Hiring in-house vs remote developers: Cost-based comparison
In the current situation, remote work has become a life-saving solution for the majority of companies. Even the most conservative proponents of office work, like banks, have come to realize that remote work is not all that scary, and with a well thought-out approach it can be even more efficient than working in the office.
If you’re currently faced with making talent decisions, hiring remote employees is worth considering for two basic reasons — flexibility and cost efficiency.
How does hiring remote developers help to keep your company flexible and productive?
The experience of global companies has shown that shifting to remote collaboration increases business flexibility and can help to get through tough times such as the worldwide quarantine.
The main precondition for successful remote collaboration is setting your work processes the right way. Here are the four steps to manage this task:
How does hiring remote developers help to cut costs?
Hiring local employees in developed countries can be very expensive if you add all social benefits to net salaries.
Remote collaboration offers more cost-optimized methods of recruitment than hiring in-house employees. There are many companies that offer services in remote tech talent recruitment.
Such tech partners help businesses save on local recruitment and at the same time get access to markets with wide tech talent pools.
To explore the costs for hiring developers, we recently researched four countries with developed economies that have a high demand for programmers — the US, the UK, the Netherlands, and Germany. We compared hiring costs in each of these countries with the cost of hiring developers in Ukraine.
| UK | Germany | Netherlands | US | Ukraine | |
| Developer’s annual gross salary including all company taxes | $74,058 | $81,657 | $88,058 | $138,539 | $60,000 |
The research shows that the US has the highest average annual after-tax cost per developer – $138,539. The Netherlands is next with $88,058.
Germany follows with $81,657, and the UK comes next with $74,058. Ukraine has the lowest average annual cost for a developer ranging between $50,000 and $60,000.
Let’s compare the annual employment costs in the US and Ukraine to see the numbers in greater detail:
| Junior software developer | Mid-career software developer | Senior software engineer | ||
| US developer cost | ||||
| Annual net salary | $63,735 | $106,816 | $139,148 | |
| Supplementary pay 3.2% | $2,039 | $3,418 | $4,452 | |
| Insurance 8% | $5,098 | $8,545 | $11,131 | |
| Paid leave 7.1% | $4,525 | $7,583 | $9,879 | |
| Retirement and savings 3.8% | $2,421 | $4,059 | $5,287 | |
| Legally required benefits 7.6% | $4,843 | $8,118 | $10,575 | |
| Total after-tax cost | $82,661 | $138,539 | $180,472 | |
How much does it cost to hire developers in the US, the UK, Germany, the Netherlands, and Ukraine?
All in all, tax contributions in the US make up 29.7 percent of the net salary.
Hiring a junior software developer in the US will cost you \$82,661 per year on average. If you need to hire a middle software developer in the US, you’ll have to pay \$138,539. And hiring a senior developer in the US will add up to \$180,472 on average.
You can find more detailed numbers regarding software development costs in the UK, the Netherlands, and Germany in our research.
Conclusion
Hiring remote developers has now become a widespread practice all around the world as businesses continue to adapt to the rapidly changing work culture.
High-speed internet and a broad selection of available communication tools and methods make the move to remote collaboration as seamless as never before. And successful experiences of global players continue to prove it.
If you’re currently considering remote hiring options but still have lots of questions, don’t hesitate to contact our experts and get a consultation on hiring dedicated developers with Grid Dynamics.
