Key Takeaways
- BLS puts the median software developer salary at $148,100 in May 2025; total compensation at top-tier companies averages $191,750 when RSUs and bonuses are included
- Tech talent shortage leaves 1.4 million US positions unfilled, with average time-to-fill for technical roles running 66 days - 50% longer than non-tech hires
- Tech industry annual attrition runs 13-21%, with the average engineer leaving within 2-3 years; replacement costs 50-200% of annual salary
- Offshore tech rates in India run $25-$35/hr versus $80-$150/hr fully loaded for a US FTE, a 50-70% gap
- Contractor staffing agency markups in tech range from 20-60% on top of worker pay depending on engagement type
Technology hiring has always been expensive. In 2026, it costs more than most hiring managers budget for. Base salary is the number that appears in offer letters. The real number includes equity, benefits, recruiting overhead, months of lost productivity during onboarding, and the likelihood that the person you just hired will be gone in two to three years.
Software engineer salaries by role and region
BLS median wages for technology roles (May 2025):
| Role | Median Annual Wage | 10th Percentile | 90th Percentile |
|---|---|---|---|
| Software developer | $148,100 | $79,850 | $211,450+ |
| Software QA analyst | $111,490 | $65,880 | $168,530 |
| Systems software developer | $152,210 | $85,410 | $218,580 |
| Computer and information research scientist | $145,080 | $87,120 | $215,100+ |
Source: BLS Occupational Employment and Wage Statistics, May 2025.
The Dice Tech Salary Report 2025 puts average tech professional compensation at $112,521, up 1.2% year over year. Software engineers specifically average $128,386 on Dice. The gap between BLS and Dice reflects methodology: BLS covers all employers at all experience levels, while Dice skews toward active job seekers.
Salary variation by geography:
| Market | Software Engineer Average Base | Premium vs. National |
|---|---|---|
| San Francisco Bay Area | $226,843 | +53% |
| New York City | $184,000 | +24% |
| Seattle | $178,000 | +20% |
| Austin | $155,000 | +5% |
| Remote (national avg) | $136,504-$142,542 | baseline |
Source: Glassdoor, 2025-2026 data.
DevOps and SRE
DevOps engineers earn more than general software roles because the job spans infrastructure, security, and deployment pipelines simultaneously.
| Metric | Figure | Source |
|---|---|---|
| Average DevOps engineer salary (US) | $162,440 | Glassdoor 2025-2026 |
| DevOps.com mean Q1 2025 | $144,290 | DevOps.com survey |
| Senior DevOps base (Salary.com) | $160,547 | Salary.com |
| Senior DevOps total cash including bonus | $166,957-$204,881 | Salary.com |
Product managers
| Market | PM Average Base | Notes |
|---|---|---|
| US national | $124,000-$189,000 | Glassdoor 2026 |
| San Francisco | $151,000-$242,000 | Glassdoor 2026 |
| New York City | $156,423 | Glassdoor 2026 |
| Senior PM, NYC | $233,373 | Glassdoor 2026 |
QA engineers
QA engineering compensation runs below software development but follows the same geographic spread.
| Role | Median / Average | Source |
|---|---|---|
| Software QA analyst (BLS median) | $111,490 | BLS OEWS, May 2025 |
| Software QA engineer (Glassdoor) | $117,352 | Glassdoor 2026 |
| QA engineer range | $93,657-$148,431 | Glassdoor 2026 |
For broader benchmarks on what companies spend beyond salary when they bring someone on, see cost of hiring an employee in 2026.
Total cost of employment in tech
Budget conversations in tech usually start and end with base salary. That understates the real number significantly.
BLS Q4 2025 data puts benefits at 29.9% of total compensation for private industry workers, roughly $13.79 per hour in benefits versus $32.36 in wages. The rule of thumb - that a worker costs 1.25x to 1.4x their salary - holds at the aggregate level, but tech compensation structures push that multiplier higher at senior levels once equity enters the picture.
