How Much Does It Cost to Hire a Developer in Europe
Hiring a software developer may be a painful question to tech companies and startups in the US, UK, and Western Europe. It is quite hard to find developers with reasonable rates locally, and such talent shortage is harmful not only for companies but also for the entire economy. As predicted by the “Future of Work: The Global Talent Crunch” report, the United States will be facing a global talent crisis by 2030. Being the world’s leading technology market in 2019, the US can lose about $162.25 billion by 2030 because of sector skills shortages, mainly the tech sector. The United Kingdom may be also affected by the digital skills gap and it can cost the country £141 billion in GDP growth. Therefore, with the ever-growing demand for tech talent, companies in the US and Western Europe find the solution in outsourcing. Here, we provide you with a calculator that will help you figure out the difference between hiring a software developer in Western and in Eastern Europe. We will also provide you with understanding how much cheaper than in the UK you could hire a top developer remotely thanks to YouTeam .
Real cost of tech staff
Years of experience
NEED TO KNOW
This comparison calculator was prepared by Tristan Senycia in exact accordance with the Accounting Methodology utilised Accounting Services for Business UK in their True Cost of an Employee CalculatorUse the calculator can be used to compare the real costs of:
- Remote Full-Time Employed Contractors in Central or Eastern Europe vs
- In-House Employees in Western Europe, based on their salaries and hourly rates.
- Mid-Level Developer = 3-4 years experience
- Senior Developer = 4-7 years experience
- Super-Senior Developer = 7+ years experience
- Work hours/week = 40**
- Actual productive working days
- Weekdays in a year = 261 Days** Deducting:
- Holidays (2010 minimum is 28 days) = 28 Days/Year**
- Formal training = 5 Days/Year**
- Sick Days = 7.7 Days/Year**
- Wasted/unproductive time (allow 10 mins per working hour) = 37.5 Days/Year**
- Wages / Salary & NIC’s
- Class 1 NICs = 13.8% on earnings above Earnings Threshold [£6,475 p.a]**
- NI Rates
- Employer’s NI threshold (per week) = £144.0**
- Class 1 NICs: 13.80%**
- Salary – London Average
- Mid-Level Developer = £40811/year* = £21.26£/hour*
- Senior Developer = £52229/year* = £27.20£/hour*
- Super-Senior Developer = £58000/year* = £30.21£/hour*
- Hourly, monthly & annual salaries = average for Remote Contractors available for hiring through YouTeam
|Mid-Level Dev||3-4 years||21|
|Senior Dev||4-7 years||25|
- Conservative Management of Outsourced Resource Co-efficient = 1.2
- Employee specific costs
- Software licences = £1,500/year
- Training = £500/year
- Computer & IT support = £500/year
- Apportionment of business costs
- Share of general overheads (rent, rates, building maintenance, water, heat & light, telephone, insurance, etc) = £500/year
- Consumables (stationery, toner, tea/coffee, toilet paper, etc) = £100/year
- Administrative overheads (HR, payroll, secretarial, appraisals, etc) = £1,000/year
- Benefits Bonuses + Profit Sharing at each different seniority level
- Mid-Level Dev = £5000/year*
- Senior Dev = £6000/year*
- Super-Senior = £7500/year*
- ‘Equivalent salary paid’ – For engineers of equivalent levels of experience, ascertain both:
- Calculate the multiple of equivalent salary paid in both the in-house
employee model and the outsourcing model
- In the in-house employee model this varies between 1.8 and 2, depending on the seniority of the staff involved
- In the outsourcing model this varies between 1.1 & 1.2, depending on the effort required to communicate & manage external engineers
- Equivalent salary paid X multiple of equivalent salary paid = Total Cost of Resource (for both the remote contractor & in-house employee)
- Compare percentage cost difference between the total cost of resources of both the remote contractor & in-house employee
- Accounting and legal expenses – Accounting fees, Bank service charges and fees, Credit card processing fees, Insurance (liability, workers comp, etc.), Legal fees, Overhead staff (executive, administrative)
- Administrative Costs – Administrative salaries, Delivery and postage, Digital certificates, Dues and subscriptions, Filing fees, Recruiting (advertising and fees), Interview expenses, Payroll, Secretarial, Appraisals
- Sales & Marketing – Advertising, Conferences and trade shows, Corporate graphics and web design
- Computer Related costs – Computer hardware, Computer software licenses, Computer software subscriptions and maintenance, Hosting services
- Office expenses – Books, Check orders, Equipment, Furniture, Meals and entertainment, Meeting expenses, Consumables – stationery, toner, tea/coffee, toilet paper
- Rent – Rent, Corporate taxes (property, etc.), Rates,
- Telephone expenses – Voice and data communications
- Utilities – Printing services, building maintenance, water, heat & lighting,
- Other Overheads – Overtime, Holidays, Repair services, Training, Travel, Maternity/paternity leave, Jury service, Sick leave holiday pay
- Optional Benefits – Company car, Gym, Healthcare, Life assurance, Pension, Bonus, Profit Sharing
However, you can always hire a developer in Central or Eastern Europe in a cost-effective way. This is particularly relevant if you are, currently, bootstrapping your new software product.
FROM YOUTEAM BLOG
Is it really more cost effective than hiring in-house staff for software projects?
Back in 2014 Toptal’s VP of User Engagement Hyam Singer challenged the notion that in-house developers were always more cost effective that contractors, who on the surface charge higher hourly rates.
- What are the project requirements? Define the project scope, deadlines, technology stack, functionality of the web or mobile app that you are going to build, supported platforms, etc. This will help you get a clearer picture of a candidate that you are looking for.
- What is the collaboration model? Are you hiring a full-time, part-time, or freelance developer? Do you consider outsourcing the development services to an offshore country?
- What is the project budget?
- Do we need recruitment agency services for a fee, or do we spend a lot of time on manual research (which can be tricky), or do we use “no recruitment fee” services like YouTeam?
- California: $34 - $90 per hour
- District of Columbia: $38 - $76 per hour
- New York: $30 - $82 per hour
- Texas: $31 - $74 per hour
- Washington: $38 - $160 per hour
- United States: $35 per hour – junior, $125 – senior.
- Poland: $ 15 per hour – junior, $ 75 – senior.
- Ukraine: $23 per hour – junior, $45 – senior.
- India: $5 per hour – junior, $50 – senior.
- United States: $30 per hour – junior, $80 – senior.
- Poland: $20 per hour – junior, $85 – senior.
- Ukraine: $20 per hour – junior, $65 – senior.
- India: $4 per hour – junior, $65 – senior.