CTOs, engineering leaders, and decision-makers building and scaling software development teams.
What you’ll learn
The real cost of hiring an in-house software development team in Germany versus working with a CEE partner.
Hiring an in-house software development team in Germany is expensive.
On paper, in-house hiring in Germany looks solid. You get access to experienced engineers and a mature tech market.
But once you factor in employer contributions, long hiring cycles, and long-term commitments, the total cost rises quickly.
And it’s easy to underestimate until you’re already in the thick of hiring.
Nearshoring to Central and Eastern Europe gives you another option – one with a lower total cost, faster access to established teams, and less exposure to hiring risk.
But only if you understand how the numbers actually compare.
In this article, we break down the real cost of building a software development team in Germany versus working with a CEE development partner.
Let’s dive in!
Table of Contents
Germany vs. CEE: side-by-side cost summary
Hiring in-house in Germany and nearshoring to Central and Eastern Europe lead to very different cost structures.
Here are the key differences at a glance:
Hiring in-house in Germany vs nearshoring to CEE: software development team costs
Cost
Germany (in-house)
CEE (agency)
Developer base salary (annual)
~€60,000 on average
€22,000–€32,000 depending on role
Senior/lead roles
€80,000–€100,000+
€35,000–€45,000
Employer contributions
+20–30% on top of salary
None for the client
Recruitment costs
€5,000–€10,000 per hire
Included in agency rate
Onboarding and training
€3,000–€5,000 per hire
Included in agency rate
Infrastructure and workplace
€14,000–€22,000 per person per year
Included in agency rate
Total annual cost per developer
~€114,000–€182,000 all-in
~€50,000–€120,000 all-in
Typical hourly rates
€120–150 per hour
€30–50 per hour. Up to €60–65 for senior specialists
Cost predictability
Low, many variable costs
High, one agreed rate
These numbers explain why many companies rethink in-house hiring once they run the math.
Germany offers strong talent, but it comes with high fixed costs.
CEE nearshoring shifts those costs into a predictable rate, which helps you keep your budget under control.
In the next sections, we’ll break down where these differences come from, starting with in-house hiring in Germany.
Cost of hiring an in-house software development team in Germany
Salary averages for key software development roles in Germany
Germany has some of the highest IT salaries in Europe. That’s great for talent, but it pushes your team budget up fast.
Here’s what you can expect to pay for key roles:
Front-end developer – Front-end developers earn around €55,000 per year on average.
Backend developer – Back-end developers usually sit slightly higher, at around €60,000 per year.
QA engineer – QA roles land near the same level. The average sits at €60,000, with common ranges between €50,000 and €75,000.
DevOps engineer – DevOps roles come at a premium. Average salaries land around €68,000 per year.
UX/UI designer – Designers earn about €51,000 on average. Mid-level designers often sit in the mid-€50k range, while seniors can reach €65,000 or more.
Project manager – PMs average around €77,500 a year. Depending on seniority and region, the range spreads from €58,000 up to €99,000.
Keep in mind, these are only the average base salaries. Depending on seniority, tech stack, city, and other factors, they can be significantly higher.
And these figures don’t include employer contributions, which we’ll cover next.
Extra employer costs and overhead
The real cost of an in-house hire grows once you add mandatory contributions and day-to-day overhead, like:
Mandatory employer contributions – On average, you pay an extra 20-25% of every salary for social security, health insurance, pension, and other obligations. A mid-level dev earning €65,000/year ends up costing around €81,000/year.
Recruitment costs – Recruitment doesn’t come cheap. Recruitment agency fees, job ads, internal training and interview time can add up to €20,000 for a single senior hire.
Onboarding and equipment – New hires need laptops, software licenses, and training. You also cover the time your team spends bringing them up to speed.
Office and workspace costs – If your team works on-site, you carry the cost of office space, utilities, and workplace setup. These vary by city but they add up quickly, especially if you’re scaling quickly.
And these aren’t costs you can just skip.
They’re built into every in-house hire, which is why total team costs in Germany climb far above base salaries.
You won’t see them show up on payslips, but they will have a huge impact on your total long-term costs:
Slow ramp-up time – New hires sometimes need months to reach full speed. You pay their full salary during that period, even though productivity is still low. If you hire a lot of people at once, this becomes a meaningful cost.
Turnover and replacement – When someone leaves, the cost resets. You lose momentum, you lose knowledge, and you have to pay for another recruiting cycle. Every departure can effectively double the cost of that role for the year.
Hiring delays – Hiring developers takes time. The average role stays open for weeks, and specialized positions can take months. During that period, work slows or stalls while salaries, recruiter fees, job ads, and senior interview time continue to add up.
Management overhead – You need people to manage internal teams. That includes project management, HR, procurement, and operational support. These aren’t direct engineering costs, but they’re part of the true budget.
All these hidden factors push the total cost of hiring an in-house team well beyond the numbers you see in salary reports.
Cost of hiring a software development agency in Central/Eastern Europe
Salary averages for key software development roles in CEE
Salary levels in Central and Eastern Europe vary by country, but they follow a clear pattern.
Even senior roles cost significantly less than their German equivalents.
