The question everyone wants answered.
Well, it isn’t that simple.
In order to get a full answer, you must look into each step of the process – from recruitment, through the guidelines, and all the way to the (hopefully) successful harvest of talent.
You want to do this just right from the get-go.
Why?
Because unforeseen expenses, productivity loss and other onboarding hurdles will be lurking every step of the way.
So:
How Much Does Software Developers Hiring Cost?
There are many aspects that must be dissected.
Depending on which option you choose to go with, the expenses vary. Let’s check them out:
Recruitment Agency Fees
Imagine this:
You have decided you want a recruitment agency, and you have a team that:
- is responsible for all the paperwork
- conducts the interviews
- explains the job
That’s a time-efficient option because it allows you to direct your attention elsewhere, saving time and effort in the process.
Are there any setbacks?
Sure, there are. With the rapidly changing landscape, problems arise constantly. They are an unavoidable part of the process and must be considered.
Here are the most common ones:
- the boarding process
- the fine lines
- the dynamic environment
- the fees charged
Depending on how many resources there are to be spent and spared, these unnoticeable pitfalls may well cost you an arm and a leg.
The average recruitment fees amount to around 25% of the annual salary of the employee in the USA and a somewhat lower 22% when the UK is concerned.
Other Expenses
What about the aspects almost no one thinks of?
There are other expenditures which are bound to come to light.
For example:
- background check – some companies have it as a requirement during their recruitment process.
- training – it would be impossible to deliver value in the long run without it.
- health insurance – there is no need to explain that one.
- equipment – it is necessary if the employer cares about efficiency and quality.
- the severance package – if the company decides to lay off their candidate, they must compensate them.
- employer branding – it is essential for attracting a high-quality workforce.
- coffee in the break room – it isn’t as costly, but it sure does make a difference.
In the following chart you’ll see the overall cost per hire for the USA and the UK, as well as how it is broken down into different parts. Note that the numbers are in USD and are approximate.
What is striking:
The overall recruitment cost in the USA is approximately half less than the one in the UK, with a staggering difference of almost $30 000. Outsourcing costs may be approximate in numbers for both countries. However, if we look at the overhead costs, the UK allocates nearly $30 000, which is almost three times more than in the US.
Salaries of Developers in 2024
The research done here is immense.
Today’s work landscape is rapidly shifting, and it’s nearly impossible to know what is going to happen next.
The annual income of developers has gone through its fair share of changes on a global scale.
Let’s look at the USA and the UK, for instance. It is interesting that while the UK spends almost double the money on recruiting, we see a different pattern with annual salaries. Depending on the position, the salary may be almost three times as low as the one in the USA (the position of a QA analyst).
In short, the USA “invests” more in the long run, while the UK puts the focus on having a stronger start.
Others Possible Risky Scenarios
Just like with every other process, there are many things to consider when hiring software developers.
For example:
Not Fitting In
People have their own mindsets and values.
Not everyone is the same.
There is a risk of someone not being able to adjust in a cultural sense because of their background.
There may be significant differences in:
- age
- gender
- fluency in the working language
This could make spending daily time with teammates less enjoyable or create a tense atmosphere between the people.
However:
It is all part of the risk management process.
Teams may have personal diversities. This would help in terms of having different points of view when brainstorming. It may become a challenge when it comes to the work process itself, though.
Loss of Productivity
Productivity is the effectiveness of productive effort, as measured in terms of the rate of output per unit of input.
Which means that candidates have all the following:
- have passed through the interviewing
- are well-suited for the role
- have all the necessary stacks
- are high-skilled
And yet, the workflow is slow.
We are talking about the natural initial loss of productivity – an aspect of work that’s rather overlooked when considering the eventual hiring expenses.
Surprisingly, the average productivity of a new employee is no more than 25% during the first month, so consequently the productivity cost amounts to the staggering 75%.
This is the risk factor each firm encounters, and it is crucial for employers to know it shouldn’t be overshadowed by other larger expenses.
Time Management
The correct distribution of time is valuable when:
- recruiting people
- dealing with everyday challenges
- assessing the amount of time needed for each task
- making sure no one gets overwhelmed unexpectedly
The list doesn’t end there.
The recruitment process is no different. It takes a lot of time, and it requires a significant effort if you aim for efficiency.
Things like a limited local talent pool are just one of the many hidden pitfalls.
Studies show that on average it may take 2-6 weeks to hire a candidate from beginning to end, with senior roles taking about 20% more time to fill.
Does this sound impossible to you?
We at Expert Allies can make all your worries go away.
Contact us now and have the first consultation for free!
To Sum Up
There isn’t a magical formula for the exact cost of hiring software developers.
It depends on many factors and circumstances.
One thing that should be highlighted – staying on top of the process to avoid unpleasant surprises that will set you back a lot.
One solution – hiring an outsourcing company (yes, we believe it is that easy). It works as a clever shortcut to skip some of the decision-making regarding recruiting and mitigates most of the risk involved.
One alternative – making use of remote dedicated development teams for greater scalability. In doing so, you only use the talent you need for the time you need it.
Don’t wait around for your luck to change when it comes to people employment, make it work for you today.
FAQ
What expenses are there when hiring a software developer?
Hiring a software developer involves costs such as recruitment agency fees (25% in the USA, 22% in the UK), background checks, training, health insurance, equipment, and severance packages. Additional expenses include employer branding and amenities. Overall, recruitment costs are about half in the USA compared to the UK.
What are the risks?
Hiring software developers comes with risks such as poor cultural fit, leading to team tension, and a significant initial loss of productivity, averaging only 25% in the first month. Additionally, the recruitment process is time-consuming, often taking 2-6 weeks, with senior roles taking even longer.
Are salaries better in the UK rather than in the US?
Salaries for software developers are higher in the USA than in the UK. Although the UK spends more on recruiting, US developers earn significantly more, with some positions earning almost three times as much. The USA invests more in long-term salaries, while the UK focuses on initial recruitment costs.