Developer Salaries: Where Does Your Tech Budget Go?

A developer’s life in a company- a financial guide

Ever wondered where the money goes when you hire a developer? Maybe you own a tech start-up and you don’t know what to expect, or you’re a developer who wants to know what goes on behind the curtains, or maybe a human resources employee who’s thirsty for knowledge. No matter the scenario, we got you covered! We did some digging and we’re ready to share with you the secrets of tech recruitment and more!

In this article, we're going to take a closer look at the costs that pile up during a developer's journey within a company. But don't worry, we promise it won't be a dry accounting lecture. We're about to uncover the hidden spending that makes a developer's career tick, from the initial hiring process to their eventual farewell cake. So, grab your magnifying glass, and let's follow the money trail!

Recruitment

Imagine you're setting out to build the dream team for your company. You're on the hunt for top-notch developers who will take your projects to the next level. But here's the catch: assembling that dream team comes with a price tag. Before you even shake hands with your new hires, you'll encounter a set of expenses known as recruitment costs. Have you ever been curious about the price tag attached to bringing a new team member on board? Well, there's a handy metric called 'Cost-Per-Hire' that dives into the financial side of recruitment. Think of it as your behind-the-scenes ticket to figure out what it actually costs to welcome a new member to the team.

So, what's this Cost-Per-Hire thing? Simply put, it's like playing detective with recruitment expenses. You add up all the money you spend, both inside(training the team, the recruiters’ wage during that specific time frame) and outside(job fairs, LinkedIn membership, online marketing) the company, to find and hire someone new. Then, you divide that total by the number of folks you've brought in during a certain time frame.

It's like making your own secret formula: (Money Spent Inside + Money Spent Outside) / Number of New Hires = Cost-Per-Hire.

This metric is really important when you want to establish your recruitment budget for the following year. If you know the number of employees you need and you already know the cost-per-hire amount, you know what to expect in terms of expenses.

What should you think about including in a recruiting budget?

Well, it's all about breaking down what you typically spend on recruiting so you can plan your spending wisely. Let's make it crystal clear with a list of common things to consider for your recruiting budget:

• Job Boards Fees: This is what you dish out to job boards to showcase your job openings.
• Candidate Assessment Costs: These are the fees you pay to companies that offer pre-employment tests or coding challenges for potential hires.
• External Recruiter Expenses: It's the cash you shell out to individual recruiters, recruiting agencies, or staffing firms.
• Employer Branding Efforts: These funds cover activities related to recruiting, such as campus recruiting days and career fairs.
• Careers Page Costs: This includes the expenses linked to setting up, maintaining, and sprucing up your careers page.
• Internal Recruiters' Costs: Often the biggest chunk, this covers the salaries, benefits, and travel expenses of your in-house recruiters.
• Additional Recruiting Expenses: Don't forget to factor in other costs like referral program bonuses, travel reimbursements for candidates, and the expenses for your Applicant Tracking System (ATS).

This way, you'll have a clear picture of where your recruiting budget is going and can manage it effectively.

There’s no general rule when it comes to cost-per-hire, as every business manages its investments in a different way and decides its own way of doing things. There are so many elements that need to be considered: the local labour market and the impact of external/internal recruitment expenses do depend on the local trend. You have to research what strategy works and what doesn’t in your target offshoring country.

We have to keep in mind that the salaries of recruiters differ throughout Europe. The typical income for an IT Recruiter in Germany amounts to €55,839 annually or €27 per hour. Generally, the salary range for this role falls between €39,534 and €67,621. Interestingly, most IT Recruiters in Germany hold a Bachelor's Degree as their highest level of education. These salary insights are derived from data collected through salary surveys, gathered directly from employers and anonymous employees in Germany. The typical gross salary for recruiters in Poland amounts to €22,979.44 annually, with an equivalent hourly rate of 11 euros. On top of this, they typically receive an average bonus of €801.9. These salary figures are derived from data collected through salary surveys conducted with employers and anonymous employees in Poland. For entry-level recruiters with 1-3 years of experience, the average annual salary stands at €16,462.16. In contrast, senior-level recruiters with 8+ years of experience typically earn an average annual salary of €28,564.82.

