It’s tempting to hold off on that new developer hire — just squeeze more out of the current team right?
Particularly for software developers who have a giant impact on company success. Lost revenues, lost profits… buggy software, missed project launch windows, higher volume of calls to tech support, longer wait times when on the phone to tech support.… unhappy customers, reputation loss — All real consequences of understaffed and/or overworked developer teams.
The impact of a software developer can easily reach multi-millions or even billions (take the 13 man strong team that built and sold Instagram for $1 Billion, 13 months after launch)
Unfilled tech vacancies can cost you a ton.
It’s not a stretch to imagine the financial impact of missing a new project launch, losing ground to a hungry competitor, or the significant financial impact of launching a new, buggy software product that gets panned in the press and ignored by customers en masse, because teams were undermanned, overstretched, or simply “good enough” talent was hired in a pinch.
How it adds up
There’s a number of formulas that can be applied to account for the cost an unfilled vacancy. Some more elaborate than others.
We’ll keep things simple.
Assuming every employee has a net positive effect on company revenue (why else would you hire them), we can apply a very simple formula that demonstrates the impact on revenue of an employee — and the revenue cost of an unfilled vacancy. Simply divide annual revenue by the number of employees. Then divide that number by the no. of working days and multiply by average days to hire.
But not all employees are created equal. At a tech company, the developers are the heart of the wealth creation engine. Therefore we add a multiplier of 1 2 or 3 and put developers in the top.
You can work out the costs using the following formula:
Lost revenues = (Annual revenue / no. of employees) / 220 working days X multiplier 1, 2 or 3, X average days to hire.
For a small SME with revenues of £5million, with 40 staff a developer is therefore worth £1700 per day in revenue.
We find this number (£1700 per day in revenue, per developer) holds up across companies of various sizes in the SME space that we deal with (Unicorns like Instagram notwithstanding!)
Hence, even at a conservative estimate, an unfilled tech vacancy potentially brings huge, non-trivial costs.