When you hire contract IT talent, the number you pay the staffing firm — the bill rate — is the worker's pay rate plus payroll burden plus the agency's margin. Because vendors quote only the bill rate, the margin (typically 25–75%) is where the money hides.
US bill rates by role (2026)
| Role | Mid | Senior |
|---|---|---|
| Software developer | $72–115 | $108–160 |
| DevOps / Cloud engineer | $95–140 | $130–190 |
| Data engineer | $120–145 | $150–240 |
| Project manager (IT) | $110–165 | $150–190 |
| Security engineer | $115–175 | $150–215 |
Geography
Nearshore (Latin America) runs ~40–60% below US; offshore (India/SE Asia) ~60–75% below. But model landed cost, not headline rate — multiply quoted offshore rates by ~1.4–1.8× for management overhead, onboarding, and communication lag.
The traps
- Markup opacity — specialized/short-term roles hide 50–75% margins.
- Conversion fees of 15–25% of first-year salary during a 6–12 month window.
- Overtime billed at 1.5× the bill rate (not pay rate).
- Misclassified seniority — a "senior" billed at senior rate but staffed mid-level.
The levers that work
- Standardize a role-based rate card and cap markup % in the MSA.
- Run competition across suppliers (via a VMS) to compress rates and margins.
- Stack discounts: 8–15% for 10+ resources, 10–15% for 12-month terms, 8–15% more on a blended-team rate.
- Cap escalators at CPI/3% and negotiate declining conversion fees to $0 after 12–24 months.
Bottom line
Negotiate on the pass-through pay rate and the margin — not the headline bill rate — and standardize a rate card so every requisition prices the same.
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