Onboarding and Training

So you have the raw talent but do you know what you need to do with it? We often take talent for granted and we overlook these important steps. However, some may say that these two processes are what keep employees loyal, engaged, and productive. The beginning is always the most difficult, no matter how much experience employees have.

When we discuss onboarding and training, we're really talking about the costs involved in bringing new developers onto your team and teaching them the skills they need to do well. It's like the first step in getting them ready for what's to come.

Think of onboarding as the process of making your new talent feel welcome. It's not just about paperwork and setting up their workspace; it's about introducing them to your company's way of doing things, what you stand for, and what you believe in. This early connection to your company can have a big impact on how engaged, motivated, and loyal they are.

Now, let's talk about training. It's like the ongoing learning journey that gives your developers the skills they need to do their jobs well. It keeps them up-to-date with the latest technologies and best practices in their field.

So what numbers do we have to look for?

• Costs of tools and technologies- the ones that the future employee will use (keep in mind that they’re pricey)
• Training content development- you need a learning platform, right? Or a guide to introduce your employee to their work? That’s going to cost, both money and time.
• Time investment from IT, HR, training, and managers
• Team integration activities, like meet-ups or team-building events
• Salaries- duh!

Let's take a closer look at the continuous expenses tied to developers' salaries and benefits. It's about sustaining your talent pool and how competitive compensation plays a key role in keeping them onboard.

First, salaries. It's not just about paying a sum of money. Salaries reflect the value you place on your developers' skills and dedication. When you offer competitive compensation, it's not just a lure for top talent; it's also a powerful tool for retaining them. Developers tend to stick around when they feel they're fairly rewarded for their hard work.

Now, onto benefits. These extend beyond the paycheck and encompass health insurance, retirement plans, and additional perks that enhance your developers' lives. Benefits are not mere costs; they're investments in your team's well-being. Happy, healthy developers are more likely to remain dedicated to your organization, leading to better talent retention.

So, when it comes to salary and benefits, we're talking about more than just numbers. It's an ongoing investment in your most valuable asset – your talented developers. It’s up to you to decide how much that means to you and what you’re willing to sacrifice for it.

A recent report from talent.io provides insights into the varying average salaries of developers across Europe, both in full-time and freelance roles. The research highlights Munich as the leading city for full-time developers, offering a median salary of €70,000, followed by London (€66,000), Berlin (€60,000), Amsterdam (€57,500), and Paris (€45,000). London emerges as the city with the highest entry-level median salary for software developers at £40,000, while Brussels offers a comparatively lower median of £26,600.

Notably, freelancers may find better prospects in Germany compared to France. In 2020, German freelance software developers received 50 percent higher daily rates (approximately €600) compared to their French counterparts (around €400).

The report also sheds light on the most in-demand technologies in different cities, with variations in the preference for back-end development skills. Node.js is the top choice for London and Paris, while Berlin leans towards Java for back-end development. When it comes to front-end roles, React is the preferred skill in all major European cities, but there are discrepancies in the third-most desired skill, with Paris favoring Vue.js, while London and Berlin opt for Typescript.

The report suggests that Node.js and React skills are currently in high demand, urging candidates with expertise in these areas to consider registering to fill existing roles.

If we’re talking benefits, the previous year (2022) delivered some seriously awesome perks for remote software developers. No matter your employment type, these are the top benefits that are making work more enjoyable:

• Devices (65.8%): Get ready for a tech treat! Companies are handing out the latest gadgets to keep developers equipped with the best tools for the job.
• Flex Your Time (57%): Forget the rigid 9-to-5 routine. Flexible working hours are the new norm, letting developers take control of their schedules and work when it suits them best.
• Health is Wealth (47.6%): Your well-being matters. Health insurance is a hot benefit, ensuring developers stay healthy and cared for.
• Learn and Earn (33.6%): Never stop learning. Companies are offering learning stipends to encourage developers to continually enhance their skills.

