Key takeaways for the budget line
- A monthly rate is a bundle. Ask which items it bundles before comparing 2 of them.
- Employer taxes and statutory benefits follow the engineer’s country, and they vary widely across Europe.
- Your own side carries onboarding, management time and tooling seats in every model.
- Replacement, raises and equipment refresh are real costs that show up after month 6.
Finance asks for the cost and gets one figure per engineer per month. That figure is a bundle, and 2 providers quoting the same number can be selling noticeably different things. The work is in unpacking it, which takes about an hour and saves arguments in month 4.
Companies that hire dedicated development team capacity for the first time usually compare that bundle against a local salary. That comparison is wrong in both directions: it ignores what the bundle covers, and it ignores what your own payroll costs beyond gross pay.
What sits inside a monthly rate
Quotes to hire dedicated development team capacity break down the same way wherever the engineers sit. 6 items usually live inside the figure. The engineer’s gross salary. Employer taxes and social contributions in their country. Statutory benefits, which can include paid leave, sick pay and a pension contribution depending on the jurisdiction. Local HR and legal support. The recruiting that found the person. And the provider’s own fee, which is the only line that represents margin.
The variation sits in the next tier. Equipment, software licences, a workspace, travel for a quarterly visit, and the cost of a replacement search are handled differently from contract to contract. When a quote looks lower than its neighbour, this tier is where the difference usually hides.
| Cost item | Who carries it | In the rate? |
|---|---|---|
| Gross salary | Provider, as employer | Always |
| Employer taxes and contributions | Provider | Always |
| Paid leave and statutory benefits | Provider | Always |
| Recruiting and screening | Provider | Usually |
| Laptop and equipment | Either side | Ask |
| Office or desk space | Either side | Ask |
| Replacement search | Provider, normally | Check the clause |
| Dev tool and SaaS seats | Client | No |
| Management and onboarding time | Client | No |
What never leaves your side
3 lines belong in your development team budget whether you hire dedicated development team capacity or build in-house. Tooling seats, because a new engineer needs the same licences your own staff have. Onboarding time, which is real engineering hours spent by people who were already busy. And management attention, the item nobody prices and everybody spends.
That last one deserves a number in your own planning even though no invoice shows it. Somebody keeps the backlog ready, answers questions during shared hours and runs the review cycle. Buying IT resource augmentation services moves the hiring work off your desk and leaves the directing work exactly where it was.
The costs that appear after month 6
Salary review is the first. An engineer whose pay never moves will look around somewhere near month 18, and the search that follows costs you ramp-up time whoever pays the recruiting fee. Contracts for IT resource augmentation services treat the review differently: some index annually, some reopen the rate only when the engineer asks. Ask how raises are handled and how often, then put the expected drift into the development team budget rather than discovering it as a renegotiation.
Teams that hire dedicated development team capacity for several years hit equipment refresh on a longer cycle, and it follows the same pattern. So does the replacement search, which is free in some contracts and billable in others, and which always costs you weeks of context whatever the commercial terms say. The honest planning number for a long engagement includes one replacement.
Comparing against an in-house hire
Build the in-house column properly before you compare. Gross salary, employer taxes, benefits, recruiting fee or internal recruiter time, equipment, workspace, and the share of HR and payroll administration the role consumes. Most teams find the gap narrows once that column is complete, and the decision moves to things money doesn’t settle: proximity, tenure, and who holds the architectural memory of the system. The same arithmetic applies when the comparison is against IT resource augmentation services for one role instead of a team.
The dedicated team cost also behaves differently over time. An in-house hire’s cost rises with the local market and with your own review cycle. A provider arrangement rises with the engineer’s market and with whatever the contract says about indexation, which is a question to ask in year 1 instead of year 3.
How to build the line
Write the bundle out item by item for each quote you hold, mark every line as inside, outside or unclear, and send the unclear ones back as questions. Providers of dedicated team services answer that in a day when the answers are simple, and the ones who need a week have told you something useful at no cost.
Then add your own column: tooling, onboarding hours, management time, and one replacement over 24 months. Companies that hire dedicated development team capacity with that sheet in hand negotiate better and get surprised less, which is most of what budgeting is for.
Frequently asked questions
Why do quotes for the same role differ so much?
Country of employment, seniority definition and bundle contents, in that order. A quote built on a different country’s employment cost isn’t comparable, and one that excludes equipment and replacement sits lower for a reason that has nothing to do with efficiency.
Do dedicated team services cost more than single placements?
Per engineer, rarely. What changes is the shape of the commitment and the overhead that comes with a lead, shared ceremonies and a longer notice period. Price the arrangement you need; dedicated team services and single placements answer different problems, and the lowest unit figure settles neither.
How should we handle currency and indexation?
Fix the billing currency and ask what triggers a rate change: inflation, statutory increases, or a salary review. Get the mechanism in writing. A contract silent on indexation will raise the subject at the least convenient moment.
What’s the cheapest way to start?
Smaller than the plan says. Clients who hire dedicated development team capacity in stages spend less in the first quarter and learn more about fit than any evaluation framework shows. Growing from a working group is simpler than correcting an oversized one.
Does the rate cover IT resource augmentation services for short assignments?
Short engagements are usually priced higher per month, since recruiting is amortised over fewer of them. If the work ends in a quarter, say so during negotiation instead of signing a long structure you’ll unwind early.
