The Hidden Cost Behind Hiring In-House Software Developers

Published on: October 23, 2022
Last updated: November 03, 2022 Read in fullscreen view

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Hidden Cost Behind Hiring In-House

There is always an eternal debate between hiring in-house and outsourcing. Some are holding to their in-house IT support because they fear change or are afraid to let go of these people who hold such access to their data.

We’ll break down the unseen expenses businesses deal with when it comes to in-house IT departments for a better understanding of the real cost of in-house:

Cost of Recruitment

Hiring a team of in-house IT professionals is more than just the salaries. The process of recruitment onboarding, training, retraining, and certifications will cost you time and money. Note that certifications are necessary to ensure that your employees are up to date with the latest technology and your company won’t fall behind the curve.

There is also the payroll, health insurance benefits, and other administrative fees related to paperwork. You can also include the cost of procuring IT equipment and additional office furniture.

Turnover Cost

One of the unseen expenses around in-house is the cost of replacing an employee. Research shows that the average job tenure of the rising millennials in the workforce is three years. If your company is looking to hire people with more qualified skills, then the salary package should be competitive.

Aside from the increase in the employee wage, there is also a cost included in decreased productivity. New hires can take time to adapt and get to the productivity level of the previous employee. Additionally, there is a cost of disengagement among other colleagues within the same department that you should consider.

Downtime Cost

Compared to outsourcing from Managed Service Providers (MSPs), in-house IT departments can’t guarantee 99.9% uptime. According to a study, 25% of small businesses said the hourly cost of downtime for their business is around $20,000 - $40,000, which is a significant amount.

Downtime generates business disruptions and decreases the productivity of employees, making it a major challenge for SMBs today. This doesn’t include the possibility of losing important data, failed backups, or security breaches that can happen during downtime.

Hardware and Software Costs

The expenses don’t end once you acquire the necessary computer and software tools to manage your internal businesses. The continual cost of upgrades to hardware and software happens often, not to mention the time spent monitoring and ensuring the effectiveness of these tools.

To have an efficient managed IT system, you are required to have the right toolset and it won’t help if you are under-spending on IT. You won’t be able to retain a competent IT professional if the working environment is substandard and they can’t reduce potential risk proactively.

These expenses can quickly add up and you may find opting for an externally provisioned service more cost-effective and scalable.

Read on: The hidden costs of outsourcing software development

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