What’s the Software Engineer Hourly Rate in the USA?

Developing innovative products is necessary for businesses willing to phase out competitors and dominate the market. 

But can your business budget cover the average hourly rate for a software developer in the US and afford high compensation for the work of the best minds?

With many technology companies in Silicon Valley and a limited population of proficient developers, the US software developer hourly rate has scraped the sky due to competition.

Recent estimates suggest that Google alone employed at least 40,000 software engineers in 2022. If other members of the FAANG family each employ that many, we’ll talk about at least 200,000 software developers earning above-average compensations. 

But competitive salaries are not the only factor that drives issues with hiring engineering talent. Inability to fill critical skill gaps, talent shortage, and other hiring bottlenecks are hot topics among US-based and companies from other countries and continents.

Many trusted sources reaffirm the statement and provide statistical data covering global skill shortages. ManPower Group data, for example, suggests that 74% of respondents report having issues with filling the required positions, with IT roles topping the list of most in-demand skills.

In terms of IT recruitment, many companies are actively considering specialists from other countries and regions. There are many alternatives to hiring in-house due to the gradually erasing geographical boundaries and the popularity of the remote work format.

Many companies opt for expert development teams to create full-fledged tech solutions to compete in the market instead of hiring in-house.

However, many US-based businesses choose to remain on the safe side and opt for hiring internally. Yet, the size of software engineer contractor hourly rate can raise the eyebrows of potential customers. Many of them wonder if the enormous bills of US-based companies are justified. To get a clear picture, it is necessary to consider additional factors that come into play.

What’s included in the software developer's rate?

The average hourly rate for software developer includes several items of the company's hiring and employing a specialist. We've fetched and analyzed the US Bureau of Labor Statistics data to estimate the particular ones.

Here’s what the allocation of costs looks like:

Now, let’s consider what is included in each of the cost items:

Employee compensation: the main part of expenditures, which accounts for 65-73% of the budget.

Fixed benefits (25-31%): additional costs that a company has to cover. Some basic ones include: 

• Legally required benefits (social security, medicare, unemployment insurance)
• Health insurance (disability, dental, life)
• Paid time off
• Retirement savings
• Annual bonus
• Supplemental pay (overtime and premium)
• Employment training tax

It is also necessary to consider overhead costs (10-15%) associated with the company’s day-to-day operations:

• Rent and utilities
• Employee perks: provided lunch, corporate events, coaching, etc.
• Office supplies: furniture, electronics, and technical supplies, etc.
• Time on bench and research projects.

Company’s profit (10-15%) is one of the company’s core investment sources. 

Now that you know what is included in software developers’ rate let's look at what rates US-based companies offer their specialists.

What rates are at software companies in the USA?

If you are ready to cover a software engineer hourly rate NYC, you need to factor in the company’s size.

About $80-135 for a developer’s work per hour is more common among employees of a small company. They typically consist of 10-100 team members. A mid-sized company housing up to 1000 employees can offer their specialists $100-$220 hiring rates. Such companies have an extensive tech stack and a vast pool of talented developers for immediate project needs.

The premium price tag applies to the largest players on the market that work with high-profile projects of reasonably large companies or governments. Reputed companies with an extensive case history of successful projects also position themselves in the category. In this case, the hourly rate for software engineer will range from $300 to $800. Much will depend on the tech stack’s complexity and the required skill level of a specialist, too.

Every project is unique, but we can calculate how much a development team will cost on average. 

Typical staffing necessities for an average project will include the following roles:

• Project Manager
• Mid-level front-end developer
• Mid-level back-end developer
• Senior full-stack developer
• QA engineer

Now let’s take a look at their rates.

A senior software engineer hourly rate is the highest in the USA.

Generally, software development companies in the USA work within the same price range. However, we can find some differences when it comes to large business hubs.

For example, according to Clutch, software engineer hourly rate California varies from $150 to $200 for most registered companies. The research of this reputed catalog has shown that the majority of companies in NYC offer a $50-100 hourly rate range for their specialists.

Alternative ways to save on software developer hourly rate in the US

When the team and the leader are ready to take on experts for a remote format, companies are actively looking for specialists from other countries.

Outsourcing and offshoring, for example, expand the field of engaging potential employees - they can be hired from any region and country.

Different reports confirm the projected growth of outsourced projects in the coming years. In particular, Mordor Intelligence projects a significant increase in the global IT outsourcing market volume by 2027. It reached $526.6 billion in 2021 and is expected to grow at a CAGR of 4.13% from 2022 to 2027. The report anticipates it will hit $682.3 billion by the end of 2027.

Revenue of IT outsourcing in the USA is currently valued at $144 billion. It is likely to reach a value of $208 billion by 2027, as reported by Statista. 

One of the key drivers for outsourcing is the reduction of project costs. This point fuels market growth most of all for software companies in the USA. 

Considering the growing share of US-based businesses that hire remotely, many companies set their eyes on ways to optimize and cut project costs. As a considerable part of the budget covers a software developer hourly rate, companies are looking to save on these payments. 

To get a sense of what rates in popular remote hiring destinations are like these days, we analyzed the data to find out what companies pay employees in key tech roles.

Software development rates by country

Canada

The Government of Canada invests heavily in post-secondary STEM programs and encourages new specialists to gain new centers of excellence in their education. A steady flow of new tech talent is entering the global workforce every year.

Canada offers vast opportunities to engage top talent at a cheaper cost while remaining within the continental US time zone. Businesses can expect to pay from $50 to $70 hourly rate, which is less than in the United States.

