Numbers

Category Archives — Numbers

How long can you sit on a tech vacancy?

It’s tempt­ing to hold off on that new developer hire — just squeeze more out of the cur­rent team right?

Costly mis­take.

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.

The numbers

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.