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Are You Spending These Hidden Cost Of Hiring A Software Development Team?

Software development is important for any company because it boosts clients' experiences and offers innovative products to consumers. It also ensures an efficient and productive workforce and caters to the company's requirements. Also, it can reduce the time for doing market research and deliver the best results. With all these benefits, you can stay assured of a product that meets or exceeds the business objectives.

For efficient software development, most companies hire a software development team. But do you know you may be overpaying a little too much while hiring a software development team? There may be a lot of hidden costs associated with the recruitment process, and you may not even know about it! Here's a quick overview of the hiring costs of a software development team:

How Much Does it Cost to Hire a Software Developer in the US?

There is no specific cost associated with hiring a software developer in the US. It varies from company to company. However, there are a lot of add-ons connected to the overall hiring cost of a software developer in the US. This includes:

Legally Required Benefits and Insurance

The US Department of Labor has enforced laws to provide legally required benefits to employees. Legally required benefits, as the name suggests, are the benefits that must be provided by the employees by the employer. These included necessities of an employee like their health, safety, social security, etc.

Note that the regulations may differ from state to state in the country. So, it's important to offer benefits as per the legal requirement of the particular location. Make sure to take assistance from legal professionals to be more clear about the laws and regulations.

Social Security and Medicare Tax

Among the perks included in legally required benefits, social security and Medicare is the most common one. While social security covers retirement, disability, survivor, and family benefits, Medicare (by the Centers for Medicare & Medicaid Services) deals with hospital care, medicines, drugs, etc. The Medicare facility is for people who get Social Security disability benefits for more than two years or for people 65 years old and above. Both the employer (you) and the employee (your software development team) has to pay the FICA obligation of 7.65% (for both Social Security tax and Medicare tax), respectively.

Workers Compensation Insurance

Legally required benefits also cover workers' compensation insurance, where employers are legally obligated for workplace safety. If any accident happens, you, the employer, are bound to offer coverage regarding the same. The employees can get the coverage, regardless of the person who's at fault. If the employee dies during the incident, their dependents will get the benefits. Workers' compensation insurance is valid in all states except Texas.

Unemployment Insurance

Unemployment insurance or unemployment benefits are state-provided insurance where the employee gets money on a weekly basis on losing their job. For that, the person has to meet certain eligibility criterias, including the state's work/wage requirement, working time criterias, etc. Although the money is paid by the state government, the insurance is funded by payroll taxes collected from the employer.

Health Insurance

According to the Affordable Care Act or ACA, if you are an employer with 50+ employees in your company, then you must offer healthcare coverage to them. You must also fill up the health insurance value on W2-forms and other legalities with the IRS and mention the complete details regarding insurance cost, types, plans, and more.

Paid Leaves

Besides the legal and insurance-related coverages, you also have to offer paid leaves to your employee, adding an extra cost. According to the Family and Medical leave act, there are certain employees who qualify to get 12 weeks of unpaid leaves every year. During this span, all their health benefits will remain intact.

Besides that, even though it's not legally required by federal or state law, employers also offer vacation leaves. A software development expects at least ten vacation leaves every year from an employer. Additionally, you may have to provide severance and sick leaves too.

Savings and Retirement

As per the US Department of Labor, an employer should offer employee benefits like pension plans or retirement plans to the employee. There are several retirement plans that can be offered, like the 401 (k) plan, defined benefit plan, and more. Similarly, ERISA or Employee Retirement Income Security Act covers information about private sector pension plans.

Additional Compensation Premium

You may also have to pay additional monetary compensation besides the standard salary to your software development team. This is applicable to employees who work extra hours during their working schedule. Additional compensation premiums may include the following:

  • Bonuses
  • Back pay
  • Severance pay
  • Commissions
  • Profit sharing
  • Merit pay


Any employee that works more than 40 hours per week should be paid a certain amount of overtime money. It's like the compensation that the employee gets after working for longer than the standard hours. As there are times when the development team has to work extra hours, you'll have to pay overtime compensation too.

Costs Hidden in the Process

Besides the costs that are mentioned above, there are many other costs in the process that are completely hidden. This means you may be paying it without being aware of the same. Such hidden costs include:


As you may know already, sourcing means looking for qualified candidates for the job opening. To hire a software development team, you may have to proactively find, engage, and hire candidates that fit the company and job role. It's certainly beyond just reviewing resumes and sending applications to the employee.

The cost associated with sourcing may include fit-for-hire expenses like criminal checks, educational checks, credit checks, background checks, work eligibility, immigration, etc. Additionally, it includes initial recruitment costs for assessment, automated interviews, tests, and more.

Jobs Boards Fee

Job board fees is a website where the employer posts the requirements for any new job openings. For a software development team, you may have to provide multiple vacancies in the preferred location/field. Not just that, you may have to pay a certain amount of money as fees to these job boards.

External Recruiter Fee

An external recruiter fee is paid to the agency for hiring the desired candidates. This fee is decided as the percentage of the hired candidate's base salary. Ultimately, the external recruiter fees may vary from agency to agency. However, you have to keep a large sum in hand for the recruiting professionals.

Internal HR Salary

Internal human resources are responsible for identifying, managing, and prioritizing resources for better hiring and workforce productivity. They are responsible for talent management, compensation, employee benefits, training compliance, workplace safety, and more. As you have to have a full-fledged salary for these professionals, that adds to another hidden cost that you weren't aware of. An experienced HR professional can make up to $100,188 per year.


Based on the number of employees you're hiring for your software development team, you may have to hire multiple HRs. That adds up to the cost. Also, if you don't take help from professional HRs, you may spend more on hiring the wrong candidates. An interview also costs you time, and you must know that time is money.

Onboarding and Training Expenses

Onboarding costs include a lot of things like equipment, extra working hours (during new hiring), paperwork, employee handbook, documents, etc. It may also include costs for important technologies like laptops, monitors, mobile phones, WiFi, etc. Meanwhile, the hidden cost also includes training expenses covering instruction, instructional materials, equipment costs, facilities fees, and more.


Hiring a professional software developer is important for your company. But why waste so much time and effort on self-hiring when you can take assistance from Brix? As iconic, Brix allows you to find talented developers/engineers with long-term experience and skills for your organization. It takes less effort and time, plus there are no hidden fees associated.

In fact, with Brix, you can save more than 50% on hiring costs! So, get the most professional software development team for your company as per the quality control standards.

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