What is the Actual Cost of Hiring Cheap Developers

It might be surprising but the software development cost doesn’t depend much on the hourly rates of hired developers. Changing the focus from prices to such aspects as developers’ experience, productivity, and overall work quality are more important. All of these factors remain under much discussion and raise the number of frequent questions on hiring cheap developers vs expensive devs

 – How does the engineers’ productivity influence the cost?

 – What price do you actually pay for good and bad developers?

 – How much does the quality cost?

We’ll give responses to these and many more questions in this article.

List of contents

• What can go wrong with cheap development services?
• The hidden cost of software development
• What is the difference between experienced developers and inexperienced ones?
• Comparison of the actual cost of cheap and expensive software developers
• Summary

The market demand for software developers is growing considerably, and so is the cost. Due to the lack of the required workforce and increased wages, companies are looking for different options to find the right candidate with reasonable prices. It is quite important to keep the balance between quality and cost. According to the U.S. Department of Labor, every bad hire can cost 30% of the annual earnings of this position. For example, by hiring a cheap developer with an average salary of $105.590, the company could spend $31,677 additionally for such expenses as onboarding, training, and, finally, recruiting other candidates. 

Along with the possibility of cutting down costs, companies have to consider the experience of the developers. Mature specialists are valued for the following competencies: problem-solving skills, programming language proficiency, debugging, testing, code review capability, performance optimization, etc. Even the time to hire senior and junior specialists considerably varies. Due to the statistics, in the U.S., it takes on average 35 days to find the senior software developers and 15.7 days – the junior ones. Hiring is a challenging process that requires some additional research on developers’ availability, experience, provided services, and rates. Since these aspects differ from country to country, the companies need to be aware of all the factors that affect the final software development price, including the hidden cost.

WHAT CAN GO WRONG WHILE HIRING CHEAP DEVELOPERS AND WHAT WILL BE THE BACKLASH?

It would be necessary to note at this point that there can be other pitfalls of cheap development services. Actually, the hidden cost is only one of the possible obstacles. Meeting deadlines is equally important. It is obvious that developers have to deliver quality code within the set timeframes. Additional working hours increase expenses as well as postpone product launches, fixes, and updates. Hiring cheap developers reminds the lottery ticket. There is no point in paying for services that you can’t be certain about. Lowering the standards is considered a bad alternative. In short, it’s just losing time along with unreasonable spending since every company is still in need of improvements sooner or later.

At the same time, there are big chances to lose a competitive advantage. The first impression on the clients can’t be made twice. Vague promises of future improvements barely justify presenting low-quality software products. You need to provide exceptional functionality as well as keep on enhancing it constantly. It would require the sustained effort of experienced developers that are good at both development and maintenance. Any changes or new feature introductions have to be carefully planned. It is always based on a detailed analysis of the software performance and customer feedback. Once the users are dissatisfied with the software quality or performance, they will never come back to it.

Considering the mentioned above aspects, companies that want to succeed won’t neglect such advice. Otherwise, it results in building the software product on a sloppy foundation. By the time the company saves money for more functionality, it might be difficult to fulfill the newly outlined requirements within the poor-quality product. In order to impose unplanned changes, developers could spend a long period of time. It would be either fixing the bad code or doing everything from scratch in the correct way. Each of these options is definitely time and resource-consuming. 

When saving costs becomes the main priority, it has inevitable consequences. Hiring cheap developers has resulted in many failures. The most recent and terrific example is Boeing’s 737 Max crisis which was caused by basic software mistakes that led to several fatal crashes. The engineers totally failed in software testing. 

For example, the regulators found an issue with the computer chip that lagged behind in emergency response when it was overwhelmed with data. And what is absolutely ridiculous is that Boeing itself has stated that the senior company leadership was not involved in the review. Such consequences followed after the company decided to outsource development and testing to lower-paid contractors that lacked practical experience in aerospace. They were doing everything to reduce expenses, including laying off the experienced engineers that had worked for years in the company. They were hiring cheap developers that charged only $9 per hour, and seemed the perfect decision at that moment. As a result, they’ve paid a price that is way higher than just money. 

