The Hidden Costs of Full-Time Software Developers
Drew Hendricks
APR 11, 2016 17:54 PM
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The Hidden Costs of Full-Time Software Developers

by Drew Hendricks

Software development is one of the hottest areas for outsourcing, with businesses realizing that they can easily assign projects to workers in remote areas and save money. Programming talent is not limited to any geographic area, especially now that so many organizations have dedicated themselves to cultivating and nurturing technology talent in developing nations.

But some companies steadfastly stick to the practice of paying salaried developers to handle all of their programming needs. These may be software development firms that provide applications to a variety of clients or businesses that have a full-time need for software development and upgrades.

“There are a myriad of reasons why enlisting the help of specialized freelance, tech talent can make a tangible impact on a company’s bottom line,” says 10x Management Founder, Rishon Blumberg. “In addition to getting fast access to high level technical expertise, working with a freelancer can save an organization money in a variety of ways.”

If your organization is one of the many paying salaries to full-time software developers, there are a few hidden costs that could make a difference. Outsourcing could eliminate these costs, giving your business an annual financial savings that can then be put toward other expenses.

Environmental Distractions

Despite predictions that telecommuting is the future of work, only 37 percent of American professionals work from home. Software developers fit the ideal profile for remote work, since their daily tasks are often completed in solitude. For the many businesses that still require full-time salaried developers to work on site, there are many productivity challenges, especially in the popular open-plan offices. One study found that workplace distractions cost companies $10,375 per person annually. Businesses may actually find that hiring remote workers saves money if they allow those developers to work from the comfort of home.

Local Cost of Living

Assuming a business hires local full-timers, the cost of living must be factored into the overall expense. Salaries can vary from one area to another and full-time workers are more likely to demand the local market rate before accepting a position. By using contractors and freelancers, businesses have the option of hiring a worker in an area with a lower cost of living, even if the worker is required to come into the office occasionally for meetings.

Office Space

Salaried software developers are more likely to need dedicated physical space, even if that space is shared with other telecommuters. By switching to contract workers, a business can eliminate that commitment, which frees up desk space for other workers. For a new business, contracting out software development means that they can invest in a smaller office lease, if they choose any space at all. This saves money on utilities, rent, and office equipment, since contractors customarily use their own computers, printers, and scanners.

Limited Perspective

When a business limits itself to the same group of salaried employees, working year after year, that business can easily fall into a rut. Contractors bring in new perspectives, often suggesting improvements that come from their own outside experience. Business leaders may feel more comfortable asking a temporary worker for thoughts and ideas and the contractor, in response, may feel freer to speak up. This is especially true if a business regularly brings in new contractors to work specifically on one or two projects. New contractors will have a fresh perspective, since they haven’t been involved in the company’s work on other projects.

High Turnover

While the research on the cost of losing an employee varies widely, most business owners realize that recruiting, interviewing, and training new workers is a considerable expense. A contractor commands an hourly wage, based primarily on the level of experience and expertise that contractor brings to a project. Instead of paying top dollar for a salaried worker at that level, a business can usually afford an hourly wage for the duration of a project for a contractor. The specialized information that a developer needs to learn can usually be passed on quickly, but the advanced coding skills a programmer has can easily transfer from one project to the next.

There are benefits to hiring full-time salaried software developers, but businesses should weigh them against the pitfalls. By understanding the full cost of each approach, leaders can make fully-informed decisions and choose the option that works best for them.

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