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How Much Does It Cost to Build Your Own HR Software?

12 min read

In today’s fast-paced business world, startups face unique challenges when it comes to managing their human resources.

From hiring and onboarding new employees to tracking performance and administering benefits.

The demands of HR can be overwhelming.

That’s where HR software comes in.

This powerful tool offers startups a comprehensive and efficient way to streamline their HR processes.

At the same time, it saves time and resources, while ensuring compliance and employee satisfaction.

That’s why we decided to analyze how much HR software will cost and what the price depends on.

But first, let’s take a look at some statistics that show the importance of HR applications.

Statistics

Before diving into the specifics, let’s take a look at some statistics that highlight the growing importance of HR applications in modern workplaces:

  • According to a recent survey, 85% of HR professionals believe that HR software positively impacts their organization’s efficiency and productivity.
  • The global HR software market is projected to reach $24.8 billion by 2026, experiencing a compound annual growth rate (CAGR) of 10.2% from 2021 to 2026.
  • An estimated 74% of companies have implemented HR applications to automate their HR processes and enhance employee experience.

Now, let’s learn more about what HR software is.

What is HR Software?

HR software, also known as Human Resources software or HRM (Human Resource Management) software, is a digital solution designed to automate and simplify HR tasks and processes within an organization.

It encompasses a number of applications and tools that cover various aspects of HR management.

At the same time, it allows startups to efficiently handle employee data, recruiting, performance management, payroll, benefits administration, and much more.

Are you thinking of developing HR software?

Contact us. We will be happy to share our experience in developing HR software from scratch.

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Key Functions:

1. Efficient Employee Data Management

It allows startups to maintain accurate records of employee information.

Such as personal details, employment history, contact information, and performance metrics.

2. Seamless Recruitment and Onboarding

Startups often experience high volumes of recruitment, making the process time-consuming and complex.

It simplifies the onboarding process, allowing startups to effectively orient new employees.

This all happens with the help of the necessary documentation, training materials, and company policies.

3. Enhanced Performance Tracking

HR management software facilitates continuous feedback, 360-degree appraisals, and performance appraisal cycles.

In doing so, it promotes a culture of growth and development within the organization.

4. Streamlined Payroll and Benefits Administration

HR software automates payroll processing, calculating salaries, tax deductions, and generating pay stubs with accuracy and efficiency.

5. Improved Compliance and Reporting

Human resources software helps startups navigate regulatory and legal requirements.

It automates processes such as tracking vacation entitlements, managing overtime, and generating reports.

This way, startups can optimize their HR processes and focus on their core business goals.

But, what types of HR software are there? Let’s find out in the next paragraph.

This photo shows the key factors in the development of HR software

Types of HR Software

HR software comes in various forms, each catering to specific HR functions and organizational needs.

Common types of HR software include:

1. Core HR Software

This type of software focuses on essential HR functions such as employee data management, payroll, benefits administration, and compliance.

Example: PeopleForce offers a comprehensive suite of core HR features.

Including employee data management, time and attendance tracking, leave management, and employee self-service portals.

2. Talent Management Software

This type is designed to facilitate processes related to recruitment, performance management, learning and development, and succession planning.

Example: BambooHR provides a talent management platform.

It includes tools for candidate tracking, onboarding, performance management, and employee engagement.

It focuses on streamlining the entire employee lifecycle.

3. Workforce Management Software

This type of software helps organizations manage employee scheduling, time and attendance tracking, and workforce analytics.

Example: monday.com is a versatile work management platform.

It includes features for time tracking, resource allocation, scheduling, and task management.

It helps businesses effectively manage their workforce and optimize productivity.

4. Onboarding Software

It streamlines the new employee onboarding process by automating paperwork, task assignments, and training modules.

Example: Rippling is an all-in-one HR platform that offers a robust onboarding module.

It simplifies the adaptation process.

It automates tasks such as filling out forms, providing equipment, and managing access rights.

This photo shows the types of HR software for human resources management

Choosing the right type of HR software is not the main task.

You need to understand what features your application will include.

Let’s find out now.

HR Software Development: Features and Functions to Implement

When developing custom HR software, identifying the essential features and functions to include is crucial.

Consider the following features commonly found in HR software:

1. Employee Data Management

A robust employee database is fundamental for HR software. It allows efficient storage and retrieval of employee information.

2. Payroll Management

Automating payroll processes ensures accurate and timely salary calculations, tax deductions, and compliance with labor regulations.

3. Performance Management

Incorporating features for goal setting, performance reviews, and feedback helps organizations drive employee engagement and improve performance.

4. Recruitment and Applicant Tracking

An applicant tracking system simplifies the recruitment process by managing job postings, resume screening, and candidate communication.

5. Onboarding and Offboarding

Streamlining onboarding procedures and automating offboarding tasks saves time and ensures a smooth transition for new hires and departing employees.

6. Time and Attendance Tracking

Tracking employee attendance, leaves, and working hours supports accurate payroll calculations and compliance with labor regulations.

7. Integration Capabilities

The ability to integrate with other systems such as payroll software, time-tracking tools, or third-party services enhances the efficiency and effectiveness of the HR software.