Fully loaded cost estimates by role:
| Role | Base Salary | Benefits + Taxes Add-On | Stock / Bonus | Fully Loaded Annual | Employer Multiplier |
|---|---|---|---|---|---|
| Junior SWE | $95,000 | $28,500-$38,000 | $10,000-$20,000 | $133,500-$153,000 | 1.40-1.61x |
| Mid-level SWE | $148,100 | $44,430-$59,240 | $20,000-$50,000 | $212,530-$257,340 | 1.43-1.74x |
| Senior SWE | $185,000 | $55,500-$74,000 | $60,000-$150,000 | $300,500-$409,000 | 1.62-2.21x |
| DevOps engineer | $162,440 | $48,730-$64,976 | $25,000-$60,000 | $236,170-$287,416 | 1.45-1.77x |
| Product manager | $156,000 | $46,800-$62,400 | $20,000-$50,000 | $222,800-$268,400 | 1.43-1.72x |
| QA engineer | $111,490 | $33,447-$44,596 | $8,000-$20,000 | $152,937-$176,086 | 1.37-1.58x |
What goes into the benefits load:
- Employer FICA matching: 7.65% of wages
- Federal unemployment tax: 0.6% of first $7,000 in wages
- State unemployment tax: varies, typically 1-5%
- Health insurance employer contribution: $6,584 per employee per year for single coverage (Kaiser Family Foundation 2024), rising to $15,797 for family coverage
- 401(k) match: 4-6% of salary at most tech companies
- Paid time off accrued cost: 10-20 days annually, valued at daily wage rate
Stock compensation
At large tech companies, RSUs often equal or exceed base salary. Levels.fyi 2024 data shows median total compensation for software engineers at $191,750 when base, RSUs, and bonus are combined. Engineers at FAANG-tier companies commonly see 40-60% of total compensation in equity. That equity carries real cost to the employer in dilution and compensation expense, and it is fully visible to competing recruiters who benchmark against total comp.
Stack Overflow's 2024 Developer Survey found engineering managers averaging $192,500 in total compensation, backend developers at $170,000, and full-stack developers at $130,000.
Contractor vs. FTE cost comparison
The contractor-versus-FTE decision in tech depends on engagement length, role seniority, and how you are sourcing the contractor.
Agency markup structure for tech contractors:
| Engagement Type | Typical Agency Markup on Worker Pay |
|---|---|
| IT/software contractor (W-2 through agency) | 50-60% |
| Corp-to-Corp or 1099 arrangements | ~30% |
| Permanent placement fee | 10-20% of annual salary |
| IT-specific contractor markup | 20-30% |
A contractor paid $80/hour net through a staffing agency costs the employer $112-$128/hour at a 40-60% markup. That covers payroll taxes, workers' comp, agency overhead, and margin.
FTE fully loaded hourly equivalent:
| Salary Level | Fully Loaded Annual | Hourly Equivalent (2,080 hrs) |
|---|---|---|
| $95,000 | ~$133,500 | $64/hr |
| $148,100 | ~$207,340 | $100/hr |
| $185,000 | ~$277,500 | $133/hr |
24-month cost comparison
Workforce cost analyses comparing contractor versus FTE over a 24-month period have found contractors running approximately $23,800 cheaper overall when accounting for the absence of benefits, PTO accrual, and employer tax costs. That advantage erodes in three situations: when the engagement extends past 12 months, when an agency is marking up by 50% or more (at which point the contractor can cost more than a fully loaded FTE), and when the role requires security clearances or specialized compliance onboarding.
The contractor advantage concentrates in short-duration specialized work. For ongoing production engineering, a 24-month FTE often comes out cheaper once agency markups and contingent workforce instability are factored in.
For broader IT outsourcing economics, see IT outsourcing statistics 2026.
Tech talent shortage and competition metrics
The supply-demand gap in tech hiring is structural. It predates the 2021-2022 hiring surge and held through the 2023 layoff wave.
Current shortage scale:
| Metric | Figure | Source |
|---|---|---|
| Unfilled tech jobs in the US | 1.4 million | CompTIA tech workforce reports 2025 |
| New tech job vacancies projected annually | 344,000 | BLS projections |
| Average time-to-fill for technical roles | 66 days | Industry benchmarks |
| Time-to-fill premium vs. non-tech roles | 50% longer | Recruiting data |
| Senior engineer hire through traditional channels | 4-6 months | Industry estimates |
Employer-reported difficulty:
- 87% of tech leaders report challenges finding skilled workers (Robert Half survey)
- 65% say finding skilled tech workers has gotten harder year over year
- 76% of IT employers globally report a talent shortage (Staffing Industry Analysts)
- IDC projected the IT skills shortage would cost $5.5 trillion globally by 2026 in delayed product launches and missed revenue
BLS long-term projections:
| Occupation | Projected Annual Openings | Growth Rate (2024-2034) |
|---|---|---|
| Software developers | 317,700/year | +17% |
| Computer and information research scientists | 4,900/year | +26% |
| Information security analysts | 33,900/year | +33% |
Software developer employment is growing at 17% over the decade, three times the 5% average across all occupations. Information security analyst demand is growing at 33%, driven by expanding attack surface and regulatory requirements. The demand curve is outrunning universities and retraining pipelines.