THE HIDDEN COST OF SOFTWARE DEVELOPMENT

Comparing the software development rates across the globe, services in some locations are cheaper than others. For example, in some regions of Asia, developers charge $15 per hour, Eastern European devs cost $35-45 per hour, while developers in Western Europe can have an $80+ hourly rate. At first sight, this might appear as a great solution to choosing cheap development services. Someone can think that there is no point in paying higher hourly rates if you find a lower price and receive the same services. Here is the list of other expenses that the leadership often forgets to take into account: 

• Management
• QA
• Communication
• Downtime
• Customer churn rate

Sure, the cost is affected by various factors, including the cost of living. Ironically, the lower cost of living is one of the most obvious ways to explain why those advantages that lead to lower costs on paper actually can be a double-edged sword. Countries with a higher cost of living can be characterized by the best (and the most expensive) education and high or native level of English language skills. Thus, by hiring cheap developers, many companies sacrifice overall quality and communication. Both those factors drastically impact the overall cost of the produced code. The reasons for that are pretty simple and will be explained in detail in this article. In short, lower communication and coding skills lead to more mistakes, misunderstanding of requirements, and more iterations as a result. More iterations mean higher costs, longer time needed for features implementation, and, ultimately, to more subsequent expenses such as QA time, managers’ time, etc.

In fact, developers spend only 32 percent of their working hours on coding. The rest of the time is taken by maintenance – 19 percent, testing – 12 percent, meetings, and management – 23 percent, security issues – 5 percent, etc. Source: thenewstack.io

The developers need a team of specialists to produce the code. Nothing more complex than the simplest website or mobile app with 2-3 screens can’t be created single-handedly. 

Let’s define the minimum list of people who support developers in their everyday work:

• Project Manager
• QA Specialists
• Team Leader

Moreover, engineers are usually split into various teams and each of them has separate areas of responsibility, like front-end development, back-end development, DevOps, etc. The overall productivity of the team depends on the productivity of the least qualified members. 

They have to be proficient not only in coding but raise productivity with other tasks. The specialist who isn’t that good at maintenance and testing will need additional time for the code review and bug fixing. It automatically increases the number of working hours of both the Team Leader and QA. 

The same thing is about communication skills. The lack of understanding, poor communication, and need for constant explanations influence the team performance as well as takes some time to fix the raised issues. It requires additional attention from the project manager, that will spend time managing the work of the particular specialist. Any additional working hours mean a significant increase in development costs. Therefore, the company has to consider expenses on the developers’ working hours along with QA, management, and communication fees. Professionals will charge more than cheap developers; however, they are able to complete the tasks within the timeframes, show great productivity, and collaborate effectively with the other team members. It was already proved by many scientists that developer productivity can make a big difference in the efficiency and speed of the development process.

The researchers have studied the coding qualities of specialists with an average of 7 years’ experience and received the following results. The initial coding time between the worst and best specialists can differ by 20 times, the execution speed by 10 times, the coding size by 5 times, time spent on debugging by 25 times. Source: researchgate.net

Considering that the productivity of the less experienced and, thus, cheaper developers could be way lower, it increases the required number of working hours to complete tasks. Hiring cheap developers is likely to be much more expensive than it’s expected. Usually, such savings lead to overpayment for subsequent expenses and bad coding that has a negative influence on the overall project development. Low-quality work is paid at least twice. Consequently, companies spend time and resources on both poor coding and the possible ways to fix it. In addition to the ever-increased salaries of all the software engineering specialists, they need to pay the other members of the team, like the Team Lead, CTO, testers, etc.

WHAT IS THE DIFFERENCE BETWEEN HIRING CHEAP DEVELOPERS AND EXPENSIVE EXPERIENCED DEVS?

