How Much Does It Cost to Hire a Software Engineer in 2023?
The cost of hiring a software engineer can vary greatly depending on a number of factors, including the individual’s level of experience, the location of the candidate, and the specific skills and expertise required for the job.
How do you determine the cost to hire a software engineer? When it comes to budgeting for a software engineer, there are no one-size-fits-all solutions. In this article, we will cover the main factors that contribute to the cost of hiring a software engineer.
Top factors that contribute to the cost of a software engineer
1. Software Engineer Experience
For entry-level software engineers, the average salary is around $75,000 per year. However, this can vary depending on the location of the candidate. For example, software engineers in San Francisco can expect to earn significantly more than those in smaller cities or rural areas.
Additionally, software engineers with specialized skills, such as experience with a specific programming language or platform, can command higher salaries.
Mid-level software engineers typically earn around $110,000 annually, while experienced senior software engineers can earn upwards of $150,000 or more. However, it’s worth noting the cost of living in certain areas, so even a relatively high salary may not go as far in those areas.
2. Cost of Benefits
In addition to salary, companies may also need to consider other costs associated with hiring a software engineer, such as benefits and bonuses. Many companies offer competitive benefits packages, including health insurance, retirement plans, and paid time off. Bonuses, particularly for high-performing engineers, is also common in organizations.
3. Cost of Recruiting a Software Engineer Internally
Another factor to consider when determining the cost of hiring a software engineer is the recruiting process itself. If you’re recruiting internally, you most likely have a team with the skillset and tools to hire a software engineer. If so, consider the following cost when recruiting internally:
- How much does your recruiting team cost?
- How much does your technical assessment software (HackerRank, Codility, Codingame, etc.) cost?
- How much time does it take hiring managers to interview and vet candidates?
4. Cost of Recruiting a Software Engineer with an IT Staffing Agency
If you don’t have the above skills, time and internal team in place to recruit yourself, working with an experienced IT staffing agency is a good option.
Many companies opt to use IT recruiting agencies, which can be more efficient in the long run. The cost of IT staffing services ranges from 20-30% of placement salary. This means that your cost to obtain a skilled software engineer who is salaried at $120,000 typically ranges from $24,000 to $36,000 when working with an outside IT recruiter.
The advantage of working with an IT staffing partner is that they are experienced, dedicated to staffing, and do not rely on job boards but are highly skilled in seeking talent. Staffing agencies also have a big network of candidates to pull especially if they have been in business for many years.
5. Cost of Hiring a Software Engineer on a Contract Basis
Hiring a software engineer on a contract basis can be a cost-effective option for companies. This allows them to hire an engineer for a specific project or period of time without incurring the costs associated with a full-time employee. Additionally, the hourly rates for contract software engineers can be competitive from a cost savings standpoint versus the cost of a full time employee.
Finding the Right Staffing Model for You
The cost of hiring a software engineer can vary greatly depending on a number of factors, including the individual’s level of experience, the location of the candidate, and the specific skills and expertise required for the job. Entry-level software engineers can expect to earn around $75,000 per year, while experienced senior software engineers can earn upwards of $150,000 or more. Companies also need to consider other costs associated with hiring a software engineer, such as benefits and bonuses and recruiting costs. Additionally, some companies may opt to hire remote workers, which can also impact the cost of hiring.
If you need help deciding what the best option is for your business, book a staffing consultation with our talent acquisition team and start growing your team.