.

Still not sure? A one-page recruitment plan usually makes the answer obvious, because it forces you to write down the business problem, the must-have skills and the budget.

Staff augmentation vs managed services

The difference is who manages the work.

• Staff augmentation adds people to your team. You decide priorities, run the standups and own the code. The partner handles employment, payroll and replacement. At Remote Crew this is our contract hiring service.
• Managed services (or outsourcing) buys an outcome. The vendor manages the team, and you manage the vendor.

Pick staff augmentation when the engineers need to understand your product deeply and stay for years. Pick managed services for a well-defined project or a function you don't want to run.

Nearshore vs offshore

Nearshore means hiring in countries close to your time zone. Offshore means hiring far away, usually where costs are lowest.

• For US companies, nearshore usually means Latin America. São Paulo and Buenos Aires are 1 to 2 hours ahead of New York, and Bogotá and Mexico City are on US Eastern or Central time, so teams share a full working day.
• For companies in Western and Northern Europe, nearshore usually means Portugal, Spain, Poland, Romania and the Balkans, all within one or two hours.
• Offshore (India, the Philippines, South-East Asia) costs less per hour, but the overlap with Europe or the US is a few hours at most, so the work has to run mostly asynchronously.

Our view: for product engineering, where people need to talk through decisions every day, the overlap is worth more than the hourly saving. For well-specified work that runs asynchronously, offshore can be the right call. See our developer hourly rates by country for what each region costs.

Agency vs freelancer

A freelancer is cheaper to start and easier to stop. An agency hire costs a one-time fee, but you get an employee who builds knowledge of your product over the years.

Use a freelancer when the work has an end date. Use an agency, or your own outreach, when the role is permanent and senior. Our article on freelance vs full-time remote developers goes deeper.

Direct hire vs contract

A direct hire is your employee from day one: you need an entity in their country and you run payroll. A contract hire works in your team while a partner employs them, which is quicker to start and needs no entity.

Many companies start with contract hiring and convert later. At Remote Crew, converting a contract developer to a direct hire is always possible, with a fee that goes down the longer they've worked with you.

Toptal alternatives

Toptal is a freelance marketplace: you get vetted freelancers quickly and pay an hourly rate agreed through the platform. It's a good choice for short, well-scoped work.

If you're looking for alternatives, the right one depends on why:

• You want a long-term team member, not a freelancer: a specialist recruitment agency (you hire the person directly) or contract hiring (a partner employs them for you).
• You want a lower rate for the same freelance model: other freelance marketplaces such as Upwork, Arc or Lemon.io. Compare their pricing pages and their vetting.
• You want to hire many people: an embedded recruiter (RPO) builds your pipeline, and you own the hires.
• You want a managed team: a nearshore development company.

How Remote Crew fits in

We're a developer-first tech recruitment agency based in Portugal. We help companies in Europe and the US hire mid-level and senior engineers from Portugal, Europe and Latin America in three ways: permanent placement, contract hiring (staff augmentation, with an EOR option) and an embedded recruiter (RPO).

We'll tell you what to do, even when it isn't us. Since 2019 we've placed 250+ developers at 70+ companies, and 96% of our permanent hires since 2022 stayed beyond the 90-day guarantee. Prices are on our pricing page.

Not sure which model fits? Book a free call and we'll tell you, even if the answer is a job post.

Frequently asked questions

What is the difference between staff augmentation and managed services?

Staff augmentation adds engineers to your team while a partner employs them; you manage the work. Managed services buys an outcome from a vendor that manages its own team. Choose staff augmentation when the engineers need to know your product deeply.

Is nearshore or offshore better for a startup?

Nearshore, if your engineers need to collaborate with your team every day: shared working hours speed up decisions. Offshore can work for well-specified tasks that run asynchronously, and it usually costs less per hour.

Is it cheaper to use an agency or a freelancer?

A freelancer is cheaper for short work. For a permanent senior role, an agency's one-time fee (at Remote Crew, 15 to 20% of first-year gross pay, paid only if you hire) is often less than a year of freelance margin.

Should I hire developers directly or on contract?

Hire directly if you have an entity in the developer's country and want them long term. Hire on contract if you don't have an entity, need someone to start quickly or want to try the role first; you can convert later.

When is a recruitment agency not worth it?

For junior roles, which usually fill from a job post, and when you're hiring five or more people for the same role, where an embedded recruiter paid by the hour usually costs less.

How fast can I hire a senior software engineer?

With a specialist agency, first candidates usually arrive within days; at Remote Crew, within 48 hours of the briefing. A senior hire usually takes 4 to 6 weeks from briefing to accepted offer, plus the candidate's notice period. See how long it takes to hire a remote developer.

What does an Employer of Record do?

An EOR legally employs someone you've already found, in a country where you don't have an entity, and handles payroll, taxes and contracts. At Remote Crew, EOR costs €399 per person per month plus salary and employer costs.

Can I hire developers in Portugal without a Portuguese company?

Yes. Through contract hiring, we employ the developer in Portugal and they work in your team. When you're ready, we can help you set up your entity and move the team onto your payroll. See how we help companies hire developers.