Are you hiring a software developer or technical engineer but not sure how or where to spend your hiring budget? Hiring a software developer is two times more costly than hiring for any other position. Not to worry, this article will guide you through alternative ways to hire a software engineer that better fit your budget.
Hiring an engineer or software developer comes with a price, and identifying where to spend your budget is the key to getting the right software developer at the right price for your business. We've put together this detailed guide to help you identify what the hiring cost of an engineer entails, and how you can better navigate the technical recruitment market.
What is the cost of hiring a software engineer?
There are a few costs you’ll need to consider when hiring a software engineer. We’ve rounded them all up for you to give you a better idea of how you can budget for this critical hire.
Software development talent sourcing platforms
Though there are free platforms for sourcing an engineer or software developer, they often give better results when you boost your search. This comes by paying monthly or yearly subscription fees.
For example, you can upload a free job post on LinkedIn, but for significant results, you have to opt for promoted ad posting on a pay-per-click or total budget basis. This can cost at least $10 for any ad format, and LinkedIn recommends you invest in the job ad depending on the seniority of the role you’re looking for.
This success is regardless of the software developer community you may have created on LinkedIn. If you’re not paying to reach them with your position, you won’t.
Similarly, on Indeed, as opposed to a free job post, an ad costs about $5 per day for boosted visibility—especially for a software developer.
Other ways of sourcing an engineer or software developer include:
An applicant Tracking System (minimum $200 per month)
Outsource talent acquisition (typically at a minimum of 15% of the candidate’s first-year salary)
In-house HR or recruiters (average $77619 per year, according to Indeed)
Technical testing for hiring developers
Most companies use technical testing platforms that cost between $250-$600 per month, depending upon the features you opt for. If you’re using a tech-specific applicant tracking system, then sometimes this is a feature that comes with the tool.
These platforms are used rigorously in the developer vetting process to test the candidates' technical abilities through various coding challenges. They’re a great idea if your recruiter is based in the HR department and has low-to-no technical knowledge. They’ll ensure your HR person is passing only technically qualified candidates to your hiring manager.
Interviews for a full-time software developer
Engineers usually go through multiple HR and technical interview rounds to land a job, and these too can be costly to a business, mainly in your use of human resources. While an HR person judges the engineers on their soft skills, the technical recruiter checks their problem-solving and coding abilities to successfully hire software developers.
The average annual cost of hiring an human resources manager is $77,619, while a technical recruiter takes around $63,919.
Training for your next software developer
Training is an essential part of tech hiring, which is why companies are spending more money on it—especially when it comes to creating a well-rounded software developer. According to a survey, corporate training expenditure in the US increased by almost 10 Billion in 2021.
A software development manager or a software development training specialist can help you create, plan, and run training programs to teach your engineers specific skills.
According to Indeed, hiring a training developer can cost approximately $66,000 a year. You can also opt for coding bootcamps, which cost about $7,000 at least.
Onboarding: managing your on-site knowledge transfer
According to Indeed, the average cost of onboarding an employee is approximately $400. Your software development cost won’t come cheap, so you shouldn’t try to cut corners when it comes to onboarding new talent either.
In fact, a solid onboarding is among one of our top tips for managing remote engineers. You'll save yourself hours of time and a handful of mistakes if you provide a complete onboarding experience for new hires.
Total cost of hiring a software engineer
If we round up all of our total costs and average them out, then your average cost for hiring someone new for your development team will look something like the below.
Remember, sourcing and testing platforms vary greatly depending on the package you opt for. We’ve also put this table together considering the software developer hiring process is between 2-4 weeks.
Interviews have been calculated considering the time they’ll take from your human resources manager and technical recruiter. Training and onboarding are also two expenses that can vary greatly and will largely depend on how set up your business is already for these two processes.
How much does a software engineer make?
Whether you’re looking for junior or senior software developers, it’s a lucrative industry to be in, and you’ll need to be financially prepared to bring a development role onboard. Let’s take a look at some of the factors contributing to the salary package of developers.
Developer’s geographical location
The cost of hiring a software engineer with experience can vary widely depending on the engineer's experience, geographical location, and your industry niche. In general, the cost of hiring a software engineer with experience is quite high.
