How much does it really cost to hire a software engineer

What is the Real Cost of Hiring a Software Developer?

You need a developer today (or yesterday) and don’t have time to waste. You don’t have money to waste either. Going through the process of finding a software developer for a particular project or role can be time-consuming and costly if you’re already tight on time.

The hiring process is one of those things we don’t usually stand back and take stock from to analyse (like all good developers should) how much investment you will put into the hiring process. It can be challenging to count the minutes and hours spent going through CVs, taking interviews and getting challenges ready to see if a candidate is worthy.

That’s why we decided to put a price to it for you! Here is the Geektastic breakdown of what we think it costs to hire a software developer.

How much does it really cost to hire a developer?

At first glance, you might just say “Take their salary (e.g. £50,000) and multiply by the average recruiter revenue share of say 20%, and bingo! It’s £10,000!”

But it’s not as simple as that, when you look at the internal costs they quickly add up. This post attempts to put an average price against the different stages to try and get a breakdown of the costs in hiring just one software engineer

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In our example, we have worked on an internal cost of £100 /hour/person. If you feel your cost is higher / lower then you’ll need to adjust accordingly. Here is how we’ve taken that internal cost and distilled the process to give an estimated spend.

The cost factors of hiring a software developer

Recognising you will have different costs depending on whether you use an agency recruiter or do it in-house, we’ve broken things the variables down as such.

These are the cost factors we believe help when hiring a software developer.

  1. Create a proper job description
    It’s worth spending a few hours on this, even if you work from a template to start with. It makes a HUGE difference in response rates to your ads and will help the recruiter. We have seen some shocking job descriptions that don’t differentiate the hirer or explain the role well at all.
    Spend averages around £200
  2. CV screens
    You can expect around 30 CVs per listing. If you are receiving more than that for a listing there is a good chance your recruiter is sending over too much fluff. Say you take 5mins per CV; that’s around £249. If you are taking the direct approach (job boards/ads) you will be sifting through way more so 100 is probably more accurate.
    Spend averages around £830
  3. Phone screens
    These should be called ‘sales pitches’. From experience, this is more the SNR team pitching the business to the engineer to get them sold in and engaged enough to take a tech screen. You will probably need to do at least 18 calls (60% of CVs) at 30mins via a recruiter or take 40 calls (40% of CVs) if going direct.
    *Spend averages £896 (via recruiter) or £1992 (direct)*
  4. Code Challenges
    To save a lot of time on the next two steps we, and many other tech teams, use code challenges to evaluate a candidate’s tech skills (please have a read of our blog on code challenges here).

    Assume of the phone screens you just carried out, you will send code challenges to 80% of them (you will issue 14 via a recruiter, 32 if doing it directly).You’ll spend 15mins faffing around with the recruiter/candidate sending zip files back and forth (unless you use our platform of course).

    Of the ones you get back (60% - if you are lucky - asking an in-demand engineer to spend 2hrs on your code challenge is a big ask) it takes 45 mins to evaluate the code submission by your engineers, then another hour with the team (let’s say 4 people) talking through candidates and deciding who to take through to the next round of phone interviews.
    Spend averages £3,351 (via recruiter) or £6,957 (direct).
  5. Phone Interviews (aka tech follow-ups)
    30 mins call with three engineers from hiring team. 50% of those that take the tech screen pass and get taken through to a phone interview.
    Spend averages £645 (recruiter) or £1,434 (direct).
  6. Final Face to Face interviews
    From the phone interviews, you should aim to get to 3-4 final face to face interviews. We always brought in 5-6 team members, and these final interviews took up to 3hrs.This is a considerable overhead but ultimately worth it and justifies the need to do code challenges to reduce the volume of final face to faces.
    Spend averages £7,200

So what is the exact cost of hiring a developer?

From our experience, these internal costs add up to £12,541 (via a recruiter) and £18,613 (direct).And don’t forget, this is on top of the revenue share you pay to the recruiter or the ad spend on your job boards etc.

And don’t forget, this is on top of the revenue share you pay to the recruiter or the ad spend on your job boards etc.

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