While 2020 has brought a lot of uncertainty to many businesses and even brought some to a grinding halt, this isn’t true for those working within software development. In a world which suddenly needs to function remotely and digitally, software developers are in high demand.
Though some industries like travel have been hit much harder, others are thriving; in particular, the healthcare, technology, and financial services industries. This is as they attempt to play catch up and compete in the digital realm under increased demand.
Similarly, government bodies, including the education sphere, are attempting to streamline digital operations to serve their citizens better throughout the pandemic. This includes upgrading long outdated infrastructure to allow for more remote support.
Much of this work was overdue pre-pandemic. The pandemic has amplified the dire need many businesses and agencies had to pursue digital transformation. This uptake in the field has led to new challenges for employers hiring though.
The first hiring challenge is the high amount of open positions available means companies need to offer competitive wages and benefits to be considered by the best applicants. Firms are competing for the top qualified candidates and its driving wages higher. Despite an upward shift in IT jobs, skill gaps still exist. Hiring managers compete with others to catch the best fish in a shrinking talent pool. The competition is intense on several levels, including online resources and referrals.
Another impediment in recruiting the right IT talent is the lack of work experience. As an employer, you seek the experienced software developers possessing relevant qualifications, but that's not all. Instead, you need a balanced workforce with adequate experience and excellent soft skills. That makes the job of hiring managers more convoluted.
All this said, we’ll look more in-depth at what you could be looking at paying for a software developer salary in 2021 in the United States.
Different reports state different median annual wages for software developers, which is likely due to the vast nature of the US. Many also separate the median salaries of software developers and software engineers, although the roles are very similar in skillset.
One report marks the median annual wage at $114,057. This in-depth report also breaks down what you could expect to pay for the least experienced software developers vs the top candidates.
Entry-level software developers, so those in the 25th percentile of pay averages, make a median annual wage of $97,250. Meanwhile, experienced software developers in the 95th percentile make a median annual wage of around $165,000.
This gets more convoluted if you begin to look into median annual wages in specific states or cities. In more populated cities with higher living costs, where employers are vying for the best candidates, you can expect to pay substantially more.
In San Francisco, for example, median annual wages are an astounding 41% higher than the US median average. New York is similar, at 40% higher than the US median average. Other high areas include:
As you can see, more densely populated areas or states with a strong tech presence tend to be higher than average. However, this also trends downward in some areas with less of a tech company presence and lower living costs.
For example, in Phoenix, Arizona, you could expect to pay 17% less than the median US average. Likewise, in Mobile, Alabama, the median annual average is around 14% less than the US average.
In some states with populated capitals, this wage disparity becomes even more apparent. In Boulder, Colorado, the median annual wage for software developers is 19% higher than the US average. But only a couple of hours drive south in Pueblo, the median annual wage is 15% lower than the US average.
One of the large perks of being a white-collar worker is the benefits. Not only do those getting into the field desire the top wages, but the benefits that come with it too.
The most wanted benefit in the US is obviously healthcare insurance, and 68% of companies hiring in the US offer this perk. This is closely followed by paid time off, with 63% of US companies offering this benefit. Dental insurance comes in third on the wanted benefits list, with 59% of companies offering dental insurance.
In this sense, the question "how much does a developer cost" isn't so easy to answer. These benefits obviously add additional costs to hiring for companies. But to get the best candidates locally, it’s a worthwhile cost for many businesses.
As you can see from the studies and data above, the field itself is doing well. Job growth for software developers is expected to grow by 22% from 2019 to 2029.
We touched on the impact the COVID pandemic has had above, but it’s also changed the hiring process for IT roles. Companies surveyed stated 54% of them had conducted more remote interviews. A further 42% of companies stated they had shortened the hiring process.
The biggest change is in remote or agile working. 42% of companies state that since the pandemic, they have advertised fully remote jobs.
While part of this new trend towards remote roles is due to the pandemic, it’s been an increasing trend for some time.
Around 70% of employees and their supervisors stated they are as productive or more productive from home than they were in the office. Around 50% of employees surveyed stated they wanted to continue to work from home after the pandemic abates.
Companies who want to thrive need to recognize this trend to get the best software developers. It’s great news for many companies in high-cost cities, as it means they can downsize their office space. They can also hire from further afield and offer median annual wages respective to their employees' location, not their headquarters’ location.
Even in industries struggling due to the pandemic, raises will be necessary to keep the best employees locally.
A survey found employee raises in 2021 are predicted to be around 2.8%. This is slightly higher than the average of 2.5 to 2.7% raise for 2020, but still slightly lower than the 3% average raise pre-pandemic.
It’s no secret that the technology industry is still struggling to create pay equity and equal opportunities for both women and people of color. There’s a spotlight on companies within the US, in particular, to put their efforts towards tackling this in 2021 and beyond.
Companies are expected to be regularly analyzing their employees’ pay and adjusting as necessary.
Much of this expectation comes from increased demand for pay transparency. Companies like Glassdoor and Payscale back this trend, by encouraging employees to add pay to their workplace reviews. This means companies paying below the average or not offering adequate benefits are at a severe disadvantage.
It should be apparent by now that hiring software developers in the US can be a complicated and expensive feat. If you’re hiring locally, especially in competitive cities, you need to offer the best benefits and above-median wages to attract the best candidates. Even remotely, navigating median wages for software developers in the US can be a difficult task.
Previously, companies have turned to offshore development to tackle this problem. But many offshore development companies lack the soft skills businesses need to thrive. Things like language barriers, time differences, and even cultural differences can wreak havoc on agile software development projects.
A simple solution to this can be nearshore software development. This means hiring from a country in close proximity to the United States, like those in Latin America.
This makes collaborative agile development much simpler. Teams are in the same time zones and language barriers are no longer an issue. This makes the software development process a far more efficient and creative process, with a better end result.
Most importantly, median wages for nearshore software developers are much lower. This is due to lower living costs in countries bordering the United States. It can be a great solution for companies working on a tight budget, who still need high-quality developers.
number8 is a custom software development staffing firm. Our nearshore offices are located in Honduras and Costa Rica. We’ve been sourcing the best nearshore software developers for US companies for over a decade.
We can help you keep your software developer salary costs lower with nearshore developers. We’d love to help your business find a great cost-effective solution for your software development projects. Get in touch with us today for a quote.
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