The main difference between developers with vast experience or good education and inexperienced ones is that they use standard patterns. Experienced developers focused on the simplicity and usability of their code. It is much harder to write quality code while reducing the general complexity. The standard patterns are simpler to maintain, faster to produce, and most important – easier to read by other developers. Consequently, it reduces the amount of code that is running and speeds up the system in general. The predictivity of the professional team members cuts the number of code conflicts and brings more logic into the code. It requires not only great technical skills of developers but in-depth knowledge and understanding of applied approaches. There are certain qualifications to look for while hiring software developers. 

Experienced developers

This category of specialists has extensive experience in programming but nevertheless continues to master their professional skills. They practice using various libraries and tools in order to find the best solution for every situation. Good software developers would always stay critical and make decisions based on the context. They are recognized for great problem-solving skills, analytical thinking, and high productivity. The first thing to consider is that the level of productivity is never measured by the number of code lines. In fact, they write fewer lines but keep the code simple and clean. It enables the prevention of code conflicts and various bugs. Moreover, such code is easier to maintain and faster to test. Experienced developers won’t spend additional time on rewriting as the code is written well from scratch and easily read by other team members. They always leave constructive comments and provide full documentation in opposite to cheap IT specialists. Good developers are beneficial to any development process since their contribution results in the efficient work of the whole team. Any arisen issues are discussed and resolved by regular and close collaboration with project managers, QAs, and team leaders. It increases the general team support as experienced developers are able to suggest a lot of workable solutions on their own. If you find a good software developer, their expertise will easily cover the following requirements and bring the most value to your project:

• Proficient in programming
• Clean and readable code
• Good at maintenance and testing
• Problem-solving and practical skills 
• Great documentation
• High productivity
• Effective communication

Inexperienced developers

The point is that cheap developers lower their rates due to the expertise they can provide. It doesn’t mean they don’t have experience in programming, but they have just acquired some basic skills that are suitable for completing ordinary tasks. They aren’t proficient with advanced tools or a wide variety of libraries. This category of developers tends to apply common solutions without in-depth learning of the issue. Of course, they could produce a huge number of code lines in a short period of time. However, it usually applies no logic and causes badly readable code with numerous bugs. Instead of real software advancement, they are looking for some solutions to improve already low system performance. Such code is really hard to test and often should be additionally maintained or rewritten. In most cases, they won’t be able to perform necessary duties without extra mentoring of the senior technicians, a project manager, or a team leader. The development process disruption affects the productivity of the whole team since other members have to spend time fixing the operations that the inexperienced developer can’t deal with. Hiring cheap developers, companies have to realize that their employees will lack some qualifications that result in:

• Basic knowledge of programming 
• Badly readable code
• Frequent need for the code refactoring
• More bugs
• Poor commenting
• Lower productivity
• A regular need for mentoring
• Poor communication skills

It isn’t hard to make the choice between experienced developers and inexperienced ones for qualification. Professionals are the obvious choice that many companies sacrifice due to the vague possibility of saving expenses. You will be totally surprised by the real development cost of expensive vs cheap services.

COMPARISON ON THE REAL SPENDINGS ON CHEAP AND EXPENSIVE DEVELOPERS

Previously we have mentioned that people who write the code can’t properly function without supporting staff such as QAs and project management pros. That’s why our cost estimate will include expenses on all the services required for developing the sampled middle-complexity feature.

In order to do that, we introduce such relative value as a coefficient of other specialists’ engagement per one unit of the produced code. For example, the QA tester will need 1 hour of testing, identifying bugs, and sending bug reports per every 5 hours of the developer’s work. Thus we have a coefficient of 0.25 for QA that we’ll use to get the sum of subsequent expenses.

Calculations cover the difference in rates along with the involvement coefficient of other specialists.

When the development process runs well, it takes on average 15 hours for most software developers to write the code for one unit of medium to high-complexity CRUD. However, the working hours of other specialists considerably vary. Because of the poor qualification of the uneducated or inexperienced developers, other team members need to spend much more time on task explanation, management, testing, and advising some solutions. 

