Outsourcing is a hot topic among software companies in the USA and around the world. Many businesses opt for expert development teams to create full-fledged tech solutions to compete on the market instead of hiring in-house.
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% during 2022-2027. The report anticipates it to hit $682.3 billion of value 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.
What are the Reasons for Outsourcing?
Enabling focus on core business, decreased time-to-market, enhancing security issues are some top reasons for outsourcing that we previously discussed in our IT outsourcing guide. However, that is not what primarily sets the direction of the market trajectory. Talent shortage, inability to fill critical skill gaps, 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.
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 outsource, 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.
The size of the developer's rate in the USA can raise the eyebrows of potential customers. Many of them wonder if the enormous bills of US-based companies are justified. However, 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. To estimate the particular ones, we’ve fetched and analyzed the U.S. Bureau of Labor Statistics data.
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 want to hire a software engineer in NYC or any other US-based developer, you need to factor in their 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 position themselves in the category as well. In this case, an hourly rate for a software developer will range from $300 to $800. Much will depend on the tech stack’s complexity and 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.
|Role||Average Rates in the USA|
|Mid-Level Front-End Developer||$100-140|
|Mid-Level Back-End Developer||$120-160|
|Senior Full-Stack Developer||$130-190|
A full stack developer 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 the hourly rate for software engineer in San Francisco varies from $150 to $200 for most registered companies. The research of this reputed catalog has shown that the majority of software development companies in New York offer a $50-100 hourly rate range for their specialists.
The difference in software developer rates per hour across the globe can become a good reason for outsourcing. It can save you millions of dollars and give a more significant competitive advantage to your business. So, instead of hiring someone at a sky-scraping senior software engineer contractor hourly rate in the US, you can engage our developers.
Geomotiv is a US-based software development company with distributed development teams across Europe, Asia and South America. With extensive expertise across domains 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.
Save on budget costs and access a talented workforce with the necessary qualifications.
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!
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