When looking at hiring software developers, an experienced software engineer in the Bay Area of California can expect to earn a salary of $100,000 or more per year in a software development company. It’s one of the locations that demand some of the highest paying developer jobs.
In contrast, an experienced software engineer in the Midwest might only earn a salary of $50,000 per year.
Here are the reported numbers from CodeSubmit on median salaries (per year in USD) for mid-software developers in different countries.
You’ll also need to keep in mind legally required benefits depending on where you’re hiring. Certain countries or states require you to provide insurance, healthcare benefits, PTO, and other costs if you’re hiring full-time staff.
Developers’ level of experience when it comes to developing software professional and educational experience also plays a vital role in their salary.
Their level of experience determines their pay scale. The ones who are new to the field take an average salary of $87,000 per year, while mid-level engineers’ salaries can range between $90,000-$105,000 a year, and senior engineers earn more than $120,000 yearly.
In-house developers start expensive and only get more expensive over time.
Your company’s scope of work and projects
The cost of hiring a software engineer also varies depending on the type of company and the projects it works on; this is often referred to as building custom software solutions.
For example, a software engineer working for a small startup might only earn a salary of $50,000 per year, while a software engineer working for a large tech company on big projects might earn a salary of $100,000 or more per year.
#### Here is the average cost of hiring an engineer in the US based on their tech stacks:
Why is hiring an engineer so expensive?
There are several reasons contributing to the booming cost of hiring engineers, which include:
1. High global demand
The demand for software engineers is increasing rapidly in the global market, which is contributing a lot to the cost of hiring developers.
Software developer employment is expected to increase by 22% between 2019 and 2029, which is substantially higher than the average for all occupations, according to the US Bureau of Labor Statistics.
2. Tech talent shortage
86% of hiring managers experience a tech talent shortage. A leading market intelligence company IDC projects a four million developer shortage by 2025.
Although there has been an increase in computer science graduates, the skills and knowledge that are required to work on professional projects are still lacking.
3. Lengthy hiring process
The tech hiring process is 30% more lengthy due to the shortage of skills and a requirement to filter out the most suitable candidates. A report from a UK-based search engine claims that in the US, UK, and Canada, the average time to hire job applicants slowed down in recent years. It takes UK businesses 68 days on average to fill vacancies. Similarly, US businesses take 60 days, while in Canada, the average is 54 days.
4. High salary bands for the role
As the demand is high, developers tend to have better opportunities with high salaries. According to Glassdoor, the average pay of a software engineer in the US is $105,748 per year, which includes $90,357 as base pay and $15,392 as additional compensation, such as bonuses.
The salary of a developer working in big tech companies can go up to $218,810 per year.
These are some of the things that are uncontrollable, and you can’t do much to save your hiring cost due to them.
At the same time, there are other factors that are totally in your hands to spend your hiring budget on, which include whether you are hiring an on-site developer or a remote developer.
Is there a more economical way to hire a software engineer?
Yes, there certainly is! While hiring engineers, you also have the option to choose between on-site and remote developers. While the cost mentioned above stays somewhat the same for on-site developers, remote engineers, on the other hand, are far more economical and provide greater benefits to your company.
These benefits get multiplied if you hire developers through Remotebase.
How hiring remotely saves your tech budget?
While you can’t control the global demand or the shortage of tech talent, there are significant financial and competitive advantages if you opt for remote developer teams for your business:
When your team of developers works remotely, your company gets financial benefits. From infrastructure costs to utilities and hardware, remote working helps your company save a significant amount of fortune, enabling you to expand without spending much.
For instance, if you’re looking at how to hire remote developers in Ukraine, you could be paying, on average, $18,560 per month compared to $41,440 for an in-house team in the USA.
According to a survey conducted by Gartner, 1/4th of respondents stated that they would shift at least 10% of their on-site employees to permanent remote positions even after COVID is over. The main reason for this is tightly managing the costs and achieving the cost benefits of working remotely.
Faster business growth
Remote developer teams allow you to work with a diverse pool of tech talent from all over the world. This expands the creative, troubleshooting, and networking spectrum of your business, giving you a solid competitive advantage over your competition.
