Hiring software developers – tips to avoid hidden costs

Hiring in-house proves profitable for businesses and currently it is the in-thing in global IT industry. This strategy enables you build your own team while enjoying complete control at the same time. But building an in-house team is never that easy. The cost of hiring software developers does not remain limited to salaries and benefits. Rather it goes much beyond than that and only a seasoned recruiter knows this better. There are lots of factors that may come into play and affect productivity of your project. Some of these factors include delays in hiring, on-boarding process going slow for some reason or the other, blending of the team members may take its time. There can even be management overheads and any of these factors is powerful enough to make productivity suffer.

In the following sections of this blog post, let us go through all the adversities in real life that can make your effort of building an in-house team costlier than your estimation.

Recruiting a software developers – the realistic cost

When you are hiring software developers, salary is always just a part of the total hiring cost. The standard salary of a mid-level developer in the United States, as of ongoing 2025, is within the range from around $100,000 to $130,000 a year. The figures are more or less at par with the existing salary structures across various Western European countries too.

Salaries for senior developers or those who work on niche roles are obviously much higher. This salary scale usually exceeds $200,000 annually. In other words, IT professionals like AI, DevOps and cloud architects by and large earn above the $200,000 benchmark a year.

But this is just the tip of the ice berg as they say! There are more to it; let us add up all those elements to complete the picture. Only recruitment and on-boarding can make you blow a lot of money. So it is utmost important that you are careful right from the word go in building your in-house team. Let us take a closer look at the picture to better understand the nuances involved.

At this stage of the discussion, let us focus on the table below. It provides an idea about the actual costs involved in both recruiting and on-boarding a senior IT developer in the United States or anywhere in Western Europe.

The final figures mentioned at the end of the table shows the approximate cost of hiring a developer. Your task in hand involves hiring an entire team.

Now let us get into finer details. What are the hidden costs in hiring in-house developers? Let us uncover those in the following section.

Hiring in-house developers – hidden costs involved

Delays in hiring

Hiring competent developers is a lengthy and time-consuming task. On an average it takes about 41 days to hire software developers. If the requirement is for any specialized role, the process may last double the time mentioned above. In other words it takes about 82 days for the top notch IT companies to fill up vacancies of expert developers. The 82-days average timeline works itself out from the time they set the recruitment process rolling!

Thus it is pretty obvious that the process of hiring full-stack developer or any other expert role can significantly slow down your project.

Moreover, in the middle of the project some of your key members may put down their papers and leave. Thus you will need alternatives to fill up those vacant posts. Hiring quality employees in IT does not occur overnight. After recruiting and on-boarding the fresh recruits you have to give them time to ramp up before delivering their optimum performance. All these weeks or months your project hardly makes much progress. Statistics say nearly 2 out of every 5 IT organizations suffer delays in their projects because of issues related to recruitment.
Then there is the cost to consider.

On average the cost of posting jobs on popular platforms like LinkedIn or Indeed ranges from around $500 to $1000 per post.

If you choose third-party recruiters from outside, you have to pay them around 15 to 20 percent of a candidate’s yearly salary. In other words, external recruiters are even costlier than LinkedIn or Indeed. When a candidate signs up for a yearly salary of $150,000, the recruiter walks out with around $37,500 as his remuneration.

Till now we were discussing the immediate financial impact. In addition to that you have to take the hours lost into account. Let us suppose, you have initiated the process to hire node JS developers. Each candidate appears for 4 rounds of interview. If you have shortlisted 6 candidates and each candidate takes about an hour of the interview session, in that case 24 hours of output from your senior software developer or the team leader gets stalled.

24 hours is more than half a work week and during this time there is no progress in building a software application in question. There is no reviewing of codes and no bug solving either to take the project forward.

On the other hand you may bank upon the strategy of fast hiring. In IT, there is nothing as such called fast hiring. If you rush selecting candidates chances are higher you select wrong candidates. A bad hire is even worse because it costs you even more in the long run.
Delays in hiring are definitely more than an inconvenience. A hiring delay often affects the momentum of work progress. Once the momentum is affected, chances of missing deadlines loom larger. Every day that passes by while you are in this situation, your project just falls behind a little at a time.

On-boarding candidates – costs involved and the time to warm up

Hiring the right candidates to build your team is only the beginning. You should better expect to experience a lot more.

After hiring a new developer in your team, you must give him sufficient time before he turns fully productive. Here again the combination of time and money becomes relevant! Any developer, newly appointed as a part of a team, requires about 8 to 26 weeks reaching optimum productivity. In fact the more complex role you select him for, the longer time the professional requires reaching his full productivity. This is true for every developer in this planet.

You cannot expect them to just walk in and keep delivering you codes. They have to get an idea of your way of doing things. Moreover they have to understand your stack and the processes. During this initial phase, they ask more questions and are slow in their work. These things are normal in any software development project. But these things also keep costing you money.

