Hiring a remote team with the required skills is an approved common practice in the software development industry. This way of having IT projects done has been popular for a while already, but considering the challenges nowadays, it is one straightforward option to keep your project rolling.
We have already outlined why Eastern Europe IT specialists are a solid choice in our previous writing. We have mentioned strong technical education, intellectual background with high motivation, convenient logistics, no working hours difference, a decent level of English, cultural and mental likeness, etc.
Now it is time to take a look at numbers directly. How much would it cost to get software developers remotely from Eastern Europe (the best value-for-money option) compared to hiring the same personnel here in the Netherlands? And how much can one save?
To make this visible, we are going to contrast an annual payment of the most common IT specialist in Amsterdam and Kyiv (Ukraine) – the vast pool of software developing talents. At Moqod, we have extensive experience in working both in the Netherlands and in Ukraine.
We chose the middle level of experience (2-5 years on average) and took for comparison positions of Java developer, PHP developer, and QA engineer.
According to stackoverflow.com, Java specialists with 2-5 years of experience in the Netherlands will get annually approximately €62,000. To be precise in costs evaluating, we need to add additional work-related costs that are going to occur when you employ a developer in-house. Among these necessary payments are:
(of €4,494) is an important recruiting metric. It refers to the total cost of filling an open job position and bringing a new person to the company. These expenses occur once and are commonly associated with advertising, events, recruitment process fees, administrative costs, and benefits. In our calculations, we considered the situation when you work with an internal recruiter. In the case of external recruiters, the fee for a hunted head can reach up to 25% of the employee’s annual payment.
Insurance, taxes, is another tangible expenditure item that will cost a company about €12.400 a year (related to the annual gross salary mentioned above €62.000).
A holiday allowance
(of about €4,960 a year) is mandatory for employers. Everyone with a work contract in the Netherlands gets a gross payment of 8% of the salary earned in the past year.
Paid by an employer to an employee to manage business-related travels by car, taxi, boat, or airplane. Such trips can include getting to work, meeting clients, reaching a place of business meetings, or conferences. At a minimum, it will be €1,984 a year.
Office desk cost plus hardware costs
There is research that office desk cost in Amsterdam in 2018 was €600 per employee per month and hasn’t changed since then crucially. If we take an average laptop price of €2,000 and a mobile phone of €1,000 and estimate average usage of 24 months, we get €125 per month per employee of hardware costs. Summarizing, we get €725 per employee per month, which is €8,700 a year (fixed, no matter how good your employee performs).
Employee perks, parties, snacks, etc.
The last but not the least. These office bonuses are essential to reinforce the workplace culture, retain actual staff, and attract new workers. The number can start from €1,500 a year and obviously may have no limits.
Thus, the calculation looks the following:
Summarizing these expenses, a company will annually pay more than €96,000 per employee of the level mentioned above
At the same time, Java software developer from Ukraine, hired via Moqod will cost €44,000 annually, which is €51,400 less (which is more than 53% savings). In the case of remote developers from Ukraine all the work-related costs are not applicable. While you get the same level of work done.
We also compared the middle experienced PHP developer and QA engineer hired in Amsterdam for at least a year:
Hiring costs of the PHP developer and QA engineer in Amsterdam
While the same specialists employed from Ukraine will cost €26,100 and €22,600, which is 40.5% and 37.6% less, respectively.
It is hard to argue with numbers: cooperating with remote software developer teams from Eastern Europe is almost twice cheaper without compromising output quality.
Now let’s take a short-term project (let’s say with a three-month duration) and compare the teams’ salary costs of two middle-experienced Java developers and a junior QA engineer.
Hiring costs of a team of developers for a short-term project in Amsterdam
The fees will be respectively €54,723 and €20,321, while in Ukraine €14,139 and €8,339. In this case, the total price of the project in the Netherlands is €75,000, and in Ukraine is €36,600. By hiring a remote dedicated team for three months, a customer saves at least €38,384 per period. Also, keep in mind, this type of contract is usually flexible with the possibility to prolong or change the team composition in most cases.
By the way, if you are interested in estimating how much more you can save depending on the required technology and level of experience by overviewing exact numbers using our savings calculator.
Working with a remote team is a must-have of modern times. Such giants as L’Oréal, Deutsche Bank, Intel, have been using remote dedicated teams regularly for many years, and have an excellent record of stories is getting longer with each new contract.
Through cooperating with skillful engineers and developers from Eastern Europe in addition to 70% of the cost per year, you will get mature, established processes and domain expertise.
So focus on more critical staff like keeping your business on the wave, perfecting your service or product, promoting them, and supporting your customers during these hard times. We will take care of the rest.