If you are an established business working with remote developers or dedicated development teams, you may have already experienced issues with what do look like hidden costs. Let’s assume the following scenario. You pay a rate of – for example – 25$/hour for a developer, but at the end of each month, when you draw the line on your expenses, you seem to spend more, like 70$/ hour for both development and management. Management costs stay pretty high, while a lot of management time is required for coordinating your software project. Besides this, developers working on your project are low on productivity, come and go, being constantly replaced by the company that employs them. If you feel like being part of a similar scenario, that means you are experiencing a low employee retention rate. Why this happens and what can you do about it?
In this article, we will highlight the importance and the gains of a high employee retention rate. In order to make things very clear for you, we have created an infographic that depicts how costs decrease, while the retention rate grows.
From our experience with offering dedicated developers services, we can state that employee retention rate is one of the key success factors when talking about long-term software projects. With more than 14 years experience, we had developers employed on long-term software projects for complex software projects managed by companies like Broadsoft, Unotifi or Livongo.
The secret to getting from 30% productivity to 100% productivity
To better explain, we will take two scenarios – one in which employee retention rate is of 3 months, and one in which employee retention rate is of 12 months. In both scenarios, we consider a developer rate of 25$/ hour and a manager rate of 75$/ hour. A cost per hour that includes both developer’s and manager’s time. It is calculated according to the formula =(DeveloperRate*8/Developers’Productivity + ManagerRate*ManagerTimePerDay)/4.
In the first month, for both scenarios, the productivity of a developer will be 30%, while he must get to know the project. We must take into consideration that a developer’s productivity increases with 10%/ month. This means that a developer, after 3 months of being assigned to a project is only 50% productive. Just after 8 months of working on the same project, we can assume that a developer will be 100% productive.
How to save up to 70%
The more complicated and complex the project is, the less productive a new developer assigned on a project will be. Also, they will need more support and verification time from the manager. While in the first month, a project manager spends – let’s assume – like 1 hour/ day for a certain developer/ project, after 5 months, his time can be reduced to a half. From our experience, we have witnessed that a manager time decreases by 15%/ month. So, in the scenario in which the retention rate of a developer is just 3 months, their productivity won’t exceed 50%, and his manager’s time won’t drop below 0.7 hours/ day. According to our estimations, at the end of one year, with this retention rate of 3 months, the project owner will spend around 73$/ hour for both developer’s and manager’s work.
In the second scenario, where a developer’s retention rate is 12 months, the final average cost after one year of work will be around 43$. This is a cost difference of almost 30$, the equivalent of 67%, compared to the previous scenario. The difference is made by the fact that, in this scenario, we’ve got 5 months of 100% productivity on the developer’s side, and 8 months in which the manager’s working time is reduced to 50%.
The truth is, sometimes, it takes a developer even up to 10 months to learn about all the particularities of one complicated software project, depending on its complexity. So you just can imagine what amount of time and money is wasted when developers assigned to a projects change every 3 months. Each time, one should start from the beginning which results in wasted money and time for the project owner.
So, if you have a complex software project which requires a high retention, Clarisoft Technologies can offer dedicated developers to work on your project, with a retention rate of more than 12 months. So, you can drastically reduce costs, also gaining the certainty that the people working for you have a high level of knowledge regarding your project. you won’t need to start all over again with new people that require training and they leave after two or three months.
Need more support on this issue or want to find out about our rates and programmers? Don’t hesitate to CONTACT US.