Suppose a developer’s salary is $12,000 a month. He is working only half his capacity. There you are losing $6,000 every month. You may have to bear this loss for probably anywhere between three and six months. All these calculations and assumptions base on the consideration that you picked the right candidate for the role at the time of hiring.

There are other costs involved in on-boarding. Like setting up accounts, orientation sessions, paperwork by the HR and security training to name a few. Suppose you hire Python developers or any other category of software developers. You have to bear all these expenses. On an average all these costs sum up to around $4,000 on hiring each new candidate.

Internal time is also lost in the process which we will discuss now. Someone has to guide the new recruits. Usually the team lead or a senior developer shoulders the responsibility. Elements included in this aspect include –

• Allowing a new recruit to walk through codes
• Overviews of tools
• Conducting mentorship sessions and last but nevertheless the least,
• Answering endless questions

Suppose the team lead or senior developer spends 5 hours a week on the activities mentioned above. In three months that sums up to 60 working hours during which the senior developer is depriving the project to prioritize something else. When you are on-boarding a single candidate it is still manageable. When you onboard, say, 5 people at a time, your entire team slows down and the progress of your project suffers badly.

The more new recruits you add to a project, the more overhead you handle to provide support to each of them. This is a compounding problem and unfortunately people usually underestimate it.

Overhead management

When you hire developers, you actually hire everything that comes with these professionals, including even management. Providing direction is essential to keep every in-house developer productive. There has to be someone who plans work for them, reviews their code and even execute one on one with them from time to time. It costs money having this someone in the team. Pay scale of managers in software engineering ranges from around $250,000 to $370,000 annually when you look at the United States.

When your in-house team for software development is steadily growing, you gradually need more and more structures. There has to be more layers, more reporting and obviously more systems. This adds up both cost and complexity. For example, HR is just a layer. After all someone must be there to look after aspects which are crucial for your developers. These aspects include –

• Payroll
• Benefits
• Conflict resolution
• Tracking vacations
• Legal compliances

Internal HR teams spend around $2500 as admin cost on an average for each employee in a year. Now you multiply that by the size of your team and get an idea about the total cost in a year. It is important to note that this cost adds up pretty fast.

You also require systems to manage your HR platform and performance tools. You also need software systems that facilitate learning and development. Each of these systems adds up to your cost. Hiring web developers or any other category of software professionals definitely adds to the capacity of your team. But at the same time it also adds certain loads in your budget which are unavoidable.

Retention cost to take into account too

Recruiting the right software developers is hard but retaining them is always harder. The job market in the tech world is always active. Developers have their options open and they are aware about those possibilities. This fact is actually more applicable to senior developers.

Let us see what researches have to say on this. Hardly 3 out of every 10 IT professionals want to continue with their present employer. 45 out of every 100 software professionals switch jobs within a year or two. When a developer quits your organization, you lose his output. Along with that you also lose time, momentum and institutional knowledge.

In other words you cannot afford to have passive retention strategies by any means. Retaining your team is helpful but that costs money too. Replacing an employee actually costs you 6 to 9 months of his or her salary. This amount adds up in the following forms –

• Recruitment
• On-boarding
• Productivity lost while warming up
• Disruption faced by other team members

If a software developer earns $120,000 a year from you, replacing him will cost anywhere between $60,000 and $90,000. If the individual is a highly skilled professional, then your replacement cost is likely to be more.

On the other hand, if they choose to stay with you, then retaining them will not turn out to be cheap either.
Common strategies to retain employees in the global IT industry include the following –

• Spot bonuses
• Pay bumps and
• Counter offers

In other words you have to offer them more days for vacation, greater flexibility and more perks. Only then you may expect to retain them.
Burnout is another factor to consider in this context. If a team is under constant pressure, the members are likely to burn out. In such circumstance, people quit the organization or become disengage. A lot of IT companies try square this up with perks like the following –

• Extra time off
• Greater number of mental health days
• Wellness stipends

Employee retention or rather the lack of it may also affect the cultural roots. You may be hiring dedicated developers in the team. But when the new recruits see existing people leaving the organization, their confidence gets dented. Thus, they also start looking for new jobs. How can you tackle a situation like this?

Here are a few tried and tested tips –

• Offer learning stipends
• Introduce newer and fresher engagement programs from time to time
• Arrange “one on ones” more frequently
• Raise the budget for career development

Managing frictions and cultural issues

IT companies hire developers on basis of the skills they possess. But it is culture which keeps them together in cohesion. If the cultural fit is not right then cohesion vanishes away quietly. This costs a lot of money for any organization. This brings us to the concept of quiet quitting. This means employees do not quit your organization; they physically stay with you but check out mentally. Quiet quitting costs around $500 billion worth loss in productivity annually for IT companies. On the other hand hiring errors cost the industry around $600 billion a year. Combining the two, IT companies in the United States alone suffer productivity loss of about $1.1 trillion a year.