Here’s what you can expect to pay for key roles in CEE:
Front-end developer – Most front-end developers earn between €22,000 and €28,000 per year.
Backend developer – Back-end developers usually fall in the €25,000–€32,000 range, depending on experience and tech stack.
QA engineer – QA engineers earn between €20,000 and €27,000 per year.
DevOps engineer – DevOps roles sit slightly higher. Salaries typically range from €28,000 to €36,000.
UX/UI designer – Mid-level Designers earn €18,000 to €26,000 per year, on average.
Project manager – Project managers usually earn €28,000–€35,000, less than half of typical German PM salaries.
These salary levels are the foundation of nearshoring economics.
They allow CEE agencies to build experienced, cross-functional teams while keeping overall costs predictable and significantly lower than in-house teams in Germany.
Outsourcing rates
CEE outsourcing rates are a direct reflection of local salary levels. Agencies price their services on top of those salaries, with their margin and operating costs included.
That’s why the final numbers stay predictable and lower than in-house hiring.
Most CEE agencies charge an all-inclusive hourly or monthly rate. This usually includes the developer’s salary plus an agency fee of roughly 10–30%.
For most roles, outsourcing rates translate to:
Mid-level developers/designers – Around €30–50 per hour.
Senior specialists and architects – Up to €60+ per hour.
These rates align with local salaries ranging from €22,000 to €45,000 per year, depending on the role and seniority.
Looking at the big picture, a nearshore developer typically costs between €50,000 and €120,000 per year through an agency.
The lower end covers mid-level engineers, while the higher end applies to very senior or highly specialized roles.
In Germany, comparable engineering work often costs €110–140 per hour. Over a full year, that can push the total cost of one developer well beyond €150,000.
In CEE, the same workload usually comes in 30–50% lower.
No direct overhead costs
Agency rates already include salaries, benefits, recruitment, retention, and operations.
You don’t manage any of it directly, you just pay one rate for a working team.
This pricing model explains why nearshoring to CEE consistently reduces development spend without lowering the seniority or experience of the people building your product.
Here are some of the costs you don’t have to deal with:
No employer taxes or social contributions – You don’t pay health insurance, pension contributions, paid leave, or payroll taxes. These costs stay with the agency, not with you.
No hiring or replacement costs – Agencies cover recruitment, onboarding, training, and retention. If someone leaves, they handle the replacement. Your cost stays the same.
No infrastructure expenses – Office space, utilities, laptops, software licenses, testing devices, and security tooling are all covered.
No internal people management – You don’t need HR support, performance reviews, or internal coordination for the team. The agency manages delivery and staffing while you stay focused on outcomes.
Predictable total cost – Instead of fluctuating expenses, you get one clear number. Monthly or hourly rates cover salary, agency margin, and operating costs.
This is why nearshoring to CEE can cut your total development spend by 30–50%. You pay for productive work, not the structure around it.
Hiring in-house in Germany vs. nearshoring to CEE: FAQs
Hiring in-house makes sense when software is a long-term core function of your business and you’re confident the team structure won’t change much over time.
It also helps if you already have experienced engineering leadership and a hiring process that works well.
If you expect steady demand, low turnover, and clear ownership for years, the higher fixed costs can make sense.
If you’re still validating a product, scaling unevenly, or adjusting priorities often, those fixed costs become a burden very quickly.
From days to weeks.
Agencies already have teams in place, so onboarding often takes weeks rather than months.
You avoid job ads, interviews, notice periods, and long ramp-up phases.
That speed can matter more than the hourly rate if you’re on a tight timeline.
You don’t pause delivery to hire again. The agency handles the replacement and manages the handover internally.
From your side, the cost stays the same and the team keeps moving.
With an in-house team, even one departure can trigger a long hiring cycle, knowledge loss, and months of reduced output.
No.
Salary levels reflect local market conditions, not lower skill levels. Many engineers in CEE work on complex products for Western European and US companies and meet the same technical standards.
You’re not paying less for weaker work. You’re paying local rates instead of Western European labor costs.
The difference shows up in the budget, not in the output.
Looking for a reliable CEE development partner?
If you’re exploring nearshoring but struggling to find a partner you can trust, you’re not alone.
Many teams reach this point after running the numbers and realizing in-house hiring in Germany comes with more risk and cost than expected.
Thankfully, you’re in the right place.
We’re a high-caliber software development company with 12+ years of experience building complex products across a range of industries, from healthcare to telecommunications.
Our teams work as a true extension of yours, with clear communication, predictable costs, and no unnecessary overhead on your side.
If you want to talk through your situation and see whether nearshoring makes sense for you, we’re happy to help. Feel free to reach out and we’ll take it from there.
A seasoned software engineering executive, Marin’s role combines his in-depth understanding of software engineering processes (particularly mobile) with product and business strategies. Humbly boasting 20+ years of international experience at the forefront of telecoms, Marin knows how to create and deliver state of the art software products to businesses of all sizes. Plus, his skills as a lifelong basketball player mean he can lead a team to victory.
When he’s not hopping from meeting to meeting, you’ll find Marin listening to indie rock, or scouring the latest IT news.
