Today’s tech environment is getting increasingly competitive, in order to succeed in your field of expertise, you need to have people you can trust and rely on. Not just that, but you need those people to be proactive, to be capable of making decisions, and be adaptive team-players.
The importance of recruiting the right people is sometimes overlooked in the grand scheme of running a successful project or business. Because of how vital it is to have proper experts for each project you take on, recruitment must be the number one priority on everyone’s to-do list.
Each step of the recruiting process must be planned thoughtfully and should follow strict guidelines so as to reap the fruit of a successful harvest of talent. You want to do this just right from the get-go, as unforeseen expenses, productivity loss and other onboarding hurdles will be lurking every step of the way.
How much does tech personnel hiring cost?
Recruitment agency fees
Let’s take a look at the scenario where you choose a recruitment agency. You have a team that is responsible for all the tiresome paperwork during the long process of recruiting suitable candidates, conducting the interviews, explaining the job itself. That’s a time-efficient option allowing you to direct your attention elsewhere in your business, saving you a great deal of time and effort in the process.
Sounds like a dream come true, right? Well, far from it in many of the cases. Starting with the boarding process and all its fine lines and dynamic environment and going all the way to the fees that must be charged for the whole process to go smoothly. Depending on how much resources there are to be spent and spared, these unnoticeable pitfalls may well cost you an arm and a leg. Recent research has shown that 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
Now that we have cleared the air around agency fees, it is time to turn our attention to other expenditures which are bound to come to light. Starting from the simplest, seemingly insignificant expenses and going all the way to the more noticeable ones.
Of course, things like coffee in the break room and connectivity aren’t quite costly, but if you pile them on top of background check and health insurance, for example, the situation changes. And let’s not forget severance package if the company decides to lay off their candidate, they must compensate them. Costs pile up and it makes a huge difference how you approach these if you care about efficiency and risks in your company.
Another three aspects which take up a considerable amount of the funds are the training, equipment and employer branding. Those three comprise the basics of employee success and lay the foundations of a fruitful employer-employee relationship. If there is a lack of proper training and suitable equipment, it would be impossible to deliver value in the long run. The employer branding on the other hand is essential in order to attract the attention of the quality workforce.
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 is that 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. While the outsourcing costs may be approximate in numbers for both countries, if we take a look at the overhead costs, we see that the UK allocates nearly $30 000, which is almost three times more than in the US.
Salaries of developers in 2024
Numerous research has been done regarding the ever-changing salaries of developers. Today’s work landscape is rapidly shifting, and it is nearly impossible to know what is going to happen next. Because of all the technology advancements, the IT market has become a lot more competitive and demanding.
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, where 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).
It can be concluded that while the USA allocates less resources towards the hiring process than the UK, the first “invests” more in the long run, while the latter puts the focus on having a stronger start.
Others possible risky scenarios
Not fitting in
Every employee is glad to know they can finally relax and fully immerse themselves in their job after having gone through the whole recruitment process and having passed the few-month-long “trial period”. It is the feeling of contentedness that engulfs them and (hopefully) makes them want to give 100%.
However, not everyone is the same. People have their own mindsets and values. There is always the risk of someone not being able to adjust in a cultural sense because of their background. It is normal and should be expected, as it is part of the whole risk management process.
Teams may also have personal diversities, which would help in terms of having different points of view when discussing how to tackle the project in the best way possible but may also become a challenge when it comes to the work process itself. When there is a significant difference in age, gender, fluency in the working language, people are less likely to enjoy spending time with their teammates and may have trust issues about each other’s motives in a new company.
Loss of productivity
By definition, productivity is the effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input. What this means is that, essentially, employees have to achieve their position with hard work and determination, but in order to keep it they must be as efficient as possible.
The candidates pass thorough the interviewing process and are ready to start work. They are well-suited for the role; they have all the necessary stacks and skills. It is all going well, great even. And when it comes to doing their job, things start getting “interesting” – the workflow is slow and may regularly be obstructed by small inconveniences and mishaps.
We are talking about the natural initial loss of productivity – one of the aspects of work that is rather overlooked when considering the expenses that come with hiring experts. This is part of the risk each firm takes with their new hires, and it is of utmost importance for employers to understand why it shouldn’t be overshadowed by other larger expenses.
After having invested so much time and effort into finding and hiring the best candidate on the market (check cost per hire table), it hardly seems likely that at the end they wouldn’t perform well. 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%.
Time management
The ability to correctly distribute your time is of utmost significance not only when recruiting people, but also when dealing with everyday challenges that stand in the way of your business’ success. It is also good to know how much time each task is going to take so as not to get overwhelmed unexpectedly.
The recruitment process is no different – it takes a lot of time, and it requires a significant effort if you aim for efficiency. There are hidden pitfalls and other obstacles, such as having a limited local talent pool to choose from. A lot of persistence and skill are needed to find the golden mean, but there is no way around it if you want your selection to be top-notch.
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.
To sum up
Whether you want to use a recruitment agency or think it would be best if you did the recruiting yourself, it is crucial to know your numbers and plan your budget right. Recruiting tech personnel can often be a very costly business, so make sure you stay on top of the process to avoid unpleasant surprises that will set you back a lot.
One solution would be to hire 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 mitigate most of the risk involved.
Another alternative would be to make use of remote dedicated development teams that have numerous advantages compared to traditional hiring, allowing for much greater scalability and cost savings, often case well above 30%. By using dedicated development teams you only use the talent you need for the time you need it and don’t have to worry about any part of the hiring process or laying off and compensating people when your project is over. Expert Allies recruits staff from three European countries that are known for their vast tech talent pool and expertise.
If you are on the lookout for quality tech personnel of any tech stack for any team size – get in touch and let us help!