Giant talent pool
Hiring for remote positions means you can select the best talent from across the world with better qualifications, skills, and experience to work for your company. This not just allows you to hire better developers much faster but also helps you save a significant amount on their salary due to the difference in currencies and cost of living.
High productivity and employee retention rates
Remote developers enjoy the freedom to work with flexibility. They have better work-life balance, higher motivation, and less absenteeism than in-house developers, who are often frustrated by commuting or office environments.
They are allowed to work from wherever they want, which infuses more positivity in them and makes their working experience more pleasant. This boosts employee productivity and the company’s employee retention rate. According to Statista, 42% of employers noticed better productivity, efficiency, and employee morale after allowing a remote environment.
Pro tip: save up to half of your engineer hiring budget with Remotebase
Remotebase connects you with the top 1% of software engineers from around the world, ready to start working within 24 hours without letting you go through the exhaustive hiring process.
Unlike others, our developers are hired beforehand after being carefully vetted by industry experts. This helps you save 60+ hours of interview time and 40% of your hiring cost. To reduce financial risks, Remotebase offers a 2-week free trial with no upfront charges.
So if you are not satisfied with our developers within the trial period, you don’t have to pay us anything at all.
How does Remotebase ensure hiring the top 1% of remote developers?
Remotebase developers go through a rigorous hiring process with multiple technical interviews and are selected after clearing multiple problem-solving and coding-related tests.
More rigorous than Silicon Valley job interviews, we test for 100+ skills, data structures, algorithms, systems design, software specializations & frameworks via
--HR screening --5+ hours of tests and interviews --Seniority tests --Cultural fit check
5 Benefits you get with hiring engineers via Remotebase
These are some of the amazing benefits of hiring remote developers with Remotebase:
1. Save hiring time and cost
We are making your hiring process hassle-free, eliminating the wastage of 40% of hiring costs and 90% of your hiring time in finding the most suitable developer.
2. Choose from a global talent pool
We solely hire the top developers from across the world, giving you access to a wide range of developer talent to work with.
3. Hire within 24 hours
We offer you pre-vetted developers that pass through a Silicon Valley standardized vetting process and are available to work with you under 24 hours.
4. Hire for a diverse skill range
Remotebase hosts developers with 100+ skills, including:
- and many more
5. 2-Week risk-free trial
Remotebase offers a 2-week risk-free trial, allowing you to work with our developers with no upfront charges. Pay only if you are 100% satisfied with the team’s performance by the end of two weeks.
Ready to get started? Hire Now!
It’s time to hire a software developer to help you grow
The cost of hiring an engineer is an investment that, if spent wisely, can grow your business significantly. However, there is no exact cost estimation as it varies depending upon the factors mentioned above.
You can certainly make it more budget-friendly and earn greater ROI by opting for remote developers. And now that you know where you can find reliable and robust teams, we hope that you find your ideal tech match without any hassle.
FAQs on the cost of hiring a software engineer
What is the average cost of hiring an engineer in the US?
According to Glassdoor, the average pay of a software engineer in the US is $105,748 per year, including $90,357 base pay and $15,392 additional compensation.
What factors to remember when you decide on the cost of hiring a software developer?
Before deciding on the hiring cost of an engineer, you must consider the project's complexity, the engineer’s location, the current salary for the role in the market, and whether to opt for in-house developers or outsourcing.
How long does it take to hire a remote developer?
24 hours. Hiring an engineer with Remotebase takes only one day. Just share your requirements and get the most suitable developer team within 24 hours.
What is the cheapest way to hire a software engineer?
The cheapest way to hire engineers and software developers is to consider a platform like Remotebase. Remotebase is able to recruit freelance developers for your project in 24 hours at a fraction of the cost of a software developers recruitment agency.
Is it better to hire a full-time software engineer or a freelancer?
It depends on your specific needs and resources. Hiring a full-time software engineer may be beneficial if you have ongoing projects that require consistent and dedicated work. They can also provide long-term stability for your team and may be more familiar with your company's culture and goals. On the other hand, hiring a freelancer may be a cost-effective option for short-term or one-off projects, and they may also bring specialized skills and experience to the table.