Senior engineers at major tech companies receive multiple recruiter contacts per week. Median tenure runs 2-3 years. Companies competing on salary alone tend to lose ground in markets where competitors are also offering sign-on bonuses, remote flexibility, and equity.
Tech turnover rates and replacement costs
When engineers receive daily recruiter outreach and competitors are offering 20-30% salary bumps, retention is a cost problem even for well-compensated teams.
Annual attrition in tech:
| Metric | Figure | Source |
|---|---|---|
| Tech industry annual attrition rate | 13.2% | LinkedIn Workforce Report |
| Broader industry range | 13%-21% | Multiple surveys |
| Average tech employee tenure | 2-3 years | Industry data |
| FAANG-tier voluntary attrition | 13%-20% | Reported figures |
Tech shows the highest voluntary attrition of any major industry LinkedIn tracks. A 13% annual rate on a 100-person engineering team means 13 departures per year. At 21%, that is 21 people out the door annually.
Cost per departure:
| Method | Cost Estimate | Role |
|---|---|---|
| SHRM formula (50% of annual salary) | $74,050 | Mid-level SWE at $148,100 |
| SHRM formula (100% of annual salary) | $148,100 | Mid-level SWE |
| SHRM formula (200% of annual salary) | $296,200 | Senior SWE at $148,100 |
| Average cost per hire (SHRM 2025) | $5,475 | Non-executive direct costs only |
| Executive replacement (SHRM 2025) | $35,879 | Direct cost baseline |
The SHRM range of 50-200% of annual salary is wide because costs are distributed across multiple budget owners: recruiting costs the hiring budget, productivity loss hits the team, and manager time spent on interviews does not appear in cost accounting at all.
For a senior engineer earning $185,000:
- 50% replacement cost: $92,500
- 100% replacement cost: $185,000
- 200% replacement cost: $370,000
The 200% figure applies when you include departing employee knowledge transfer losses, the productivity gap during vacancy, recruiter fees, a sign-on bonus for the replacement, and the ramp time before the new hire reaches full output. Senior technical roles have longer ramp periods because of system knowledge depth. The tech industry's $1.8 trillion annual turnover-driven productivity loss estimate signals the scale of the problem even for smaller teams.
The primary drivers of voluntary attrition in tech are compensation gaps, limited internal growth paths, and management quality. Remote flexibility became table stakes after 2021. Companies that moved to return-to-office policies without adjusting compensation have shown measurably higher voluntary attrition in the 2024-2025 data.
Offshore and nearshore tech staffing cost differentials
Offshore hiring in tech addresses two separate problems: cost and supply. With 1.4 million unfilled US tech positions, domestic hiring at any salary often cannot solve the headcount problem. The cost savings are an additional factor, not the only one.
Hourly rate comparison by region:
| Region | Junior Rate | Mid-Level Rate | Senior Rate | Savings vs. US Fully Loaded |
|---|---|---|---|---|
| United States (FTE equivalent) | $64-$80/hr | $100-$133/hr | $133-$177/hr | Baseline |
| Latin America | $20-$35/hr | $35-$50/hr | $50-$70/hr | 30-50% |
| Eastern Europe | $25-$40/hr | $35-$65/hr | $55-$85/hr | 30-46% |
| India | $15-$25/hr | $25-$35/hr | $35-$55/hr | 50-70% |
| Philippines | $10-$15/hr | $13-$20/hr | $20-$35/hr | 60-70% |
| Southeast Asia (ex-Philippines) | $15-$25/hr | $20-$30/hr | $30-$50/hr | 55-65% |
What is changing in offshore rates
India tech wages are rising 8-10% year over year in the main corridors (Bangalore, Hyderabad, Pune), compressing the gap with US rates. Romania grew approximately 20% in the past year. Latin America is displacing Eastern Europe as the preferred nearshore option for US companies specifically because of time-zone overlap. A developer in Colombia or Mexico City works US business hours without the overnight gap that India-based teams require.
The Philippines has a $38 billion IT-BPM industry with 1.82 million active IT professionals, making it the largest English-language offshore tech talent pool after India.
