How much does it really cost to hire a software engineer?
At first glance you might just say “Well that’s easy, 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 looks the hiring flow and tries to put some costs against the different steps to try and get a breakdown of the costs in hiring just one software engineer. You’ll be shocked at number 6.
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We have worked on an internal cost of £100 /hour/person. Clearly if you feel your cost is higher / lower then you’ll need to adjust accordingly.
Recognising you will have different costs depending on whether you use an agency recruiter or do it direct (in house) we’ve broken things down for each.
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 / will help the recruiter no end. We have seen some shocking JDs that don’t differentiate the hirer / explain the role at all. Spend = £200
CV screens - You can expect around 30 CV’s per role - any more and your recruiter(s) are sending over too much fluff - say 5mins per cv = £249. If you are taking the direct approach (job boards / ads) you will be sifting through way more so 100 is probably not far off the mark £830
Phone screens - (these should really 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 £896 or 40 calls (40% of CVs) if going direct £1,992
Code Challenges - to save a lot of lot 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 phone screens you carry out, you will send out Code Challenges to 80% of them (you will issue 14 if going via a recruiter, 32 if doing it direct). You’ll spend 15mins faffing around with the recruiter/candidate sending zip files back and forth (unless you use our platform :). 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. Costs add up to £3,351 via recruiter or £6,957 direct.
Phone Interviews - aka tech follow ups - 30 mins call with 3 engineers from hiring team. Circa 50% of those that take the tech screen pass and get taken through to a phone interview. £645 via a recruiter and £1,434 direct.
Final Face to Face interviews - From the phone interviews you should aim to get to 3-4 final face to face interviews. We always bought in 5-6 team members and these final interviews took up to 3hrs - this is a huge overhead but of course ultimately worth it (and justifies the need to do code challenges to reduce the volume of final face to faces) = £7,200
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.
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