In the last time, demand on outstaffing has boomed. Developers work remotely from offshore offices for European companies. See what the hype is about.
We conducted a research to compare outstaffing from Kyiv with in-house development in Munich, and discovered that outstaffing helps German companies save up to €40.000 per year on one software developer. Imagine that you need to hire a Middle PHP Developer. Average salary for this position in Munich is €27 per hour or €50.000 per year. But you also have additional costs like insurance, workspace and so on. In Kyiv you can hire such a developer for €45.000 including a vendor management fee, that covers all additional costs.
In this article, we have a number of additional costs you can save on using otstaffing. Let’s check.
Employer social insurance [approx. €11.000 saving]
Hiring in-house, you need to pay regular social security contributions, that is about 22% of annual salary. The table below contains current rates in Germany. So if you hire the same PHP developer, social insurance will be approximately €11.000.
| Social insurance | Rate |
| Health insurance | 10,95% |
| Nursing care insurance | 1,525% |
| Pension insurance | 9,3% |
| Accident insurance | 0,25% |
| Unemployment insurance | 0,08% |
| Total social security | 22,105% |
Sources: brutto-netto-rechner24.com, unternehmer.de
Office equipment [approx. €1.500 saving]
Office equipment is also on your side when hiring in-house. Cost of computer with two screens is at least €1.500.
Workspace [approx. €3.400 saving]
You also provide developers with workspace, it can be about 15 m2 per person. For Munich companies it could cost €3 400 per year as average monthly rent is about €19 per m².
| Districts of Munich | Rent, €/m² |
| Altstadt – Lehel | 19,15 |
| Schwabing | 18,76 |
| Maxvorstadt–Universität | 18,61 |
| Ludwigsvorstadt – Isarvorstadt | 17,48 |
| Maxvorstadt | 17,41 |
| Schwabing-West | 17,31 |
| Au – Haidhausen | 16,96 |
| Alt Bogenhausen – Herzogpark | 16,91 |
| Nymphenburg | 16,47 |
| Schwanthalerhöhe | 16,05 |
| Harlaching | 15,74 |
| Neuhausen | 15,67 |
| Sendling | 15,32 |
| Untergiesing | 15,11 |
| Alte Heide – Hirschau | 14,73 |
| Obergiesing | 14,66 |
| Thalkirchen – Obersendling – Forstenried – Fürstenried – Solln | 14,59 |
| Oberföhring – Englschalking | 14,21 |
| Milbertshofen | 14,14 |
| Moosach | 14,10 |
| Laim | 14,07 |
| Pasing – Obermenzing | 13,89 |
| Hadern | 13,82 |
| Trudering – Riem | 13,79 |
| Sendling – Westpark | 13,75 |
| Ramersdorf – Perlach | 13,69 |
| Berg am Laim | 13,62 |
| Freimann | 13,61 |
| Johanneskirchen – Daglfing | 13,58 |
| Am Hart | 13,48 |
| Allach – Untermenzing | 12,85 |
| Aubing – Lochhausen – Langwied | 12,78 |
| Feldmoching – Hasenbergl | 12,19 |
| Avg. rent | 15,11 |
| Approx. additional costs | 4,00 |
| Avg. total rent | 19,11 |
Workspace furnishing, groceries, leisure [approx. €3.000 saving]
| Costs | € per year |
| Coffee, €2,2 per employee per day | 574 |
| Snacks, €2,2 per employee per day | 574 |
| Monthly free employee outings, €22 per employee per month | 264 |
| Learning something new | 1000 |
| On-site gym, 300 m per 100 employees or 3 m per one | 684 |
| Total cost | 3096 |
Source: hubspot.com
Recruitment fee [approx. €12.500 saving]
Recruitment fee is the most costly option. You may pay up to 25% of annual salary if you seek the assistance of a recruitment agency.
All in all additional costs can be more than €30.000 per year on one developer. And if we take into account saving on salary, overall economy on outstaffing can be up to €40.000.
So now, at any given point in time, you can look into this article, see how you can save on your developers and reach us to help you with this.
