How much does it cost to hire remote software developers?

By George Fironov ·Subscribe

Remote work – you’ve heard about it, you’ve probably hired a freelancer before, but I bet you still believe the best way to hire people is in-house. There’s a small chance that you’re right – if you don’t know how to source remote candidates, or how to manage remote developers, then your best choice might be to hire locally, or relocate your new hire.

But here’s where it gets tricky. What if there are no suitable candidates in your area? Or the best candidate doesn’t want to relocate? In that case you’d be left with remote hiring as the only option. I want to tell you that ultimately it might be the best thing to happen to your business.

You’ll have to adapt your management style, as well as your workflows, to properly integrate remote workers into your team. It’ll be a challenge, but once you overcome an initial period of change, you will become a true 21st century entrepreneur. You will learn what true Agile development is, and how to manage a distributed team efficiently – simply because you’ll have no other choice!

And – probably most importantly – your overhead costs will drop, and become easier to manage. Don’t believe me? Let’s analyze the costs of hiring remote developers.

How much does it really cost to hire remote software developers?

Before we get to the cost of distributed developers, we need to set the scene with a bit of context. First: what does software development pay on average?

Let’s focus on back-end, front-end and full-stack developers, since they are the most popular types of developer roles – with a gap of almost 20% before the next category –  according to the StackOverflow Developer Survey:

Source: StackOverflow 2018 Developer Survey

This isn’t surprising.

Most companies hire developers to build on-premises software, or for software projects like building web applications that consist of features similar to many other products, but designed and built from the ground up to serve a specific niche market.

Even when that’s not the case, these three developer roles are still essential to most commercial software engineering projects.

So what are the global average salaries for front-end, back-end and full-stack developers? Let’s take another look at the survey data.

Source: StackOverflow 2018 Developer Survey

 

Front-end developers get the smallest piece of the pie, with an average of $51,000 in annual salary.

Back-end developers are a bit more pricey, at an average of $56,000 in annual salary.

Full-stack developers who combine the two above roles don’t get a much better deal for performing two roles at once – their average annual salary is $59,000.

Here’s the kicker though: most surveyed developers consider the compensation (18,3%), or the technologies they’ll be working with (17,3%) as the most important factors when choosing a new job. Only 10,3% developers chose the ability to work remotely as a top priority when evaluating job opportunities.

Theoretically, that’s good news for entrepreneurs because you could conclude from this data that if you pay more than your competitors, developers will gladly relocate to work in your office… which is exactly what Google, Facebook, and other software industry giants do, because they have the budget and the capabilities to source, hire, and relocate the best of the best.

But let’s get back to earth and face the reality that most start-ups and SMBs have to deal with. Here are the main challenges of SMBs as outlined in the Top Technology Trends for SMBs survey conducted by Gartner in 2017:

Source: Software Advice

 

This data shows that hiring the right people is clearly a big challenge for both Small and Midsize companies.

This means that if you’re not Google or Amazon, you cannot afford to hire wrong employees, or have high employee turnover.

In light of these facts, hiring remotely is not just a different method of hiring people, but also a way to reduce risk in your business. It virtually opens up the whole world as a potential source of candidates to work at your company.

 

If that’s the case, we should now take a look at how much it costs to hire remote workers in different places around the world (info table courtesy of HubStaff.com):

Source: HubStaff

 

This doesn’t give us the whole picture, because it’s hard to compare hourly rates to annual salaries, but let’s fix that, focusing only on the last two rows – “Web Developer” and “App Developer”.

 

Web Developers have an average annual salary of:

  • $5.132 in The Phillipines
  • $3.611 in India
  • $19.768 in Romania
  • $15.333 in Russia
  • $24.309 in Ukraine
  • $55.968 in USA
  • $21.584 in Bulgaria

 

Whereas App Developers have an average annual salary of:

 

  • $7.751 in The Phillipines
  • $5.955 in India
  • $20.993 in Romania
  • $15.333 in Russia
  • $28.723 in Ukraine
  • $68.302 in USA
  • $22.577 in Bulgaria

 

Another source shows us a bit of a different selection of countries along with the average hourly rates for freelance software development:

Source: CodeMentor

 

Compared to previously listed countries, you don’t even need to translate these hourly rates into annual salaries to realise that in developed countries, with high penetration of tech hubs and big business, the rates for hiring freelance software developers are much, much higher.

Hiring a Ukrainian freelance software developer costs almost 7 times less to hire than an Australian developer!

That’s just how the global market works – we don’t have much influence over software development rates around the world, but we can adapt to it.

What entrepreneurs can do with this information is stop restricting your hiring initiatives to your local market. You can find great remote developers in less developed markets, for a much smaller price, and without sacrificing the quality of your end product.

Ready to hire remote developers?

I sure hope so, because the gig economy isn’t going away anytime soon – millennials clearly prefer to work remotely, and new generations of professionals will only be more demanding in this aspect.

Moreover, remote hiring is beneficial for your company culture as well as your bottom line – there’s nothing not to like, unless there really is no other way to run your project than working in close cooperation with your whole team, but cases like these are rare.

The sooner you adapt your company culture to working with distributed teams, the better.