The True Cost Of a Full-Time Engineer

I got a call from an engineering friend of mine. He just moved to a new city for a new job. He writes firmware for a small company. Reason for the call? He is bored and wondered if we had any projects he could work on. Good engineers love their jobs and hate just sitting around. This is not an uncommon occurrence—there are a lot of small companies with “bored engineers.”

One look at this company’s website and you can understand why. They design a new product every five years! It took him about two months to write the code for the new product (why he was hired), and he will start on the next one in four years and 10 months, assuming he does not quit before then, which is likely given his current state of boredom. Meanwhile, he is costing the company $250,000 per year (Google “average cost of an engineer”—the true cost, not just what they get paid). So, it cost his company $1,250,000 to write the firmware for their new product.

If they had outsourced instead, the cost would have been about $25K, and likely would have resulted in better quality code: He is very good at writing firmware, but one person will never outperform a functional team. I can only imagine what this company could have done with an extra $1.25M. I guess it is one of the reasons our clients’ companies seem to be growing so much faster than everyone else’s.

If you’re a small company, before you hire that next engineer, you owe it to yourself to learn more about why product development is different in a small company. A good place to start is with our white papers here.