How to reduce costs on developers hiring

Was it possible a little while ago to even imagine what kind of technological world we will live in now? Technologies have developed at such an incredible speed that we only have to accept the new reality and adapt as quickly as possible. Well-established business giants were the first to pick up the wave of technological explosion and the rest of the companies had no choice but to follow the same.

Nowadays, a company’s digitization is a must to survive in the tough and competitive business world. According to statistics, the digital transformation market is going to expand from $469.8 billion in 2020 to $1,009.8 billion by 2025. And this is the reason for the constantly growing demand for developers which entails a worldwide talent shortage.

Hiring and retaining employees is now much more complicated than ever. 69% of companies report difficulties with recruitment. Considering that this process is quite time-consuming and requires a lot of resources, companies need to find new ways of hiring. In this article, we will explain what the hiring process consists of and how to optimize your spendings on team maintenance.

Developers hiring process

According to the LinkedIn report, the need for developers increased by 25% between 2019 to 2020. The reason for this is pretty obvious. With rapid technological progress and a sudden pandemic, companies had to digitize their business to stay competitive. And this, in turn, caused the growing demand for software engineers. Hence, it’s getting harder to find and hire professional engineers. The recruitment process requires not only a lot of time and resources but also pretty much investments.

Every day in the labor market appears enormous numbers of job openings. In such a situation, it’s difficult for recruiters to find the best talents. Typically, it takes approximately 42 days to fill a vacancy. What is more, the average amount of candidate hiring costs is $4000. This amount on average includes:

Besides the points mentioned above, you should take into account the recruiter’s salary or the cost of other sources where you are going to find employees. Based on all these aspects, the resulting cost per hire will be quite impressive.

Developers salaries comparison

Facing the great demand for developers, businesses try to struggle with the battle for hiring real professionals. As a result, we can observe a substantial growth in developers’ salaries. And it seems that such a tendency is going to continue. Due to the SHRM report, 41% of companies are planning to enlarge their salary budget in 2022.

If you don’t want to take part in a tough race for talents and save your budget, try to collaborate with offshore developers. For example, developers’ salaries in Ukraine are far less than in other countries, but it doesn’t affect the quality of their work. Just take a look at the significant difference between developer salaries in Ukraine and other countries.

When and how to reduce costs on team maintenance with staff augmentation

In It industry as well as in the other areas, budgeting and forecasting are essential parts to create a long-term strategy and make a company more profitable. Also, it’s crucial to identify weak points of processes as soon as possible to plan their optimization. Probably, almost all entrepreneurs know that budget streamline is one of the keys to business success.

One of the ways to optimize your company’s budget and save resources is to cut spendings on the development team maintenance with the help of staff augmentation services. Due to the following stats, 70% of companies noted that the main purpose to use outsourcing and staff augmentation is the possibility to cut expenses.

Сompared to the high cost of hiring and the need to cover additional aspects working with in-house developers, in the staff augmentation model you pay only for the time that specialist spent on a particular task. No need to compensate for benefits, savings, insurance, and even recruiter salary. No need to worry about the time needed to fill the position. Everything is covered by the staff augmentation company. Besides, three main problems can be solved by using this strategy:

Low margin

A low-profit margin directly affects a company’s growth. Insufficient business revenue results in the inability to cover all operational expenses, such as development, marketing, and management processes. It’s quite difficult to expand the business and promote your product under such circumstances.

One of the reasons for a low-profit margin is a big production cost. If you form your price from the market or true value, the biggest part of the production cost will be spent on development. And in this case staff augmentation can come in handy. By collaborating with offshore developers, you can significantly increase your company’s efficiency and save your budget. The lower expenses the bigger the profit margin.

High product cost

While creating the pricing strategy it’s inevitable to take into account the production cost. To generate income, you can’t set a product/service price lower than the cost of its manufacturing. Based on this, if you spend a lot of money on development, the price of your product/service will be quite big. And if your product/service is very expensive, it won’t be able to compete in the market.

If you use staff augmentation services, you don’t need to overpay for development operations or team maintenance. Due to this, you can lower your production cost which in turn will have a good effect on pricing and sales.

Long-lasting development process

Another thing that you can solve with the help of staff augmentation is to accelerate your development process. As we live in a rapidly evolving and changing world, companies should act fast to stay competitive and not to lose their market share. What is more complicated, companies should not only create a service/product as fast as possible but also make it high-quality.

With the sufficiently serious talent shortage and increasing percentage of turnover rate, it’s quite difficult to produce something good in the short term. According to research, 63% of companies pointed out that employee turnover has grown over the past few years. Considering this, staff augmentation services can be a salvation for companies. With its help, you can expand your development team very fast, get a high-quality product in time, and scale your business faster.

Benefits of staff augmentation

As the competition for developers has become more intense than ever before, 77% of companies already assume that they should somehow cope with a lack of talents. Staff augmentation is one of the substantiated options for this. It allows you to get the needed specialist or even a ready-made team with the required expertise very fast without a great effort. This  model of cooperation has compelling benefits:

Less headache with legal and HR aspects

Collaboration with staff augmentation companies allows you to save resources and delegate some processes to vendors. Such aspects like searching, hiring, and adaptation of workers are covered by the contractor’s company, as well as employment, payrolls, and taxes. Moreover, you don’t need to worry about retention rate, equipment supply, and employee satisfaction level. Solving all these issues is the obligation of the staff augmentation company.

Faster scalability

In the context of the need to grow business faster staff augmentation solves two following problems at once:

  • The lack of proper specialists for the fast development process
  • The need to spend time on covering additional processes (HR and legal)

Such a model of cooperation can come in handy when your company gains a new funding round. Fast talents’ hiring will help you to achieve new goals and justify investors’ trust. Staff augmentation service is also very helpful when you need to add new features promptly to get ahead of competitors. Or even when you suddenly lose a key employee, but you can’t disrupt the development process. Staff augmentation service will provide you with the missing professional as soon as possible so you shouldn’t worry about your performance.

Control over the development process

Cooperation with offshore developers gives companies flexibility, increased capacity, and the possibility to focus on main business processes. This, in turn, helps you to confront market pressure, deliver high-quality products to the end-users, and scale faster.

Working with staff augmentation companies, you can monitor all processes at any stage of your product development on your own or delegate everything to the contractor’s company. You’ll have the possibility to review all reports and add changes to the project scope at any time. You can also take part in candidates’ interviewing, track the working processes, and performance.

How to choose a vendor

Choosing the right vendor is a vital and responsible process. As you almost give your project fate to third-party companies, you should conduct research and take into account such factors as reputation, data security, and price. Also, to make sure that the contractor’s company suits you, don’t forget to figure out the following aspects:

Stack technology

Stack technology affects your product development and its efficiency. It’s important to make sure that the vendor has developers with the proper skills. Especially in the case when you need engineers with specific qualifications.

Area of expertise and released projects

Success cases represent vendors’ areas of expertise, approaches that were used to solve problems, and the quality of developed products or services. After exploring this information, you can conclude, what type of vendor will handle your project better.

Types of conditions

Last but not least is the model of cooperation. Specify what types of agreements vendors can offer you and choose the most suitable one. Frequently, staff augmentation companies offer one of the three variants of collaboration:

  • Time and material (when you pay only for the time that the developer spent on tasks)
  • A fixed price (when you pay a particular amount for developer of a dedicated team no matter how many hours they should spend on the working process)
  • DSDM (when the contractor’s company provide you with a dedicated team for a specific period and work entirely on your project)

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    Alyona Zhernovnikova
    Business Development Manager

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