Before finalizing your HR software development plans, it’s essential to understand the factors that can significantly impact the costs involved.

From the scope of features to the level of customization, various elements play a crucial role in determining the financial investment required.

This picture shows the development of HR software, which includes features and functions for implementation

Let’s delve into these critical factors that influence HR software costs.

Factors That Impact HR Software Costs

Several factors influence the cost of developing HR software.

Understanding these factors can help you estimate and plan your budget effectively.

Here are some key factors:

1. Complexity of Functionality

The complexity and depth of the HR software’s functionality significantly impact development costs.

Basic features like employee data management and leave tracking are relatively simpler.

While advanced features like performance management, talent acquisition, or analytics require more extensive development efforts.

2. Customization and Integration Needs

If you need customization or integration with other systems, the development cost will increase accordingly.

These tools include payroll software or time-tracking tools.

Customizations often involve additional development time and resources.

3. Number of Users

The number of users who will access the HR software affects the development effort and infrastructure requirements.

Systems that cater to a large number of users may require additional resources for scalability and performance.

4. UI and UX Design

Investing in a well-designed UI and UX can enhance user satisfaction and adoption.

However, designing and implementing an intuitive and visually appealing UI/UX may increase the development cost.

5. Integration with Third-party Services

If your HR software needs to integrate with third-party services, the cost may include integration fees and additional development efforts.

These services include background checks, benefits management, or recruiting platforms.

6. Security and Compliance Requirements

HR software handles sensitive employee data.

Therefore, incorporating robust security measures and ensuring compliance with data protection regulations (e.g., GDPR or CCPA) can lead to increased development costs.

7. Platform and Device Compatibility

If you aim to support multiple platforms (web, mobile) and devices (desktop, tablet, mobile), the development effort and cost will increase to accommodate responsive design and testing across various environments.

8. Support and Maintenance

Consider ongoing support and maintenance costs beyond the development phase.

This includes bug fixes, updates, and potential feature enhancements or system upgrades.

This picture shows the factors that influence the cost of HR software

 

How Much Will It Cost to Develop HR Software?

Determining the exact cost of developing HR software can be challenging.

As it depends on various factors, such as the complexity of the project, the number of required features, the development approach, and the rates of the development team.

To get an accurate estimation of how much hr software costs, it is recommended to follow these steps:

1. Development Approach

a) Off-the-shelf HR Software

If you choose an off-the-shelf HR software solution, the cost can range from $5,000 to $200,000.

It depends on the software features and the licensing model (perpetual or subscription-based).

b) Custom-Built HR Software

Custom development offers greater flexibility but comes with higher costs.

On average, the development of a custom HR software solution can range from $50,000 to $500,000 or more, depending on the complexity and scope of the project.

2. Features and Functionality

The number and complexity of features significantly impact the development cost.

Basic HR software with core functionalities may cost between $50,000 and $150,000.

More comprehensive solutions with advanced features (performance management, recruitment, training, analytics) can range from $150,000 to $500,000 or higher.

3. Tech Stack

The choice of technologies and platforms can affect development costs.

For instance, web-based HR software typically incurs lower development costs compared to mobile or cross-platform solutions.

The specific tech stack required for your HR software can influence the overall cost estimation.

4. Design and User Experience

An intuitive and user-friendly interface is essential for HR software.

Design and user experience considerations may add approximately 10% to 30% to the overall development cost.

5. Integration

If you require integration with other systems (such as payroll software, time and attendance systems, or third-party APIs), the complexity of integration can impact the cost.

Integration efforts may add an additional 10% to 30% to the overall development cost.

6. Testing and Quality Assurance

Rigorous testing and quality assurance processes are critical for HR software.

This is to ensure its reliability and security.

Testing efforts can typically account for 10% to 20% of the development cost.

7. Ongoing Maintenance and Support

After the initial development, you should consider ongoing maintenance and support costs.

These can range from 15% to 25% of the initial development cost per year, depending on the complexity of the software and the level of support required.

It is important to note that these figures are estimates.

They may vary depending on the specific project requirements, geographic location, and experience of the software development team.

To get a more accurate cost estimate customized to your HR software design project, you can consult with our designers.

We will be able to assess your specific needs and provide a detailed quote.

This picture shows the cost of developing HR software

Are you thinking of developing HR software?

Contact us right now. We would be happy to help you with this and share our experience and expertise.

Talk to us

What is the Typical Cost of Developing an HR Application?

The cost of developing an HR application can vary depending on various factors.

They include the complexity of the application, the number of functions, the development approach, and the location and experience of the development team.

While it is difficult to give an exact figure without specific project details, I can give you a rough estimate based on industry averages.

On average, the cost of developing a basic HR application with basic features can range from $50,000 to $150,000.

This usually includes features such as employee data management, attendance tracking, leave management, and basic reporting capabilities.

For a more comprehensive HR application with advanced features, the cost can range from $150,000 to $500,000 or more, depending on the complexity and scope of the project.

These may include performance management, recruiting, training, analytics, and integration with other systems.

It is important to note that these figures are estimates and may vary depending on the requirements of a particular project, the geographic location of the development team, the technologies selected, and the level of customization required.

