The Cost of Hiring the Wrong Developer

A common mistake of software development managers is not dedicating the time and resources needed for a good selection process. This is probably because few are truly aware of the high cost of hiring the wrong developer. I hope that after reading this article you will change your mind and realize that there is probably no effort that is not worth it to get the right developer for the team.

According to various studies conducted mainly in the United States, the cost of hiring the wrong developer amounts to tens of thousands of dollars; some put the figure at 50,000, others reach as high as 200,000 dollars. Certainly, the reality in the United States is different from that in Latin America, but I assure you that hiring a bad developer does not come cheap in any way. Let's look at the costs...

Let's assume a salary (company cost) of US$ 2,500 per month. Before we even start paying a cent to the new developer, there are the selection costs, which may not have been so high because we did not dedicate the necessary time to do it well, but they still add up.

If the search was done through a head hunter, the usual rate is one monthly salary of the hired profile. Although they usually give a guarantee that they will not charge if the person stays less than 3 months, the truth is that it usually takes longer to realize that the person is not the right one.

In addition to the head hunter's rate, there are other internal times spent on interviews, evaluations, and hiring. Let's assume that the cost was not so high because we did not dedicate the necessary time to do it well, so let's leave the total cost (head hunter rate plus internal evaluations) at US$ 3,000.

Once the new developer joins, we must do the on-boarding process and train them. We have to register them in the systems, give them access, set up a workstation, etc. Again, according to foreign sources, the total cost is at least equivalent to the monthly salary of an average employee. So, to the three thousand dollars we now have to add US$ 2,500 more. We are already at US$ 5,500 and this has only just begun.

A new developer only reaches maximum productivity between 5 and 10 months after joining, which is why it is hard to detect a bad developer in the first few months unless they are exaggeratedly incompetent.

It is safe to assume, then, that our new developer will not bring much value in the first 3 months; we are going to be optimistic, however, and assume that for half of the time they were able to do something productive. That means that of the cost of 3 months we will have lost half, that is, US 3,750, which added to the previous amount brings us to US$ 9,250.

From the 4th and 5th month the problems begin to be noticed. Code with errors, delays, and time lost in reviews and in trying to get the new developer to do what they have to do. In the following 3 months, we will have costs from low productivity and error correction, and in general the time of other team members helping. Again, we are being conservative in assuming that the cost will be 50% of the developer's salary (since in many cases in the end there is no choice but to redo everything or drag deficient code along for years).

Adding it all up, we are already at US$ 13,000. Now, by the 8th or 9th month it is already clear that this new developer is not up to the job. Their errors are not always detected and can end up affecting internal or external clients. The team gets frustrated at having to carry the new person's problems, and finally the decision is made to dismiss them. So to the additional 3 months of low productivity we must add the cost of the dismissal, accrued unused vacation, etc. This will vary a little according to each country's legislation, but it will certainly be no less than one salary. Then, 3 more months of unproductiveness plus one salary bring the total to US$ 19,250. It is difficult to quantify the cost of the impact of errors, delays, and unrest in the team, but clearly, adding this, the costs would reach more than twenty thousand dollars for one bad decision.

So, the next time you have to hire a developer, take into account the cost of not choosing well, and dedicate the time and resources to your selection process to find the best developer. As we saw, probably even with the most expensive selection process, with many technical interviews, automated programming exams, psychometric tests, and interviews with managers, it will always be worth investing time and resources in the selection process before making the serious and costly mistake of choosing the wrong developer.

If you want a tool to improve your IT selection processes and use automated coding tests to evaluate your candidates for developer positions, we recommend you check out Evalart.