🔍 Read the full analysis: When Does Hiring Full-Time Cost Less Than IT Staff Augmentation? on ThorstenMeyerAI.com
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TL;DR
A November 6 analysis from ThorstenMeyerAI.com says the decision between hiring and IT staff augmentation depends most on how fully and how long a person will be used. Its calculations put a US median-wage software developer at about $95 per hour actually worked before recruiting costs, while a 50% utilisation assumption raises the break-even outside rate from about $98 to $197 per useful hour.
ThorstenMeyerAI.com published a cost comparison on November 6 that estimates when hiring a full-time IT worker may be cheaper than staff augmentation, finding that actual utilisation can matter more than recruiting fees. The article calculates an approximate US baseline of $95 per hour actually worked for a median-wage software developer, then estimates an outside specialist’s break-even rate based on hiring costs and how much work the employee would have.
The analysis uses Bureau of Labor Statistics (BLS) employer-cost data and wage figures, along with German data from Destatis. For US private-industry workers in the BLS “management, professional, and related” group, June 2026 employer costs averaged $78.88 per hour worked, including $54.06 in wages. The source applies a benefits-and-paid-leave adjustment to the May 2025 BLS median software developer wage of $135,980, estimating annual employer costs of about $174,600 and approximately $95 per hour actually worked. This is the author’s calculation, not a published BLS software-developer hourly cost.
For Germany, the article cites Destatis’s 2025 estimate of €58.50 per hour worked in the information and communication sector. That is a sector-wide average across jobs in IT and telecommunications, not a developer-specific figure. The source says non-wage labour costs amounted to €29 for every €100 of gross pay. It cautions that the US and German figures use different populations and should be treated as starting points, not direct salary benchmarks.
Recruiting expenses add less to the example than utilisation does. Citing SHRM’s 2025 benchmark survey of 2,371 member organisations, the article gives an average non-executive cost per hire of $5,475 and a median of $1,200. Assuming a one-year stay, it calculates that the average hiring cost adds about $3 per hour, taking the US example to roughly $98. The source estimates that if a hire is needed for only half of their available working hours, the break-even rate rises to about $197 per useful hour.
Infographic 01 · The true cost of a hire
A salary is not the cost
Before you compare a hire with an outside specialist, convert both into the same unit: cost per hour of real work.
What a median US software developer costs the employer per hour actually worked. Our calculation from BLS wage and employer-cost data.
From salary to hourly cost
Calculation, each input published by the BLS
- Median salary, US software developer (May 2025)$135,980
- × 1.28 employer costs on top (benefits, insurance, retirement, payroll taxes)$174,600
- ÷ hours actually worked (2,080 paid, about 12% paid leave)1,830 h
- Cost per hour actually worked≈ $95
Sources: BLS Employer Costs for Employee Compensation, June 2026, Table 4 · BLS median wage, software developers, May 2025 · Destatis, 29 Apr 2026 · Destatis non-wage labour costs · SHRM 2025 benchmarking. Load factor = total compensation ÷ (wages + paid leave) = $78.88 ÷ $61.43. German sector figure covers all jobs in the sector, not only developers.
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Utilisation Sets the Cost Threshold
The calculation gives employers a way to compare a vendor quote with the cost of keeping a full-time employee productive. A salary-based hourly estimate can understate the cost if a team has only intermittent work: the employer still pays for the employee’s capacity, while the useful hours are fewer. In the article’s 50% utilisation example, the effective cost per useful hour roughly doubles before considering other factors.
That does not establish a universal rate at which augmentation is cheaper. The result changes with the employee’s compensation, benefits, paid leave, hiring expenses, project duration and workload. The source’s practical point is to calculate a company-specific threshold and compare it with actual quotes, rather than treating “augmentation is cheaper” as a general rule. Short, uncertain or specialist assignments may favour outside support; sustained core work and knowledge the organisation needs to retain may make hiring more attractive.
