Staffing is an issue in many industries. Software development is no different. The cost to find and hire a software engineer can be in the thousands before the work even starts. The cost of production hours from the time you realize you need an engineer to the time they are fully employed can further increase these costs.
Cost of Productivity and Work Hours
Any experienced managers understand costs goes beyond monetary numbers. Loss of production hours can put a project behind and cost in the long run.
From the point, the workload becomes too much for your current staff, or you lose an engineer, costs from loss in productivity start to add up. Each hour lost from being short staffed is an hour to completion or implementation lost. Being short an engineer also puts undue stress on the rest of your team to pick up the slack in hours. Pressure on the rest of your team could result in more turn over. Between the delay in product milestones and the potential turnover, you will have to explain this to shareholders, which could endanger your funding and other vital resources.
The recruiting and hiring process also costs work hours from HR and any specialized team you may have implemented to hire new team members. HR has to prepare the job description and post to job boards. There may be potential job fairs or recruiting events when a team is needed. Once there are applications, they need to screen for legitimate applicants. There may be several interviews and tests for the engineers to consider them for the positions. The hours spent could cost the equivalent of a work week worth of hours between HR and your engineering team if they are involved in the hiring process. After this, if you don’t find a suitable candidate, you either hire subprime engineers that need training or have to mark the hours as waste and move into the second round of applications.
Monetary Cost to Hire
It costs $50K to hire a software engineer, according to usejournal.com. From posting to onboarding, this price tag can change depending on location and other factors, but it doesn’t negate the fact you will spend to find the right candidate. Let’s look at some of these costs from hiring to potential turn over of your engineers.
Posting jobs on job boards can cost hundreds of dollars for 30 days. Many times a job need 60 days to find someone qualified. What about a team? Boards offer discounts for bulk posting, but it still adds up. Even using social media like LinkedIn recruiter costs your company. With continuous posting in a smaller market, this could add up to thousands of dollars from your department budget.
When you find a quality candidate, there may be other offers they are fielding. You may need to match or beat sign-on bonuses from larger or better-known companies. Sign-on bonuses can run $2k to $5k depending if the engineer is worth it. If you find a candidate from out of state, but fills the role you need, you may consider relocation bonuses as well. You could spend $10k easily before any work gets done. Other variable factors may come into play as well. Many companies require background checks which can cost to conduct and if the candidate doesn’t pass.
Your onboarding process can contribute to new engineers leaving. One survey stated 28% of new hires quit during the onboarding process, according to clearancejobs.com. The majority of those surveyed said bad experiences or cultural fit as the reason they left. Short turn over makes the cost to hire the engineer as a waste due to no production hours as an ROI for hiring.
Specialized training could be another cost of in-house engineers. Your project may require specialized technology or certifications. If you need a new engineer to train and certify in technology like AWS, Microsoft, or Salesforce, this could cost in production hours for training as well as hundreds of dollars to take the certification and classes if needed.
Along with salary, benefits and insurance will add costs to hiring in-house engineers. Nationwide salaries range from $83,000 to over $150,000 a year for software engineers. Many companies also pay a portion of health and other benefits. Required taxes and insurance coverage may also have to be paid by the company such as worker’s comp and FUTA.
Finally, looking at the cost of having to downsize or turn over of your engineers. If you are forced to downsize and let engineers go, you may be required to pay unemployment. They cost in production hours comes up again with turn over. When your engineer quits, you need to start the entire process again.
These examples are for one engineer. Multiple that by a team if you aren’t working with a team yet or are extremely under capacity.
Staff Augmentation: The Answer
Staff augmentation is a form of outsourcing where you hire a company to provide you a dedicated team of professionals. The company handles all the costs of hiring and onboarding, and you get a thoroughly trained and qualified team to handle your project. There are many benefits to using staff augmentation.
Staff augmentation reduces the time and work hours spent. You can have one or a team ready to work in half the time it may take to hire an in-house developer. A staff augmentation company will have the engineers prepared for your start date. With the business and service terms established, the team is prepared to mobilize and get your project done.
Onboarding is painless. Engineers are already trained and competent in your technologies. They also provide experienced engineers in all modern technologies reducing the cost of training and certification. The companies sole purpose is giving engineer teams.
The staff augmentation company covers benefits and insurance. The service fee includes benefit and insurance costs, but it will be much less of a financial burden as well as not having the legal obligation to report and pay on employee taxes and insurances. Having these costs handled by the staff augmentation company provides a peace of mind that you pay the company and they feel the headaches.
Downsizing and turn over costs and risk are eliminated with staff augmentation. IT allows you to add or reduce the size of your team as your project sees fit without having to let employees go. Staff augmentation eliminates unemployment. If an engineer quits at a staff augmentation company, engineers are shifted to ensure you don’t lose the production hours. Staff augmentation reduces costs to turn over.
The need to hire teams of software engineers will only increase with the rise of IoT, AI, machine learning, and blockchain. We are moving to a digital economy, but you shouldn’t let it cost you to stay competitive. Considering staff augmentation could save your thousands of dollars and a lot of headaches.
To learn more about staff augmentation, email, or call us today at 315-738-6016. We are a software company specializing in custom software and integrations, cloud technologies (AWS Certified), blockchain, and staff augmentation. We work with startups to global corporations in manufacturing, insurance, finance, defense, and cybersecurity. Contact us today for more information on how we can help start, grow, or make your business more efficient through our software solutions.