But wait, there's more! Employers are going the extra mile to keep developers happy and engaged:

• English Classes: English classes are on the rise, especially for developers in Latin America and Spain. In our globally connected world, English opens doors to international opportunities.
• LinkedIn Learning: The learning journey never ends with LinkedIn Learning. Whether you want to acquire new skills or deepen your expertise, it's all at your fingertips.
• Additional Perks: Some classic perks remain in vogue. Think company cars, bike leasing, stylish work attire, and yes, even funds for delicious office snacks. It's like your job comes with its own style and pantry!

Miscellaneous costs

If you think the expenses are over, I have bad news for you! There’s always more, depending on what kind of business you own. We’re talking legal fees associated with employment contracts, workplace costs (if that’s the case), information security costs, transportation & commuting costs, or employee assistance programs.

In a nutshell, when it comes to the developer's journey with a company, it's not just about the code and algorithms; it's also about the green stuff (no, not broccoli). We're talking moolah, dinero, cold hard cash, and all the costs that come with it.

From the day you set foot in the door to the times you spend enhancing your coding superpowers, there's a whole financial adventure going on. It's like budgeting for a road trip, except the destination is coding glory.

Companies are investing in developers more than ever, and it's not just about the salary. It's devices, flexible working hours, health insurance, learning stipends, and even the occasional English class to keep your communication skills top-notch. They want you to be a happy and well-rounded developer, not just a coding machine.

Hiring a new employee isn't just about offering them a paycheck and calling it a day. The whole process, from finding the right talent to onboarding and beyond, comes with a price tag. On average, it'll set you back about $4,700 to bring a new team member on board, or at least that’s what some studies say.

Employee benefits, like health insurance and other perks, make up a significant chunk of their overall compensation, roughly around 30%.

So, when you're tallying up the costs, it's not just about the monthly salary. You might end up shelling out three to four times that base salary for everything, from the hiring process to getting them up to speed. It's an investment in your team, and it's worth every penny when you find the right fit.

And for developers, knowing the ins and outs of these costs is like having a treasure map. It's the key to negotiating better packages, seeking out opportunities for growth, and making informed career choices. After all, you're the captain of your own career ship, and this map will help you navigate those salary seas.

So, there you have it - the developer's financial journey in all its glory. From recruitment costs to ongoing benefits and all the unexpected perks along the way, it's a wild ride in the world of coding. And by understanding these costs, both developers and companies can set sail for success in this tech-driven adventure.

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Sources

Colman, Helen. “Strategies For Reducing Recruitment Cost When Hiring Software Developers 2023.” Webnus

“Recruiting Costs: Budget and Cost per Hire | Recruiting Metrics FAQ.” Workable resources, https://resources.workable.com/tutorial/faq-recruitment-budget-metrics. Accessed 9 October 2023.

“IT Recruiter Salary in Germany.” ERI Economic Research Institute, https://www.erieri.com/salary/job/it-recruiter/germany. Accessed 10 October 2023.

“Recruiter Salary Poland - SalaryExpert.” Salary Expert, https://www.salaryexpert.com/salary/job/recruiter/poland. Accessed 10 October 2023.

Pugh, Marie. “From Recruitment to Onboarding, What's the True Cost of Hiring Employees?” BambooHR, 22 June 2023, https://www.bamboohr.com/blog/cost-of-onboarding-calculator. Accessed 17 October 2023.

Daws, Ryan. “Stack Overflow reveals UK's top 10 best-paid developer roles.” Developer Tech News, 9 October 2023, https://www.developer-tech.com/news/2023/oct/09/stack-overflow-reveals-uk-top-10-best-paid-developer-roles/. Accessed 17 October 2023.

Agrawal, Shaifali. “Remote Developer Stats: Top Benefits and Perks Companies Offer in 2022.” Arc.dev, 7 July 2023, https://arc.dev/employer-blog/remote-developer-benefits-study-2022/. Accessed 17 October 2023.

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