The real cost of hiring cheap developers

Earlier this year, Existek conducted a survey of 300 companies from 23 countries to define the average custom software development rates in 5 global locations, including Asia. According to the study, the minimal rate that you can get is $15/h. For instance, the minimal rate that you can expect in Poland is $30/h on average, which gives us 2 times difference when the cost of living in Dehli is only 60% lower in comparison to the cost of living in Krakow. With that in mind, we can assume that there are some other legit reasons for a lower cost.

In this example, let’s define how much the support of one developer at this rate could cost.

The 15-hour work of cheap developers usually requires 23.5 hours of support from the other team members.

When hiring cheap developers, the support could cost:

• In-house Project Manager to control outsourced developers with a coefficient of 0.3 results in 5 working hours

5 hours * $95 per hour = $475

• QA Specialists coefficient reaches at 0.5 with 7.5 hours of testing

7.5 hours * $30 per hour = $225

• Team Leader needs to work 6 hours due to 0.4 involvement

6 hours * $100 per hour = $600

• Product Manager/ Owner spends on average 5 hours with 0.3 coefficient

5 hours * $120 per hour = $600

Therefore, we received an estimate of $225 for the developer’s fees ($15 per hour) and $1900 – for the in-house team charges to support this outsourced specialist. Provided everything goes well, the cost of 15-hour development could be up to $2500. 

The real cost of hiring expensive developers

What about the expensive developers? How much does their support cost? Eastern European or European countries like Poland and Belarus charge 3 times more for developers with the same 5 years of experience. Thus we have rates between $35/h and $50/h. The main factors that justify the higher hourly rates are the well-developed technology and engineering education sector that takes its roots from the 1930s’, better level of English language, cultural similarity, and way better time overlap in comparison to the Asian region. Let’s take, for example, Pakistan, with 163 universities (founded 20-30 years ago on average) and 196 million population, and Ukraine, with 802 universities (founded 60 – 80 years ago on average) and 42 million population. At a glance, 3 times higher rates will lead to 3 times higher cost. But if we’ll take into account the lower cost of Ukrainian specialists’ maintenance, actual savings could be much higher simply because of a well-established educational tradition, even if we forget about all other advantages. After all, engineering education in Eastern European countries is almost 100 years old, and it has created the rocket that took the first human to space.

The 15-hour work of experienced developers requires 11 hours of support from the other team members.

• Project Manager coefficient is twice less – 0.2 with 3 hours of work

3 hours * $95 per hour = $285

• QA Specialists on average spend 3 hours with 0.2 coefficient

3 hours * $30 per hour = $90

• Team Leader needs 3 hours due to 0.2 involvement

3 hours * $100 per hour = $300

• Manager coefficient is three times less 0.1 with 2-hour collaboration

2 hours * $90 per hour = $180

As a result of simple calculations, the experienced developer would charge $525 however his support costs only $855. It’s twice cheaper to support professionals as well as be sure of the quality of provided services. 

We haven’t discovered any savings with hiring cheap developers. Assuming that less-educated developers produce only 2 times less value completely neglects any potential for cost reduction. In the worst case, the beforementioned studies indicate that less-experienced engineers write 5 times more code to complete the same tasks and spend 25x time for debugging.

Calculations confirm that the actual cost is almost the same. Is it worth risking and paying more for every occurred issue? If the cheap developer doesn’t manage to write the good code, the second iteration and rewriting by the same team will cost at least 1.5 times more that reaches the sum of $3750. There are some cases when the bad code doesn’t meet any requirements thus the company needs to write it from scratch with the help of experienced developers. The less proficient developers are chosen, the higher cost and longer time will be spent on software development.

IN CONCLUSION

We’ve come across interesting discoveries while figuring out the actual cost of hiring cheap developers. 

• Firstly, hiring cheap developers doesn’t justify the bill. 
• Secondly, high productivity can make a significant difference in the development process.
• Last but not least – good services always have a reasonable cost in order to provide the best quality.