You just started a new project and you are putting together a list of the skills you need in your team. You discover you don’t have some of the software development skills you need and will have to find a way to fill the skills gap. There are a few different ways to correct the scenario. We’ll look at three options:

  • Hiring a New Staff Member
  • Hiring through a Recruitment Agency
  • Augmenting Staff through a Custom Software Development Team

Hiring a New Staff Member

Hiring a new staff member is an excellent way of making sure you have the skills you need on your team, but the time, money, and commitment you are making to hiring a new employee only makes sense if this will be a long term project.

First you develop a job description, post the job, review resumes, schedule interviews, perform the interviews, make a decision, and negotiate pay. It costs almost $19,000 and 40 days  to recruit the average employee in Australia according to a survey of over 1,500 Human Resource professionals[1].

Once you have hired someone, you introduce them within the organisation and help them learn how to operate effectively. It normally takes between six months and two years for an employee to be fully effective within an organisation. That means this could cost another $50k+ before they are truly contributing at peak performance.

That means you are spending between $69,000 and $319,000 to have a fully acclimated employee added to your organisation. The following table is a break down of the time and costs.

This picture looks at the time and monetary costs of hiring an employee.

As you can see, there is a high investment in this process, but there are also risks involved. The two biggest risks are the person doesn’t have the skillset you need and that they leave before the project is complete. Either of these risks could delay the project, increase costs, or cause the project to be cancelled.

Using a Recruitment (Temp Agency)

A temp agency or recruitment agency is another viable option. These agencies provide quality candidates to companies so the company has an employee without the long term commitment. For software development, this can fall into two categories:

  • Recruitment and Temp agencies Domestically
  • Freelancing Websites like Toptal or Upwork.

Recruitment and Temp Agencies tend to charge around 18% markup from what they pay the employees which is on the high end of administrative costs for businesses, but they handle all benefits (if any) and most of the hiring process. This makes it where you reduce the time you spend to creating the job description, hiring recruitment agency, and interviewing the software developers they already screened.

We’ll assume the project is for 13 weeks and use the Australian figures from Indeed to calculate how much we’d spend on a software developer from a recruitment agency[2].

This picture gives an example of the time and monetary costs for utilizing a temp agency

Freelancing sites make it easy to hire software developers from around the globe quickly, but there is typically either a 3% payment processing fee for clients or hidden costs that make it where you don’t know how much you are paying for their markup. Most freelancers on Upwork will markup their desired pay by 20% to cover Upwork fees.

Software Development freelancers’ hourly varies dramatically but are typically between $60-100/hr or billed at a fixed price based on milestones[3]. Typically a freelancer takes less than a week to hire and will get to work immediately.

Below is a breakdown of how much it cost to hire a freelancer for a 13 week project along with the number of hours you’ll get to equal a full time employee costs.

Describes time and costs of hiring a freelancer to perform software tasks.

Both options are good ways to get a candidate, but you are limited to utilising that one person to accomplish the task or hiring more temps or freelancers, which comes with additional costs. You also go through the full recruitment process any time you have a new project.

Augmenting Staff through a Custom Software Development Company

The final way to fill gaps in your software development skills set is to hire a company like Flying Donkey. We focus on providing solutions to your most pressing needs with our global team of 35 designers, developers, project managers, quality assurance specialist, and other experts to help increase the success of your projects.

We operate primarily on time and materials contracts, so you know what you’ll be paying before we start doing any work. Our average customer spends between $12,000 and $20,000 per month. Using the same three-month project, Flying Donkey reduces the percent of project costs that go to administrative costs.

In addition, we speed up deployment by 7% over a freelancer or temp agency and nearly 36% while creating a better software solution.

You can easily see the advantages of hiring a custom software development company to augment your current IT staff.

To learn more about our team augmentation services, click here.

If you are ready to ramp up the speed and quality of your software development projects, schedule a call with me.

[1] https://www.hcamag.com/au/specialisation/employee-engagement/this-is-how-much-it-costs-to-hire-one-employee/192036

[2] https://au.indeed.com/salaries/software-engineer-Salaries

[3] https://www.codementor.io/blog/cost-of-hiring-full-time-and-freelance-software-developers-1nqgg7b19d