A bad fit does not reveal itself on day one. Perhaps it will not show itself within the first month. But gradually friction reveals itself in work and spreads fast. It is important to note that software developers do not only want interesting work. Rather they also want to be part of a team that works well together.

Once friction sets in your team, the process of code reviews get tense. Even feedbacks seem to be useless. Communication between the team suffers. Finally collaboration between team members becomes forced lacking natural spontaneous character.
Whether you hire React developers or any other IT professional, be careful not to get a bad hire in the team. When there is one bad hire in a small team, usually others pick up the slack. But this dents the morale of the team and the top performers already start looking elsewhere for greener pastures.

The worst thing is you cannot identify these loopholes at the time of recruitment. But such loopholes definitely show up later. The longer such issues linger in your team, the more damage it brings. Culture fit is so crucial in hiring for IT companies. It is relevant to mention in this context, at Digital Aptech, we leave no stone unturned to prevent a bad hire. We firmly believe one bad hire can easily undo all our efforts at one go that we make to ensure our team clicks.

When you hire a developer, you are not just paying his salary. You are actually paying for everything the individual requires to perform his tasks. In other words you are paying for the hardware, software, infrastructure and comprehensive IT support. These costs usually do not reflect in hiring plans but definitely show up in later stages.

You have to provide a software developer with a sound setup. Here is a short breakup of those costs.

• A high-performance laptop costs anywhere within the range from $2,500 to $3,500
• Peripherals like mouse, keyboard, along with quality webcam cost another $500 to $1000
• Arranging ergonomic chair and desk costs around $500

The expenses easily sum up to around $4,000 to $5,000 for every new joinee in the team. This expense you have to bear even before they write a single line of code!

Now let us sum up the stack of tools you have to provide. The list includes –

• CI / CD licenses
• A host of Saas tools
• IDE licenses
• Slack, Zoom or Team
• Notion, Jira or Confluence
• Sentry, Datadog, LogRocket and other monitoring tools
• GitLab, GitHub, Bitbucket

Some of these tools charge you annually whereas others charge you every month. Companies usually spend within the range from around $1,000 to $3,500 a year for each employee only on Saas tools.

Things do not stop right here! You also have to pay for cloud infrastructure that your team uses. Even test servers, container orchestration, staging environments and everything else come with an individual price tag. All these expenditures scale with your team. You have to take IT support into consideration too. When you have more members in the team you have to secure more devices. There are also more endpoints for you to manage and obviously more risks to tackle. Even VPNs, security tools, backup solutions, SSO and everything else along with those are both critical for operations and costly.

You cannot omit these expenses in remote setups either. So, even when you are hiring offshore developers you just have to bear these expenses. The costs just shift instead of disappearing. In place of office rent you spend on stipends for home office. Instead of on-premise servers you scale your expenses on cloud billing. These costs are not one-time and rather recurring in nature. If you ignore these expenses, you end up being the biggest loser.

Opportunity costs also matter

When you hire in-house, your expenditures are not the only thing that matters. The things that you give up also matter a lot. Every work hour that you are spending on recruiting, on-boarding and managing, is an hour when you are not building and growing your project. In other words that is called opportunity cost. And it usually adds up fast.

Tech hiring may easily take about three months to find the right candidate. That means three months when the progress of your project remains stalled. In these situations, you are not just running behind the schedule but also suffer lost momentum, lost users and lost market share resulting from the delay in hiring.

Every in-house hiring adds up to overhead for the management. To cut a long story short, every such hiring affects the ability of your team to deliver fast and stay at-par with the schedule. Even priorities keep changing frequently. Scaling up or down based on fast-changing scenarios is not possible either. This is where outsourcing becomes relevant in the world of IT.

So you do not have to wait for three months to get hold of the right candidate who can propel your project in the right direction smoothly. You simply outsource the job to a third-party. So, there is no time loss in on-boarding, warming up and interviews.

With an in-house team there are certain limitations or rigidities involved. These include –

• Fixed monthly salaries no matter for the workload
• Lengthy notice periods even when priorities keep changing fast
• Flexibility is limited in scaling up or down
• You cannot put a contract on pause in the middle of a project
• Reassigning tasks to techies is time consuming

These factors make any project much costlier.

Taking all these facts and factors into account hiring developers should always be done with caution. At Digital Aptech, we have years of experience in the global IT industry. So we are aware about all the nuances involved. We hire IT professionals carefully so that the complexities mentioned above can be bypassed smartly. Businesses across the world rely on our expertise and commitment to get their precise custom IT solutions on time. Please feel free to tell us about your requirements.