Effective cost model for a 5-person offshore dev team (mid-level, India):
| Item | Monthly Cost |
|---|---|
| 5 engineers at $30/hr, 160 hrs/month | $24,000 |
| Management overhead estimate (15%) | $3,600 |
| Communication and tooling | $500 |
| Total monthly | $28,100 |
| US equivalent (5 SWEs at $148,100/yr fully loaded, /12) | $103,404 |
| Monthly savings | $75,304 |
The savings are real, but they come with integration costs: timezone coordination, cultural context differences, communication overhead, and IP/security compliance requirements that can add 10-20% back to the nominal rate savings.
For a direct comparison of US versus offshore hiring economics, see US vs. offshore hiring cost comparison. For the outsourcing market context, see IT outsourcing statistics 2026.
What these numbers mean for tech hiring budgets
Tech hiring budgets consistently undercount in the same places.
The most common mistake is budgeting for base salary and stopping there. A $148,100 software engineer costs $207,000-$257,000 fully loaded once stock compensation, benefits, payroll taxes, and recruiting costs are included. Budget approvals based on base salary understate true headcount cost by 40-70% at senior levels.
The second problem is treating open positions as cost-neutral. At 66 days average to fill a technical role - and 4-6 months for senior hires - the productivity cost of a vacancy is real. A team of 10 engineers with one open seat is running at 90% capacity for an extended period. At a $148,100 average engineer salary, 66 days of lost output is roughly $27,000 in productivity cost before any recruiting fees. That cost is invisible in most job posting decisions.
The third gap is annual attrition. At 13% annual attrition on a 20-person engineering team, you are replacing 2-3 engineers per year at $74,000-$296,000 per replacement. That is $148,000-$888,000 per year in replacement cost alone, before base payroll. Few engineering budget conversations include this line explicitly, which is why it consistently surprises finance teams.
On the contractor question: contractors make economic sense for short-duration specialized work - a 3-month security audit, a specific infrastructure migration, a product launch sprint. They do not work as a permanent cost reduction strategy for ongoing engineering when agency markups are at 50-60%, because at that rate the cost advantage over a fully loaded FTE is thin or negative.
Companies facing supply constraints in domestic hiring - and with 1.4 million unfilled positions, most are - often find offshore or nearshore staffing is the only way to actually fill roles, not just the cheaper way.
For companies exploring alternatives to full-time US tech hiring, Stealth Agents virtual assistant services handle technical support, project coordination, and back-office functions that free engineering teams to focus on product work rather than administrative overhead.
Methodology
Salary data is drawn from BLS Occupational Employment and Wage Statistics (May 2025 release), Dice Tech Salary Report 2025, Levels.fyi 2024 compensation data, and Glassdoor 2025-2026 salary estimates. Total cost of employment calculations use BLS Employment Cost Index Q4 2025 data for benefits as a percentage of total compensation. Contractor markup ranges are drawn from staffing industry reports. Turnover rates reflect LinkedIn Workforce Report data and industry surveys. Offshore rate tables are compiled from staffing and vendor benchmarking sources covering 2024-2025 engagements. All figures are point-in-time and will shift as market conditions change.
Sources
- Bureau of Labor Statistics Occupational Employment and Wage Statistics, May 2025: software developer, QA analyst, and systems developer wage data
- Bureau of Labor Statistics Employment Cost Index, Q4 2025: benefits as percentage of total compensation
- Bureau of Labor Statistics Occupational Outlook Handbook 2024-2034: software developer and information security analyst projections
- Dice Tech Salary Report 2025: average tech professional and software engineer salary data
- Levels.fyi 2024 compensation data: total compensation including RSUs and bonus for software engineers
- Stack Overflow Developer Survey 2024: total compensation by role including engineering managers, backend developers, full-stack developers
- Glassdoor 2025-2026: regional salary data for software engineers, DevOps engineers, product managers, QA engineers
- Salary.com: senior DevOps engineer total cash compensation range
- DevOps.com Q1 2025 salary survey: DevOps mean compensation
- Kaiser Family Foundation 2024 Employer Health Benefits Survey: employer health insurance contribution averages
- SHRM 2025 Benchmarking Report: cost per hire and replacement cost ranges
- LinkedIn Workforce Report: tech industry annual attrition rate (13.2%)
- Robert Half Technology survey: hiring difficulty metrics (87% of tech leaders)
- Staffing Industry Analysts: global IT employer talent shortage data (76%)
- IDC: global IT skills shortage cost projection ($5.5 trillion by 2026)
- CompTIA IT workforce outlook data: unfilled positions and annual opening projections