The Hidden Value of Software Consultants
Customers of mid-size software consultancy services are generally well-established companies. These companies are experienced in hiring consultants to assist them with large and technical software developments. Everyone can easily get the market rates for software consultants if they research on the rates. These prices don’t normally surprise customers.
However, many consumers are reluctant to move forward with consultancy services. This is because they find the amount per billable hour to the consultants’ very high comparing the hourly cost for equivalent full-time employees.
Most of these rates are even double. Many companies consider operational costs to be separate from the costs of strategic investments. That’s why the interests diminish upon the considerations or consultancy costs for ongoing software assets maintenance and improvement.
It’s not debatable that the direct cost per hour is lower for salaried employees than for hired consultants. However, this simple analysis does not reveal the hidden costs of having employees, especially those experienced in software development. The total cost per hour for these employees is significantly high compared to average employees.
This article will highlight some of these hidden costs, and stress scenarios where companies might consider outsourcing software development consultancy services to vendors like Entrance Software Consultants.
The obvious costs for employees come from the work for which they are paid for by the enterprise. These include the benefits packages, training days, sick days, vacations and overhead days.
Additionally, there are other costs which are commonly associated with management and appraising employees. These costs normally increase the cost per hour comparing to the costs of hiring consultants.
These costs include contributions, bonuses and employee taxes amongst others. The bottom line cost can be affected if the company offers stock options or shares.
Human resources are also associated with the internal hiring of employees. Employers of software professionals are usually forced to manage industry turnover rates which are typically higher than the average rates.
The costs of hiring software developers are very high since the market is very competitive and almost every company strives to employ the best. These costs must be incurred whenever an employee leaves.
Using the hard factors alone, it’s much cheaper to seek external consultancy services since their charges per billable hour are much lower.
If a company wants to look for the services of external consultants, it must factor in the relative value-generating capacity of an employee over the more expensive consultant. One must turn to soft factors to examine the reasons.
Soft factors aren’t considered to be assets and hardly appear on the balance sheets. They cannot be quantified but make a lot of difference than the things counted. They affect the future revenues although they do not show any signs upon their adoption.
The following reasons will highlight why software developers working at external software consultancy firms are more productive compared to in-house software developers.
Software consultants have the capability to run numerous projects at once. So, of a consultant is assigned to a different project within the consultancy, the knowledge of the client’s business remains within the consultancy firm and can be accessed in the future. This allows better preservation of institutions business and technology knowledge.
Software consultants have developed the culture of software development. That’s why software developers are frequently attracted to them. This reduces costs incurred during recruitments and the company’s ability to attract top client is usually increased. This reduces the recruitment costs for businesses which software development is not primary goals.
Birds of a feather flock together. Software developers like interacting with other developers. When they meet, they ask questions, share ideas and get perspectives. This makes them become more informed and appreciated.
This makes it easier to create a context of shared experience. This, in turn, make the external software consultant more efficient than internal employees.