Now let’s find out the real factors that determine the cost of development.

Location

The cost of HR software development can vary significantly depending on the country where the development team is based.

Here’s a general overview of the cost differences in different countries:

1. Europe

In European countries, such as Germany, France, or the Netherlands, the cost of HR software development is typically higher compared to other regions.

On average, hourly rates can range from $80 to $150, resulting in higher overall development costs.

2. USA

The United States generally has higher development rates compared to many other countries.

Hourly rates for HR software development in the USA can range from $100 to $200 or more.

It depends on the location and expertise of the development team.

3. UK

The UK also has relatively higher development costs compared to some other regions.

Hourly rates for HR software development in the UK can range from $90 to $150 or more.

4. Australia

Australia tends to have higher development rates, similar to Europe and the USA.

Hourly rates for HR software development in Australia can range from $100 to $180 or higher.

5. Ukraine

Ukraine is known for its competitive rates in software development.

The hourly rate for HR software development in Ukraine can range from $25 to $50.

This makes it a more cost-effective option compared to countries like Europe or the US.

6. India

India is recognized for its lower development rates compared to many other countries. Hourly rates for HR software development in India can range from $20 to $40, making it an attractive option for cost-conscious projects.

This picture shows the location of the development team as a factor influencing the cost of developing an HR application

2. Experience

The cost of HR software development can vary based on the experience level of the developer. Here’s a general breakdown of the cost range per hour for different experience levels:

1. Junior Developers (0-1 years of experience)

Junior developers usually have limited professional experience.

But they may possess the necessary skills to develop HR software.

The cost range for junior developers can vary from $20 to $50 per hour.

2. Middle Developers (1-3 years of experience)

Middle developers have gained some industry experience and may have worked on HR software projects before.

They possess a broader skill set and can handle more complex tasks.

The cost range for middle developers can range from $40 to $80 per hour.

3. Senior Developers (5+ years of experience)

Senior developers have extensive experience in HR software development and have likely worked on numerous projects.

They possess in-depth knowledge, technical expertise, and the ability to handle complex requirements.

The cost range for senior developers is generally higher, ranging from $80 to $150 or more per hour.

It’s important to note that these cost ranges are estimates and may vary depending on a number of factors.

Such as location, specific skills and experience of the developers.

Additionally, the rates mentioned here are meant to provide a general idea and may differ based on the country and market conditions.

When choosing developers based on their level of experience, it’s important to consider more than just cost.

Focus on their skill set, previous projects, and ability to effectively meet your project requirements.

The right balance between cost and experience should be determined based on the specific needs and complexity of your HR software development project.

This picture shows the level of developer experience as a factor influencing the cost of developing an HR application

3. Type of Development Team

The cost of HR software development can vary based on the type of development team you choose.

Here’s a breakdown of the cost range for different team types:

1. In-house Development Team

An in-house development team refers to hiring and maintaining a team of developers within your organization.

The cost can include salaries, benefits, infrastructure, and other overhead expenses.

The cost range for an in-house development team can vary widely depending on the location and the size of the team.

On average, the cost can range from $100,000 to $500,000 or more per year, depending on the team’s expertise and the complexity of the project.

2. Local Development Agency

Engaging a local development agency involves hiring a professional software development company within your country or region.

The cost can vary depending on the agency’s reputation, expertise, and the specific requirements of your HR software.

Hourly rates for local development agencies can range from $80 to $200 or more, depending on the country and the level of experience.

3. Outsourcing

Outsourcing involves partnering with a development team located in a different country or region.

This option is often chosen to benefit from cost advantages in certain regions.

The cost can vary based on the outsourcing destination and the experience level of the team.

Hourly rates for outsourcing can range from $20 to $80 or more, depending on the country and the level of expertise.

4. Freelancer

Hiring a freelance developer or a small team can be a cost-effective option for HR software development.

Freelancers typically charge on an hourly or project basis.

Hourly rates for freelancers can range from $20 to $100 or more, depending on their expertise, reputation, and the complexity of the project.

It’s important to consider not only the cost but also factors such as expertise, communication, reliability, and the ability to deliver within the desired timeframe when selecting a team type.

Each option has its own advantages and considerations, so it’s crucial to evaluate the specific needs of your HR software project before making a decision.

This picture shows the level of cost of developing software for the HR department, which depends on the type of development team

Summary 

In conclusion, building your own HR software is a substantial investment that can yield tremendous benefits for your organization.

We have explored the various factors that influence the cost of HR software development, including the team’s experience, the complexity of functionalities, and the geographical location.

Remember, the cost may vary depending on your specific requirements and the level of customization you seek.

Looking For the Perfect HR Software Development Team?

At SpdLoad, our team of skilled developers is committed to delivering top-notch HR software solutions that exceed your expectations. Contact us today and let’s make your HR vision a reality!

Let us be your trusted partner in building a cutting-edge HR application that drives success for your organization.

Get in touch with us today to kickstart your HR software development journey!

Max

CEO

a moment ago

Ready to optimize your HR processes with HR software?

Let our team of software development experts bring your HR vision to life.

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