The real cost of employee turnover

Today’s article will be the last one from our cycle “How much it will cost — to hire a new software developer?”. We have already covered such topics as hiring and maintaining, and in the third part, we want to cover everything that is under employee turnover.

The reality shows that even the most successful and attractive employees from prospective companies have a certain percentage of staff turnover. As we’ve already mentioned, the IT industry is highly competitive and there is always a high demand for really skillful specialists so one wrong step and your developer is accepting someone else’s job offer. And here comes the issue — invest in retention or let him go? Both of these decisions are followed by certain expenses.

The annual turnover rates for software developers, programmers, and analysts are now run up to 21%. And when it comes to developers with some specific or rare expertise the cost will go upper. So below we’ll try to review and count costs for retention of software developers and its alternative cost — in case a company loses an employer or terminates.

Direct costs

Retention:

Lose of employer/terminating:

Indirect Costs

It’s about retention costs which are really hard to calculate, but we should mention them.

Time spend

Motivating a person requires additional time and efforts from the HR department and management as well. Different kind of motivating talks and interviews, gathering feedback and improving communication process between manager and employee, organizing team-building events, trainings — all this is mean extra time spend and it is equivalent to a certain amount of money (HR hourly rate — 18–21,5 USD and manager/team lead — 50 USD+).

Low motivation

In case you are doing something wrong as a result you get an unsatisfied developer. It does not always lead to losing an employee but it means lower productivity and of course it affects the project and project’s budget. Not motivated employees will work less effectively or even can harm the project. And loss can be significant.

In conclusion, we should say that the costs of hiring a new software developer don’t stop there. Yes, currently we live in a world where the phrase “Work from home” is okay, but if your software developer works in the office — you need to take into account the cost of the office space, desk, chair, and other facilities he\she will need to do their job.

So when it comes to hiring a new software developer, it’s clear that it will cost you more than just a basic salary to support and get their best work. That’s why outsourcing your software development can be one of the most cost-effective ways to boost productivity and results.

Developex can assist you with building a dedicated development team of Software and Firmware engineers, QA specialists, UI/UX designers, and also allocate a Project Manager/Business Analyst/Delivery Manager exactly for your specific needs!

Hope you enjoyed reading this article. We will highly appreciate any comments regarding it. If you struggle to find a perfect match for your development team — don’t hesitate to contact us: contact@developex.com

Developex will always be there for you whenever you search for the right development team.

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