Armenia

The Armenian tech sector has an extensive pool of well-educated and talented software developers with advanced technical skills and English language proficiency. Strong university programs with IT and STEM specializations facilitate the constant flow of engineering, computer science, physics, and mathematics graduates.

The Armenian government supports local IT companies and encourages foreign businesses to find and hire talent here. Companies can source developers at affordable rates with favorable tax incentives and non-stringent compliance requirements. As a rule, the cost per specialist accounts for a $30–40 hourly rate, although experienced candidates with rare tech stacks can earn more.

Georgia

Georgia is another notable mention on our list. The local government has direct ties with European infrastructure. It attracts European and US-based businesses to set up local entities and hire direct contractors or single developers for their projects.

Georgian technical universities ensure that their graduates have high theoretical and practical knowledge levels. The hourly rate range in Georgia is lower than in Central or Western Europe and falls between $35 and $45. Although the level of English proficiency still leaves much to be desired, the developers’ technical skills are strong due to a well-established educational infrastructure.

Turkey

Turkey is emerging as a hub for sourcing and hiring top engineering talent due to its deep expertise, large tech community, and cost efficiency. Turkey's average developer rate range is significantly lower than that in the US or Western European countries because of the differences in living standards and tax rates.
According to Glassdoor, a senior full-stack developer earns an average of $15-$25 an hour in Turkey, compared to $130-$190 US software developer hourly rate. Average hourly software developer rates in Turkey fall between $10 and $30.

Kazakhstan

Kazakhstan has a relatively young IT sector, which has started to grow due to regained political stability and an attractive taxation climate. The local government currently focuses on creating favorable conditions for recent graduates and improving their quality of life and opportunities for career growth. 

Meanwhile, developers from Kazakhstan are expected to earn from $30 to $45 per hour. This rate is attractive from the point of view of price and quality since local developers have a high level of English proficiency and tech skills. However, US-based companies need to consider the time zone mismatch.

Serbia

Serbia is a popular destination for companies willing to hire remote developers for their IT projects. It has become home to hundreds of specialists graduating from local universities and qualified workforce relocating from other parts of Europe. They earn from $30 to $45 per hour, which is relatively lower than in Western Europe and the US.

LATAM countries

Technavio predicts the LATAM IT services market to accelerate by $33.68 billion by 2025 for a good reason. Many other experts expect this region to increase business spending on software development projects. Spiceworks Ziff Davis, for instance, has recently published a report that covered growth factors, recovery expectations, and investment opportunities there. Increased focus on IT projects, the shift to remote work, and security concerns are among top market drivers mentioned in the above report. They have driven the growth of the IT service market in 2022 and encouraged businesses to engage talent from the LATAM region.

Argentina, Brazil, and Mexico are the most popular countries to outsource software development and find affordable software engineer contractor hourly rates. Here's a glance at average rates in each country:

Western European countries

As US software developer hourly rate can make a company go bust​, many companies hunt for more reasonable rates in the Western European region. Countries like Germany or France generally have a high standard of living, soaring taxes, and large economies. It results in high compensations, which, however, turn out to be lower than in the US:

Eastern European countries

High-quality education, excellent English skills, and cultural similarity to Western Europe make the Eastern European region a popular destination for outsourced projects. Moderate industry-standard software engineer hourly rate accompanies these benefits and boosts the demand for specialists in this region. The rates, though, vary by country:

As you must have noticed, each location's average hourly rate varies. Let's have a quick overview of how the US software developer rate compares to that of other countries:

Conclusion

If you're based in the United States and need to add tech talent to your in-house team, finding the right specialists at affordable rates may become quite daunting. Why not turn to a hybrid work model and look for additional resources to back up your in-house team? 

A hybrid team is the answer to current employment challenges faced by the majority of companies. The best destinations for talent sourcing provide quick access to skilled developers and other specialists and let you save on extra payments by opting for IT staff augmentation and Dedicated team services.

Geomotiv is a US-based software development company with distributed development teams across Europe, Central Asia, and South America. With extensive expertise with setting up and managing hybrid development teams and a vast pool of diverse talent, we provide the most optimal quality-price ratio for prospective partners. Our software developers can perform the same amount of tasks with the same quality for just $35-50 per hour.

Our clients don’t have to worry about transparency issues and communication hurdles as well. We provide flexible cooperation conditions that target the specific needs of your business.

Contact us to find out more about other perks of outsourcing to Geomotiv!

FAQ

We've Got You Covered!

What is the hourly rate for a software engineer in Silicon Valley?

The average software developer’s hourly rate range in Silicon Valley is from $80 to $150. As home to top technology companies, the region holds a large share of developers paid above the national average. Therefore, an employer needs to be ready to pay competitive rates to hire a specialist.

What is the average hourly rate for a software engineer in New York?

The average software developer’s hourly rate range in New York falls between $50 and $100. The factors affecting the price tag include:

• experience level;
• skills and knowledge of specific technologies;
• the company’s type and size.

How much do software engineers make an hour?

A software developer’s hourly rate is calculated based on the following factors:

• Location;
• Company type and size;
• Skills;
• Experience.

A junior software developer’s hourly rate is much lower than a senior SDE’s.

What is the hourly rate of a highly-skilled software developer?

Competent software developers are expected to earn up to $350-400/hour. A highly-skilled professional’s hourly compensation falls into a premium price tag category. A part-time software developer’s hourly rate of that kind is above industry standards.