The distinction matters for budgeting and team planning because the lower-priced option on an hourly quote may not have the lower total cost. Conversely, a full-time hire can carry costs during periods when there is not enough work. The calculation frames these as trade-offs, not as a recommendation that applies to every employer.
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How the Baseline Was Calculated
The article starts from employer cost per hour actually worked rather than dividing salary by a standard 2,080 paid hours. It cites BLS data indicating that paid leave accounts for a portion of paid time, then estimates that a typical professional works about 1,830 hours a year. For the US developer example, it applies an approximate 1.28 load factor to the median wage, based on the BLS professional-group figures. The resulting $95 hourly figure is therefore an estimate built from occupational wage data and broader employer-cost data.
The German comparison comes from a different measure: Destatis reports average hourly labour costs for the information and communication sector, including holiday pay and employer social contributions. The source says the sector figure increased from €49.00 in 2020 to €58.50 in 2025. These figures offer local reference points, but differences in data methods, occupations, currencies and labour markets prevent a like-for-like comparison of a specific developer in the two countries.
The source also says it found no published staff-augmentation rate survey with a clear methodology and excludes provider names and market-rate claims. Its approach is to let readers insert quotes they receive into the calculation. It describes the article as not being legal, tax or financial advice.
““Staff augmentation is cheaper than hiring.” You hear it in every pitch deck. Sometimes it is true. Often it is not.”
— Thorsten Meyer, ThorstenMeyerAI.com
Rates and Workload Remain Case-Specific
The figures do not identify a single market-wide break-even rate. The article says it found no staff-augmentation rate survey with a clear methodology, and it does not provide vendor quotes. A reader must compare the calculation with the rates and terms on their own desk.
Some inputs are estimates or assumptions rather than direct measurements for a particular employer. The US $95 figure combines a median developer wage with broader professional-group employer-cost data; the German €58.50 figure covers an entire sector. The hiring-cost example assumes a one-year tenure, while the 50% utilisation scenario depends on a workload assumption that will differ by team. The source also says evidence about how much faster coding agents make developers remains unsettled. Its provided material does not establish a measured productivity effect from AI or quantify how that would alter the break-even calculation.
Apply the Formula to Actual Quotes
The next step for an employer is to estimate the role’s total employment cost, realistic hours of useful work and expected duration, then compare the resulting cost per useful hour with outside proposals. Those inputs should reflect the employer’s own benefits, leave, recruiting costs and likely periods of lower demand; the published figures are reference points rather than a substitute for that work.
Any conclusion may change as workloads, wage data, hiring costs and vendor quotes change. The article does not announce a follow-up data release or a formal industry rate survey. It says AI may create more short specialist projects as well as new reasons to retain knowledge internally, but the effect on developer productivity and cost remains unsettled.
Key Questions
What is the estimated US cost per hour for a full-time software developer?
The article calculates about $95 per hour actually worked using the BLS May 2025 median software developer wage and broader BLS employer-cost data. It is an estimate, not a published BLS developer-specific hourly cost.
How does recruiting cost affect the comparison?
Using SHRM’s 2025 average non-executive cost per hire of $5,475 and assuming a one-year stay, the article estimates roughly $3 more per hour worked, bringing its US example to about $98. The survey median was $1,200, and the figures cover roles generally, not technology hires alone.
Why does utilisation change the break-even rate?
A full-time employee’s costs continue even when the team has less work for them. In the source’s example, using only half of the available hours raises the estimated break-even outside rate from about $98 to about $197 per useful hour.
Is the German figure a software developer salary benchmark?
No. The €58.50 per hour worked figure is a 2025 average for the wider information and communication sector, including jobs beyond software development.
Does the analysis prove staff augmentation is cheaper for short projects?
No. It says augmentation tends to suit short, uncertain or specialist work, but the result depends on the employer’s own workload, costs, project duration and vendor quote. The article does not provide a universal augmentation rate.
Source: ThorstenMeyerAI.com
