Traditionally, when we consider establishing a company, our first thoughts are about who are the right people to hire. The better way of thinking will be to analyze if it is beneficial for us to hire employees directly or to consider different models such as outsourcing. Of course, this is not a dilemma that happens only in the establishment of a company but an ongoing issue, when talent needs to be added to the IT or engineering team. It is extremely important for the company’s leaders and HR executives to weigh all of the options available to them.
According to several recent surveys, the associated cost of hiring one full-time employee in the United States can range anywhere from $4,000 to well over $7,000. As a rule of thumb, the minimum amount added to the gross salary of an employee as employer costs sums up to approximately 25% of the salary. Not taking into consideration possible expenses such as recruiters fees, advertising, and recruitment associated costs, turnover, and training expenses.
Of course, outsourcing is not a free ride but the costs associated with it are more straightforward and easier to calculate. Typically you will receive an offer upfront based on working hours of engineers or per project. All the additional expenses are the responsibility of your outsourcing partner and this is why you have to choose a reliable one.
The Hidden Costs Associated Of Traditional Employment
The financial outlays associated with employing permanent software engineers and designers go far beyond estimated monthly compensation expenses or the budget allocated to recruitment efforts. You should be aware of the following:
Hiring and Onboarding Expenses – Onboarding is the first step for qualifying someone to work at your company, introducing to the organizational processes, culture, and training on specific skills. Some of these expenditures may include the administrative fees connected to managing more paperwork and the funds spent procuring necessary IT equipment.
Employee Wages and Turnover Costs – If a company is hiring locally, it will have to offer competitive salary packages if it wants to recruit skilled job candidates. This however won’t guarantee employees staying for a long period at your company and you might find yourself investing in onboarding and training without getting the return on investment due to turnover and sudden leaves of employees. This fact is not avoidable especially in well developed, competitive markets.
Limited Hiring Flexibility and access to new talent– After an engineering or design team recruits and onboards capable professionals for a project, managers will then usually be under pressure to utilize those resources as much as possible to justify the costs of keeping them on the payroll even when the project they were brought in for comes to an end. This path might lead to an investment of time and finance in unsuitable employees.
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