How Much Does It Cost To Hire A Software Development Company/Developer?

Nov 14, 2022 by The Yellow Strawberry

Software solutions that are custom-made can lead to innovation. They improve productivity, enhance customer experience and promote business growth. Companies must also consider the cost of software development as well as their budget. To save money or hire internal resources, should they either hire a software company to develop bespoke solutions or a freelancer?

This blog will explain how much it costs for a software developer to be hired and the best options available.

According to a survey, there were 23.9 million developers of software in the world in 2018 and this number reached 26.9 million in 2022, and it is projected to rise to 27.7 million in 2023 and 28.7 million in 2024.

It is a major upfront investment to hire a software company/developer. This can easily run into the hundreds of thousands. Find out how much it costs to hire a software developer.

What Is The Cost of Hiring A Developer?

Software developers are in high demand. There is no sign that this will stop.

The most highly sought-after talent is technical talent. However, the cost to hire a software developer has never been higher.

These statistics are indicative of the high level of developer recruitment:

  • The US Statistics projects that software developers will grow 20% between 2023 and 2029. This is faster than the average growth rate for all occupations.

  • LinkedIn reported that the demand for software developers has increased by almost 55% between April-October 2019 and April-October 2022.

  • According to the Stack Overview Developer Survey, 57.6% are not actively looking for a job but are open to possibilities.

  • It takes between 30-39 days for software engineers and developers to be found in major tech hubs across the countries.

  • According to 80% of technical hiring managers, there is a shortage of talent.

  • 86% of technology leaders believe it is difficult to find technical talent.

  • Due to a shortage of developers, 40 million jobs are not filled.

The type of recruitment you are looking for will determine the cost.

Particularly, in-house developers can incur additional costs such as sourcing. In-house developers are generally less expensive in the long term, especially if you have full-time developers.

It's simple:

You can spend as little as $28,548 on a developer to be a full-time worker. It could cost as high as $35,685.

What Is The Cost To Hire A Team of Developers?

If the project is too large or complex for one or two freelancers, you should consider hiring or creating a team to help develop it. This is where Outsourcing and In-House Development come in.

Outsourcing

Outsourcing refers to the hiring of a team from a software development house to work on your project. These software development houses usually have the necessary talent to complete a project and can scale their talent according to the needs of the client.

 Why Outsource?

  • Flexible, expert teams: Outsourcing companies will often be able to fill all required positions for a project in-house and can scale the number of specialists according to the project's needs.

  • Outsourcing is cheaper than hiring a full-time development team to work in-house.

  • Quality Assurance: When you work with a reputable software development company, you can rest assured that you will get a high-quality final product.

Outsourcing: The costs

Outsourcing incurs very little operational cost beyond the agreed values at the beginning of the project. There are some things you should consider.

  • Legal fees: Both parties must agree on the terms of the contract when negotiating the project's outline. To make this happen, both you and your lawyer will need to assist you in writing and reviewing the contract.

  • Management: This person will be responsible for overseeing the project and acting as a bridge between your company and the development house. This could result in additional costs for your company.

  • Contract Renegotiation: If you have to change priorities or implement new features mid-development, expect to pay a lot of money. These can be included in the contract, or they can be defined as soon as the new parameters are established.

These are just some of the costs. There are also obvious costs associated with the project's construction. These costs will be discussed at the time you write the contract. They will vary depending on the reputation of the development house and the size of the project.

Project Scale Hourly Rate Minimum Budget
Small $75 - $125 / hour -
Medium $200 - $300 / hour $100,000
Large $250 - $850+ / hour $500,000+

In-House

The in-house software development team offers complete control over your projects. You can choose who and what skills you want to work with and can take on projects at your own pace.

Why Build An In-House Team?

  • You have full control: If you are in control of the people you hire you can dictate the pace and skills required to complete your projects.

  • Better communication: Outsourced teams are less efficient than in-house teams. You can't directly communicate with developers and must rely on the project manager at the software house to facilitate.

  • Self-sufficiency is when you are able to manage your own projects and can take on more in the future. You can also support existing projects throughout their lives without having to rely on third parties.

  • Capitalization of software development expenses: Your team will develop expertise and resources over time that will allow it to be more efficient and capable of tackling more challenging projects. Even though the initial setup costs are high, these can be partially recovered through continuity, performance and quality delivery of your projects.

In-House Team's Costs

Although an in-house team is the most expensive solution for project development, it can offer many benefits depending on your business's needs. It is important to assess your ability to handle the additional expenses associated with forming such a team early in your business's life.

  • Hiring: You will need to hire people. Not only do you need dedicated staff, but the software will also be needed to streamline the hiring process and help you evaluate your candidates. The hiring process can take many months before you find the right people for your job. This will result in increased costs for your company in terms of salaries and other operational expenses. This process can be assisted by agencies. A Human Resources Manager in the USA earns on average $111,648 per annum.

  • Training: You can hire experts who can fit into your culture and business processes. However, they will need to be trained and adjusted to your business. The type of work these developers do will determine the cost. The cost of each employee is approximately $980 to $1.300

  • Onboarding: Costs for onboarding depend on the job. Paperwork and administrative duties will typically cost about $400. The cost of setting up a workspace can vary depending on the requirements of the employee. Relocating someone can be costly. It could cost anywhere from $20,000 to $80,000+ depending on where they live and the conditions.

These are just some of the costs. Developers also have to pay their salaries. They will vary depending on the area they work in and their level of expertise. These are the most popular examples.

Expertise Avg. Yearly Salary
Sr. Software Developer $137,130
Software Developer $93,490
UI Designer / Developer $81,763
QA Analyst $79,590

 

 Software development costs are a complex mix of many variables. It is important to choose the right processes and avenues to meet your software development needs. We hope you have a complete list of all costs so that you can make the right decision in your case.

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